Energy Secretary Rick Perry is considering a request from utility First Energy for an emergency order to save nuclear and coal power plants in the regions where it operates.
The Energy Department confirmed the request by the utility company for an emergency must-run order under section 202 of the Federal Power Act, which gives Perry the authority to direct the “temporary” continued use of power plants in circumstances that include war, energy shortages or sudden surges in demand.
“DOE has received a 202c application from First Energy which will now go through our standard review process,” Energy Department spokeswoman Shaylyn Hynes wrote in an email to the Washington Examiner.
First Energy defined the “threat” to the grid as stemming from the the retirement of power plants that have many years of useful life “but cannot operate profitably under current market conditions,” according to the letter requesting action soon.
The company announced Wednesday that it would close three nuclear power plants in Ohio and Pennsylvania over the next four years, asking those states to enact policies to save them.
The company wants Perry’s emergency order to do two things: First, direct “certain existing nuclear and coal-fired generators” that it operates in the region controlled by PJM Interconnection, the federally overseen grid operator, “to enter into contracts” to provide electricity “as needed to maintain the stability of the electric grid.” Second, First Energy wants Perry to order PJM to “promptly compensate at-risk merchant nuclear and coal-fired power plants for the full benefits they provide to energy markets and the public at large, including fuel security and diversity.”
First Energy President Donald R. Schneider said in a statement that “continued inaction” could lead to “significant, negative outcomes for the approximately 65 million people living and working” in the region controlled by PJM.
He criticized the grid operator for demonstrating “little urgency to remedy this problem” and pressed Perry to take “immediate action” to address the emergency.
“Such quick and decisive intervention is necessary to avoid a crisis point where such baseload generation will cease to exist in competitive markets, and to ensure that nuclear and coal-fired generators operating within PJM are compensated fairly for their costs and the benefits that they provide such that they can continue to operate and ensure a dependable, affordable, safe, secure, and clean supply of electricity,” Schneider added.
The statement from the company uses a study released by the Energy Department’s National Energy Technology Laboratory this week as justification for Perry taking action. The report focused on the “threat” posed by coal plant retirements if another deep-freeze, like the one that hit the region in January, were to occur again.
The report raised the specter of blackouts if coal plants were taken offline during a similar weather event. “Had nuclear and coal-fired not outperformed during that period, PJM and the Northeast grid would likely have faced outages and other reliability problems,” First Energy said, citing the report.
But environmental groups aren’t buying the arguments, saying the request is more about profits than grid security.
“First Energy is desperate to pad its bottom line at the expense of its customers,” said John Moore, the head of an arm of the Natural Resources Defense Council that focuses on power grid issues. “The region is awash in cleaner and cheaper resources, and First Energy can’t compete in the market.”
Moore said the company’s move “is stunning” in the wake of the Federal Energy Regulatory Commission rejection of a proposed rule from Perry that called for market-based incentives to help struggling nuclear and coal plants. He also pointed out that Ohio has “rejected these bailouts.”
The Energy Department does not have a track record of approving a request similar to the scope of First Energy’s.
A similar request was made last year by coal mining magnate Bob Murray on the behalf of First Energy, but it was rejected. However, the Murray request defined the emergency action as stemming from lost coal jobs if the utility’s coal plants closed. The request stretched the boundaries of the Federal Power Act.
Nevertheless, Perry does have a record of approving 202c orders when they make sense. The order hadn’t been granted for nearly a decade before Trump was elected to office.
Dominion Energy received one from Perry in June, allowing PJM to direct operation of the company’s Yorktown, Va., coal plant “under strictly limited conditions for reliability purposes.” The order lasted through December. Perry also issued an emergency order for a coal plant to continue operating in Oklahoma last April. Before those two orders, none was issued beyond 2008, according to the Energy Department.
