DOE has no ‘regulatory or statutory ability’ to create coal, nuclear bailout, says Perry

Source: By Catherine Morehouse, Utility Dive • Posted: Thursday, June 13, 2019

Perry’s Tuesday remarks mark a departure from his previous commentary on DOE’s efforts to save increasingly uneconomic coal and nuclear plants.

At CERAWeek in March, the secretary told reporters DOE was still “looking for answers” to plant retirements. And last month, Assistant Secretary of Fossil Energy Steven Winberg told Senators the department was working with the Colstrip plant in Montana “see what opportunities there are to keep it open.”

But Perry on Tuesday seemed more inclined toward state-level intervention in economic assistance.

“Each state has their own economic right to either put tax credits, tax breaks [or] incentives in place,” Perry said, responding to a question about his stance on House Bill 6 in Ohio, which would provide $190 million in nuclear subsidies annually through 2026.

“I will say I’m a big fan of the ‘all of the above’ energy strategy, and for your state to be successful, you need to have tax policy, regulatory policy, that sends the message that capital is welcome in your state,” he said of the bill.

He’s voiced support for Pennsylvania’s nuclear bailout bill, which he said represented “thoughtful, competitive programs where states don’t have to rely upon the federal government to support a particular industry sector.”

Though the secretary said he hasn’t definitively “seen any movement” from the White House or FERC on any plans to federally subsidize or bail out coal and nuclear power, he did acknowledge conversations on how to preserve the resources were ongoing.

“The previous administration in particular didn’t like coal. They were clearly not looking to help the coal industry out at all. I just think we need it all,” he said.

FERC fell under scrutiny last August after its Chief of Staff,  Anthony Pugliese, told a nuclear group the commission was working with federal officials to identify “critical” power plants, seen by many as a first step in a larger two year federal bailout plan the White House released last June.

That plan is currently on hold, but the White House still calls for supporting uneconomic coal plants, even when industry finds retiring those units will save money.

In February, President Trump tweeted to the Tennessee Valley Authority, urging the utility to keep its Bull Run coal plant and Unit 3 of the Paradise coal plant open. But the TVA board of directors voted to close the units, which it projects will ultimately save customers over $1 billion.

Dive Brief:

  • The Ohio House on Wednesday passed a bill 53-43 that would subsidize nuclear and coal plants while eliminating a green energy mandate that now pushes utilities to more renewable energy and efficiency resources.
  • The “clean air program” would raise $190 million annually, charging ratepayers up to $1 monthly through 2026, mostly to fund First Energy Solutions’ Davis-Besse and Perry nuclear plants. The bill would also allow electric distribution utilities to charge customers a monthly fee, which requires state regulatory approval, to recover part of their ownership stake in Ohio Valley Electric Corporation’s (OVEC) Kyger Creek and Indiana-based Clifty Creek coal-fired plants.
  • The bill is expected to pass the Senate due to the support of Republicans and Gov. Mike DeWine, R, according to research firm ClearView Energy Partners VP Tim Fox, although state senators haven’t gone on the record to support nuclear subsidies. Ohio is expected to enact a nuclear assistance program before June 26, based on the deadlines FES has set to continue operation of its nuclear plants, Fox said in a note to clients.

Dive Insight:

While the House brought back some renewable provisions that had been stripped out in committee, advocates for renewable energy, natural gas and consumer rights bemoaned the passage of the bill, hailing it as a way to achieve President Donald Trump’s goal to subsidize coal plants.

By repealing the state’s broad renewable portfolio standard, the bill would eliminate a monthly surcharge of less than $5 from residential customers to help utilities obtain 12.5% of their power from renewable resources by 2027.

But while the bill eliminates the mandate, it contains other renewable provisions that helped garner support from 10 of 38 Democrats.

One amendment helped reduce permitting risk for the approval of small on-site industrial wind facilities, increasing the maximum from 5 MW to 20 MW for on-location self-generation wind-farms that could avoid Ohio Power Siting Board review. Another made room for five large-scale solar power projects to qualify for funding from the “clean air” program, after a House committee had stripped the bill of most of its renewable components.

But while some were glad to see at least some renewable provisions in the bill, oil and gas groups blasted the nuclear support provisions as unnecessary.

A report from the former senior economist of PJM Interconnection, Paul Sotkiewicz, says the FES nuclear plants make billions. The analysis, released on Tuesday published by E-Cubed Policy Associates, concludes that “Ohio nuclear resources are profitable on an operating basis and have no incentives to retire for the foreseeable future, therefore there is no need for additional out-of-market financial support.”

“This vote essentially bails out the profitable Davis-Besse and Perry nuclear power plants owned by FirstEnergy Solutions, and subsidizes two coal plants,” Chris Zeigler, American Petroleum Institute Ohio’s executive director, said in a statement.

“Independent research now confirms that the entire pretext for bailing out FirstEnergy’s power plants is bogus. Why should Ohioans be forced to bail out a profitable company?” Dick Munson, Midwest regulatory and legislative affairs director for the Environmental Defense Fund, said in a statement.