Bob Murray, the CEO of coal giant Murray Energy, said Friday he was "disappointed" with the Federal Energy Regulatory Commission's move to delay a request to subsidize coal and nuclear plants, and a major utility that he supplies warned that some power plants may have to shut down soon as a result of the delay.
“We must have the plan ordered by Perry enacted by FERC,” Murray told the Washington Examiner in an interview. “We must have it. The 30-day delay is disappointing. I am concerned. It needs immediate action. This would be the most significant action by the federal government in my 60 years in the electric power and coal industries.”
First Energy Corp., a utility and customer of Murray's, warned Friday that FERC's delay could force more coal and nuclear plants to close.
Jennifer Young, a spokeswoman for FirstEnergy, said the company is reviewing whether to close or sell power plants, a decision that could be impacted on how FERC rules on Energy Secretary Rick Perry’s proposal.
“It’s important for new members of the commission to understand the critical role of 24/7 power sources like coal and nuclear and the challenges created by premature retirement of these plants,” Young told the Washington Examiner in an email. “Without prompt action, more of these facilities will close, jeopardizing the ability to provide clean, reliable and affordable power to customers. We urge FERC to complete its review of the proposed rule and take action in a timely matter to help ensure the long-term resiliency and stability of the U.S. electric system.”
FERC is considering a proposal from Perry to subsidize coal and nuclear plants. Perry’s plan would rewrite the rules governing wholesale power markets to reward power producers that are able to store enough fuel for 90 days of generation on-site, a condition coal, nuclear and some hydropower plants can fulfill.
Coal, once the largest source of U.S. electricity generation, now represents less than a third of the power market. Cheaper, cleaner natural gas has replaced coal at power plants around the country, supplying more than a third of the nation’s electricity, while renewables have become increasingly competitive.
Kevin McIntyre, FERC’s newly sworn-in chairman, told Perry on Thursday the commission needs a 30-day extension before it can rule on his proposal to ensure “adequate time for the new commissioners to engage fully in deliberations.” Perry had been expecting FERC to rule by Dec. 11.
While Murray and First Energy opposed the delay, other energy industry representatives welcomed the move to push back a decision on what, if anything, to do with Perry’s proposal, which many see as a threat to competitive power markets by propping up failing coal and nuclear plants at a high cost to consumers.
“A delay makes a lot of sense,” said Todd Snitchler, group director of market development at the American Petroleum Institute, the largest oil and gas lobbying group in Washington. “The new chairman probably wants the opportunity to evaluate the record and get his feet wet. We think extending the process is helpful in arriving at the best possible outcome. It is a sign that he [McIntyre] is supportive of markets, as are we, and we are hopeful that will play out as we move forward.”
FERC, which is independent, has the authority to approve, modify or outright reject Perry’s plan. McIntyre said in his letter that FERC has received more than 1,500 comments since soliciting public response about the proposal on Oct. 2.
Murray Energy, America’s largest privately-owned coal company, is uniquely set up to benefit from Perry’s proposal. Perry’s narrowly written proposal would mostly affect power plants in parts of the Midwest and Northeast where Murray Energy is the predominant supplier.
Murray met with Perry on March 29 to discuss the Energy Department’s forthcoming grid study that later became part of the justification for the proposed rule that FERC help coal and nuclear plants, Murray told the Washington Examiner.
A month before the meeting, FirstEnergy said it was considering filing for bankruptcy on behalf of its merchant division, FirstEnergy Solutions.
But Dynegy Inc., a power company with about 9.5 gigawatts of coal-fired capacity, opposes Perry’s proposed rule because of how it would distort the market and favor specific industries and companies.
Dean Ellis, Dynegy’s executive vice president regulatory affairs, told the Washington Examiner that FERC delaying its decision on the rule shows the commission is serious about developing a market-based solution.
“The additional time gives FERC the ability to put out a more thoughtful response rather than a rushed and hurried response, and it also gives FERC’s new commissioners the ability to shape the policy outcome,” Ellis said. “If there is a need for reforms related to resilience or reliability, they can be best served through a market-based, fuel neutral approach.”
McIntyre was just sworn in as FERC chairman on Thursday. Another new commissioner, Richard Glick, a Democrat, was sworn in Nov. 29.
Neil Chatterjee, a Republican who served as FERC chairman on an interim basis but remains on the board after McIntyre took over, has expressed strong support for adopting the proposed rule in some form. He has said the commission would act on an “interim” version of the proposal no later than Dec. 11.
McIntyre and Glick, however, stressed in their September confirmation hearings that they would adhere to the commission's basic duties of approving and regulating the interstate transmission of electricity, natural gas and crude oil, without favoring one energy source over another.
The other FERC members, Robert Powelson, a Republican former Pennsylvania energy regulator who joined the board this summer, and Cheryl LaFleur, a Democratic holdover from the Obama administration, have also reacted skeptically to Perry's plan.
Devin Hartman, who studies electricity policy at R Street Institute, a free-market think tank that opposes Perry’s rule, said FERC’s delay on a decision could mean there is a lack of consensus on Chatterjee’s proposed interim fix.
“Chatterjee is the only one among the five commissioners who has showed clear enthusiastic support for going out of the market to help base load [coal and nuclear] resources,” Hartman said. “The delay is just further indication that this proposed rule is not going to go through, at least nothing close to its current form.”
Murray, in an interview, rued over recent coal plant closures. More than 20 coal plants have closed this year, and half of America’s coal fleet has closed since 2010.
Murray would not say what FERC’s delay on action would mean for his own coal plants, but said he fears the unknown.
“I don't know; every day when there’s another coal closure, it's a surprise,” Murray said. “I don't know what is going to happen if nothing is done. I do know what has been happening is not good for America.”