Fossil fuel plants get boost from regulators

Source: By Josh Siegel, Washington Examiner • Posted: Thursday, December 19, 2019

FOSSIL FUEL PLANTS GET A BOOST FROM REGULATORS: The Federal Energy Regulatory Commission acted Thursday to help fossil fuel plants struggling to compete with cleaner sources, in what critics say is an overt attempt to keep coal and gas plants alive longer during the energy transition — a key objective of the Trump administration.

FERC voted 2-1 in a long-anticipated action to revise market rules that govern how different energy resources are priced in PJM, the nation’s largest power market.

The changes, backed by FERC’s two Republicans, are designed to raise payments to non-subsidized sources of energy — primarily coal and gas plants — to combat state policies that subsidize carbon-free renewables and nuclear power.

PJM covers a territory representing 65 million people in 13 states from Illinois to Virginia plus Washington, D.C., about one-fifth of the U.S. power supply, many of which have policies to boost carbon-free energy sources in order to combat climate change.

“The commission is acting to protect the market from those subsidies to establish just and reasonable rates through competition,” said Republican Chairman Neil Chatterjee, speaking at FERC’s monthly public meeting. His Republican counterpart, Bernard McNamee, said renewable and nuclear generators receiving state subsidies “fundamentally undermine the competitive markets.”

Remember: The Trump administration tried and failed to get FERC to approve a more expansive policy applying in power markets beyond PJM that would have directly subsidized coal plants that can store fuel on-site.

The coal industry welcomed FERC’s new changes, arguing that state subsidies for cleaner energy sources artificially distort the market and keep prices too low.

“Far too much of the nation’s essential coal fleet has been lost to market manipulation,” said Rich Nolan, president & CEO of the National Mining Association. FERC’s action, he said, “aims to restore fairness to the marketplace and is a timely first step in addressing the loss of the nation’s baseload generating capacity.”

Democratic states and clean energy groups argue the changes discriminate against carbon-free resources, undermine individual states’ clean energy policies, and would raise consumer prices.

Democratic attorneys general have threatened to sue over FERC’s changes, contending that the commission is interfering in state policy-making that aims to counter the market’s failure to account for fossil fuels’ climate pollution costs.

Richard Glick, FERC’s lone Democrat, said the Republican-backed order is a “direct attack on state generation resource decision making.”

Glick, who opposed the order, added that if “you artificially increase capacity prices, which this order does, we are keeping existing capacity online longer.” Coal or gas plants that “might be uneconomic tomorrow might be economic [in the future] once you raise the prices.”

FERC’s order comes in response to changes proposed by PJM to impose a Minimum Offer Price Rule setting a price floor for new generation resources to combat below-cost bids from subsidized renewable and nuclear sources.

The rule adopted by FERC only applies to new clean energy resources that receive state subsidies. FERC could have gone further to target existing renewables. Glick estimated that the rule will impact 38 gigawatts of new renewable facilities in the pipeline that haven’t been built yet. His staff projects the changes could raise capacity prices at least $2.4 billion per year for consumers.