Trump’s Plan to Bail Out Coal May Be Unraveling Under New Regulator

Source: By Catherine Traywick, Bloomberg • Posted: Monday, December 11, 2017

Robert E. Murray, right, chief executive and founder of Murray Energy, presented an “action plan” to Energy Secretary Rick Perry in a meeting March 29. (Obtained by The Washington Post/Obtained by The Washington Post) 

The Trump administration, which was looking to have a plan in place by next week to bail out America’s coal country, will instead have to wait until the new year.

Kevin McIntyre, sworn in Thursday as chairman of the Federal Energy Regulatory Commission, asked for a 30-day extension to act on a sweeping proposal by Energy Secretary Rick Perry that would subsidize struggling coal and nuclear plants. Perry, who had called on the commission to come up with a plan by Dec. 11, granted the delay late Friday, saying he “respects the reasons” but “looked forward to swift action.”

McIntyre said in his request that the commission needed more time to consider the flood of comments on the proposal and have a full debate. The move casts uncertainty over the future of a plan that critics say could cost consumers billions. It has drawn united opposition from oil and natural gas producers and clean energy developers, who deride it as a retreat from fair competition in wholesale power markets.

“It’s a hornet’s nest,” said Paul Patterson, a New York-based utilities and power analyst for Glenrock Associates LLC. “Given the complexity of the issue, it’s not surprising that they’re asking for more time.”

Predecessor’s Plan

Perry ordered the commission to consider the plan in September, invoking an obscure 30-year-old statute. The initiative would pay a premium to power plants that store at least 90 days of fuel on site, in an effort to make grids more reliable. Coal and nuclear generators would be uniquely suited because, unlike gas plants, they aren’t fed by pipelines. Wind and solar farms, meanwhile, require no fuel.

The delay threatens to stall efforts by his predecessor, Neil Chatterjee, who had been crafting an alternative to Perry’s plan to curb retirements of coal and nuclear plants. While chairman, Chatterjee had repeatedly said the commission would act on the proposal no later than Dec. 11.

The extension could, on the other hand, potentially give the commission more time to drum up support within the agency for a proposal like Chatterjee’s.

McIntyre and Chatterjee, a former aide to Republican Kentucky Senator Mitch McConnell, didn’t respond to requests for comment.

“It’s clear now that the original approach that emerged from DOE is going to require some work and some modification,” said Mike McKenna, a Republican strategist and president of Washington-based MWR Strategies.

Plant Closings

Critics of the proposal say it could prevent coal and nuclear plants from closing even if they’re not economic to run. That could slow development of gas, wind and solar projects, whose growth depends on aging power plants closing.

“In a power market where demand is not growing, you need to displace something if you want to build something new,” said Ethan Zindler, a Bloomberg New Energy Finance analyst.

Coal companies argue that the current market structure does not adequately compensate the reliable power they supply. While an extension could give the commission time to reach agreement, coal producers aren’t welcoming the delay.

“Any problem worsens so long as solutions are delayed,” said Luke Popovich, spokesman for the National Mining Association.

— With assistance by Jim Polson, Tim Loh, Eric Roston, Jennifer A Dlouhy, Naureen S Malik, and Rebecca Kern