The former commissioners said that Perry was seeking to reverse a quarter century of FERC reforms that have created a marketplace for electric power generators and that many of the coal plants he is aiming to help have no advantage when it comes to reliability.
“His focus is clearly coal and there are a lot of dirty coal plants that are not competitive in today’s energy markets,” Elizabeth Moler, a former FERC chairwoman, former deputy energy secretary and former Exelon executive, said in an interview. “To me he’s effectively proposing to subsidize them and put a tax on consumers in doing so. It’s a tax in different clothing. It’s going to cost customers more money to run dirty old coal plants.”
In early October, Perry made his proposal to FERC and asked for a decision within 60 days. He proposed that credit be given to power plants with 90-day fuel supplies on site so that they could operate during an emergency including extreme weather or a natural or man-made disaster.
FERC is an independent agency, however, and some current members have indicated that the commission would make its own decision. Even one of President Trump’s nominees has stressed FERC’s independence. Robert F. Powelson, who was confirmed in August, said in a speech at the National Press Club on Oct. 16 that “the moment we put our thumbs on the scale is the moment we bastardize the process.” In an earlier speech on Oct. 4, Powelson said “we will not destroy the marketplace.”
Over the past quarter century, FERC has helped create regional electricity grid operators with the ability to accept bids from power plants to supply electricity to the grid. The competition has attracted tens of billions of dollars of investment in natural gas and renewable power sources.
The former commissioners’ letter to FERC said Perry’s proposal “would be a significant step backward from the Commission’s long and bipartisan evolution to transparent, open, competitive wholesale markets” and that it “would instead disrupt decades of substantial investment made in the modern electric power system, raise costs for customers, and do so in a manner directly counter to the Commission’s long experience.”
The group wrote that “subsidizing resources so they do not retire would fundamentally distort markets. The subsidized resources would inevitably drive out the unsubsidized resources, and the subsidies would inevitably raise prices to customers.”
It said that “investor confidence would evaporate and markets would tend to collapse. This loss of faith in markets would thereby undermine reliability.”
Pat Wood III, who was chairman of FERC under President George W. Bush, said that “I understand the politics. I’m sympathetic.”
But he said that the reliability Perry said he wanted to favor had more to do with transmission and distribution than it did with they type of fuel used.
Wood currently serves as chairman of the board of Dynegy, which has about a dozen coal plants, and as a director of SunPower. He said that when Illinois recently gave subsidies to nuclear plants in the state, Dynegy had to shut down some units as a result.
“We’re getting shoved aside,” he said. “Subsidizing one resource ends up shutting down another one.”
The group’s letter acknowledged that there are federal tax subsidies for every kind of fuel, but it said that “one step the Commission has never taken is to create or authorize on its own the kind of subsidy proposed here.”
FERC will be accepting comments on Perry’s proposal from a wide variety of groups and individuals.
Sen. Ron Wyden (D-Ore), the ranking Democrat on the Senate Finance Committee, said Thursday that FERC should shelve the Perry proposal.
“Arbitrarily propping up a dying industry goes against what the GOP has long claimed is its goal – an all-of-the-above energy strategy,” Wyden said in a statement. “This rule clearly picks winners and losers in energy resources, which robs taxpayers of the benefits of competitive markets.”