Strange bedfellows lobby Perry on coal plant subsidies

Source: Rod Kuckro, E&E News reporter • Posted: Thursday, May 10, 2018

A seldom-seen coalition of business interests is making another run at Energy Secretary Rick Perry as his department contemplates ways to subsidize the continued operation of coal and nuclear plants struggling to make money in today’s electricity markets.

The group provided a lengthy, cautionary legal analysis of a request from Ohio-based utility FirstEnergy Corp. that the Energy Department declare an emergency and direct the regional grid operator to subsidize unprofitable coal and nuclear plants. The analysis outlined how the groups would challenge a decision by DOE to “use any of its emergency authorities as a means to provide economic support to a favored class of power plants.”

The legal analysis was submitted by Advanced Energy Economy, the American Petroleum Institute, the American Wind Energy Association, the Electric Power Supply Association, the Interstate Natural Gas Association of America and the Natural Gas Supply Association.

“The orderly retirement of inefficient, aging power plants in 2020 and 2021 does not constitute an emergency,” they told Perry.

“FirstEnergy’s claim that an emergency exists rests entirely on the observation that some coal and nuclear plants — most importantly those owned by FirstEnergy — are losing money and are therefore likely to retire in the coming years,” the group said. “That is not an emergency. The retirements will unfold over a period of years and will be carefully planned.”

They noted that grid operator PJM Interconnection, which oversees the region where FirstEnergy plants are located, has said the regional transmission system will be reliable even if FirstEnergy’s baseload generating plants close as scheduled.

Their analysis was especially pointed about the notion that the federal government could invoke the Korea War-era Defense Production Act to either set prices or compel “market participants to buy products or services they do not wish to buy.”

Moreover, to invoke the concept of national defense for what is transparently a domestic effort to boost an uneconomical segment of industry would be an “unprecedented abuse of the Act,” they said, reminding Perry that the law has enjoyed bipartisan support that could be threatened if DOE acts to invoke it to save coal and nuclear plants.

Last week, Commissioner Robert Powelson of the Federal Energy Regulatory Commission warned against the use of the 1950 wartime law to support the continued operation of coal and nuclear plants that are unable to make money in today’s electricity markets. He said invoking the laws “would lead to the unwinding of competitive markets in this country.”

The groups came together before in October, when they went after Perry when he directed FERC to develop a rule to subsidize coal-fired power plants and nuclear reactors that face being driven out of business by cheaper energy alternatives.

The directive from Perry applied to the electricity markets in the eastern United States — managed by the PJM Interconnection, ISO New England and the New York Independent System Operator.

At the time, Malcolm Woolf, senior vice president at Advanced Energy Economy, said, “The group of industry associations is so wide-ranging across industry segments that some might consider us strange bedfellows. Yet we’re united in opposing this proposed rule.”

On Monday, government watchdog Public Citizen made several requests of Perry regarding the March 29 request by FirstEnergy Solutions “that DOE declare a national emergency under Section 202(c) of the Federal Power Act for all nuclear and coal power plants in PJM for a minimum of four years.”

The letter from Tyson Slocum, the group’s energy program director, requested that all communications on FirstEnergy’s request be part of the public record; that opinions and communications by and with White House lawyers referenced in an Aug. 4, 2017, letter from Murray Energy Corp. CEO Bob Murray should be made public; and that communications about the design, development and dissemination of a DOE national lab grid analysis that were released just ahead of FirstEnergy’s request to DOE should be public.