The Federal Energy Regulatory Commission on Monday unanimously rejected a proposal by Energy Secretary Rick Perry that would have propped up nuclear and coal power plants struggling in competitive electricity markets.
At the same time, the commission said it shared Perry’s stated goal of strengthening the “resilience” of the electricity grid and directed regional transmission operators to provide information to help the commission examine the matter “holistically.” The operators have 60 days to submit materials. At that time, the agency can issue another order.
Perry’s proposal favored power plants able to store a 90-day fuel supply on site, unlike renewable energy or natural gas plants.
The plan, however, was widely seen as an effort to alter the balance of competitive electricity markets that federal regulators have been cultivating since the late 1980s. Critics said it would have largely helped a handful of coal and nuclear companies, including the utility FirstEnergy and coal-mining firm Murray Energy, while raising rates for consumers.
“The Commission’s endorsement of markets does not conflict with its oversight of reliability, and the Commission has been able to focus on both without compromising its commitment to either,” the FERC said in an order.
The FERC said while it had not used the term “resilience,” it had pursued policies that would “ensure the uninterrupted supply of electricity in the face of fuel disruptions or extreme weather threats.”
Perry issued a statement saying “as intended, my proposal initiated a national debate on the resiliency of our electric system.”
But most analysts saw the decision as a setback for the administration.
“This outright rejection of subsidies for coal and nuclear shows that Commissioners of both parties have little interest in manipulating electricity markets in favor of any fuel source,” said Paul Bledsoe, a former consultant at the Obama-era Energy Department, now a lecturer at American University’s Center for Environmental Policy.
“The law and common sense prevailed over special interests today,” John Moore, director of the Sustainable FERC Project Coalition, said in a statement. “The FERC correctly found that the Department of Energy’s proposal violated the basic requirements of the Federal Power Act. Secretary Perry’s plan would have subsidized coal and nuclear plants with a 90-day fuel supply yet Perry never explained why those plants were inherently more reliable or resilient.”
Although the FERC could issue a new order after submissions by regional grid operators, the language in the current order suggested it would stand by the trend toward free competitive electricity markets.
“This is really FERC saying that any change we make to the grid is going to be grounded in fact,” Greg Wetstone, president of the American Council on Renewable Energy, said in an interview. “This is shifting to a real-world process based on what’s actually happening to the nation’s grid, and that’s great news for renewable energy.”
Perry had argued that coal and nuclear power plants would fare better in extreme weather such as the polar vortex that gripped large parts of the nation just four years ago. Yet opponents of Perry’s plan said the current bout of extreme cold undercut Perry’s argument as regional grids had excess power on hand and many power plants switched from natural gas to oil largely because of cheaper prices. One of the few major outages was the result of a failed transmission line that took a New England nuclear plant offline.
The FERC order issued Monday included three members’ concurring comments that revealed some difference of opinion beneath the unanimous vote. Cheryl LaFleur, a Democrat, said “even had a resilience issue been demonstrated, I have serious concerns about the nature of the proposed remedy, which would address the issue not through market rules but through out-of-market payments to certain designated resources.” She said Perry’s proposal “sought to freeze yesterday’s resources in place indefinitely.”
By comparison, Neil Chatterjee, a Republican and former aide to Senate Majority Leader Mitch McConnell (R-Ky.), wrote in his separate comments that “I applaud Secretary Perry’s bold leadership in jump-starting a national conversation on this urgent challenge,” and expressed concern about the “many nuclear and coal units particularly at risk of economic retirement despite their significant contribution to bulk power system resilience.”
Chatterjee said he would have preferred an “interim step” in response to Perry. He said the FERC order to seek more information about resilience was “only the first step” rather than a final one.
The other members of the commission are Chairman Kevin J. McIntyre and Robert F. Powelson, both Republicans, and Richard Glick, a Democrat. LaFleur is the only member appointed before Trump took office.