Governors' Wind Energy Coalition

Energy Secretary Rick Perry’s proposal to boost coal and nuclear sent oil and gas interests into an unlikely alliance with renewable energy sources. Now conservative groups are teaming up with greens against the idea.

The Department of Energy’s proposal to the Federal Energy Regulatory Commission would change electricity market rules to boost coal and nuclear plants with the goal of increasing grid resilience.

Virtually every stakeholder besides those connected to the coal and nuclear industries have panned the rulemaking (E&E Daily, Oct. 12). This week, attacks continued to pour in from both ends of the political spectrum.

An analysis from the Sierra Club estimated the proposal — which would allow certain plants to fully recover costs — could lead to price increases for consumers of as much as $14 billion a year.

To get to the figure, the environmental group added last year’s operations and maintenance costs for merchant coal and nuclear plants in the four markets subject to the DOE directive.

“The price tag of Rick Perry’s outlandish directive to FERC is becoming clear now, and it’s more catastrophic than we originally thought,” said Mary Anne Hitt, director of the organization’s Beyond Coal campaign.

Energy interests, including coal, have for years accused environmentalists of pushing policies that hurt consumers. Greens are now accusing their detractors of hypocrisy.

Asked about the costs of his plan, Perry said during a hearing last week: “I think you take cost into account, but what’s the cost of freedom? What does it cost to build a system to keep America free?”

The Sierra Club analysis should be read with some significant caveats. For one, its methods do not take into account factors like natural gas prices falling further if the pro-nuclear and coal plan goes through.

There are also questions about whether one of the markets that the group included in its analysis — Midcontinent Independent System Operator, which handles a big chunk of the middle of the country — is actually subject to the proposal.

Other analyses, the most publicized coming from the consulting firm ICF International Inc., have estimated added consumer costs could be in the area of $1 billion to $4 billion per year.

Tyson Slocum, energy program director with the liberal consumer advocacy group Public Citizen, said regardless of the significant uncertainty surrounding the proposal — which is still subject to FERC discretion — it is worth looking at preliminary numbers.

“I think it’s worth talking about with the caveat that this proposed rulemaking is pretty thin on details and, ultimately, FERC is likely not going to adopt this DOE proposal,” Slocum said.

Ultimately, he said, if the proposal is pushed through, “someone’s going to pay for this new resilience standard, and I think it’s going to be ratepayers.”

Conservative groups

In an analysis published today, Philip Rossetti from the center-right American Action Forum said the plan would likely lead to “an arbitrarily higher value being placed on coal and nuclear.”

Rossetti wrote, “The DOE and FERC are correct that reliability and resiliency in electricity markets have economic benefits that may be undervalued by regulators in the context of policies like renewable portfolio standards that capriciously value one energy source over another regardless of its ability to satisfy industry requirements.

“However, the [proposal] in its current form does little to address that problem,” he wrote. “Rather, the only effect of the NOPR [notice of proposed rulemaking] is to set an arbitrary target of on-site fuel requirements that values coal or nuclear power, regardless of if those sources are able to provide resiliency and reliability at least cost.”

The AAF’s report follows criticism of the plan by the Institute for Energy Research, headed by former Trump transition official Tom Pyle, which called the idea “excessive and unnecessary” and accused DOE of “government favoritism for Secretary Perry’s preferred generation sources.”

What are supporters up to?

The plan’s broad unpopularity does not mean it is without backers.

One of those supporters, coal-heavy utility FirstEnergy Corp., appears to be focused on FERC’s rulemaking docket, submitting comments from companies, organizations and unions.

“First Energy contributes over $15,000 each year to our organization,” read one filing, which was listed initially as submitted by FirstEnergy with United Way of Jefferson County, Ohio, as an “agent.”

“The loss of jobs, tax revenue and the ripple effect of such losses throughout the local economy, will have a severely detrimental impact on the region” if coal and nuclear plant retirements continue, United Way wrote.

A similar comment was filed by the United Way chapter in Beaver County, Pa. FirstEnergy has also filed comments on behalf of Building Laborers’ Local 310, a Cleveland union.

A FERC spokeswoman said the agency considers the “substance of the comments” and not who is filing them.

A FirstEnergy representative declined to comment on the Sierra Club and ICF estimates about the potential increased costs to consumers.

“Though this is a positive step, many details need to be worked out before we know how the final rule will work. I’m unable to speculate on costs associated with the rule,” said Jennifer Young.

The Nuclear Energy Institute, the industry’s top trade association, also did not comment directly on the Sierra Club or ICF analyses.

“Numerous independent assessments demonstrate that preserving existing nuclear plants is one of the least-cost ways to reduce carbon emissions and ensure economic growth. Our nation simply cannot afford to lose its largest, always-on source of non-emitting generation, one which also serves as an economic lynchpin in its host communities,” said Matt Crozat, NEI senior director of policy development, in a statement.