Largest Grid Operator Opposes Federal Bailout For Coal Plants

Source: By Rebecca Kern, Bloomberg BNA • Posted: Wednesday, October 17, 2018

The CEO of the nation’s biggest grid operator doesn’t back a government plan to prop up money-losing coal plants—at least not while PJM Interconnection LLC assesses the reliability impacts of FirstEnergy Corp.’s planned plant closures.

“We do have time, should we find a problem, to take action within our systems,” Andrew Ott told the Senate Energy and Natural Resources Committee Oct. 11.

PJM will complete its analysis on the reliability of its system in a fuel security report due out Nov. 1.

FirstEnergy, which is located in PJM’s region, announced in August plans to close three coal plants and one diesel oil plant in Pennsylvania and Ohio between 2021 and 2022. FirstEnergy Solutions filed for bankruptcy in March after getting pummeled by low power prices.

Sen. Joe Manchin (D-W.Va.) asked if Ott supports using the 1950s-era Defense Production Act to subsidize resources, an idea Manchin supports. The White House is currently considering using the act to prop up financially challenged coal and nuclear plants.

“If these retirements go at an accelerated rate, I continue to believe that the grid is going to be jeopardized and the security of our nation is going to be jeopardized,” Manchin said at the Senate hearing on “blackstart,” the process of restoring electricity to the grid after system-wide blackout.

But Ott responded, “My offer would be instead of the federal government stepping in, allow us to complete our analysis in the time given.”

Murkowski Against Intervention

Sen. Lisa Murkowski (R-Alaska), chair of the energy committee, said she doesn’t support government intervention in the competitive energy markets.

“I’m more in the camp that says we don’t want to be the one that dictates—that mandates—what those specific solutions are,” she told reporters after the hearing.

Ott elaborated after the hearing saying, “Targeting specific payments to specific resources is a very inefficient answer.”

He said instead that characteristics of generation—such as fuel security and resiliency—should be compensated, not individual plants.

“The most efficient thing is to define the characteristic and then say, ‘OK, I’ll pay for it,’ and the best resource wins and that’s competition,” he said.

Ott last year came out against Energy Secretary Rick Perry’s plan to prop up ailing coal-fired and nuclear plants, saying it would have a detrimental impact on the market.