Utilities are warning Energy Secretary Rick Perry to keep his “thumb off the scale” as he considers options for helping the coal and nuclear industry.
Perry is expected to soon announce whether he will use his limited authority under the Federal Power Act to keep coal and nuclear power plants running indefinitely in Ohio and Pennsylvania.
Ohio-based utility First Energy asked Perry to use his section 202(c) emergency “must-run” authority to keep a number of its financially struggling power plants from closing prematurely.
But given Perry’s public remarks that he likely will not use that authority, Perry may be considering other options, including a wartime measure developed during the Korean War to keep power plants operating in support of the war effort.
A letter sent to Perry last week from the Electric Power Supply Association, which represents merchant utility companies, but released Thursday, says the Trump administration also is considering using a little-known provision included in the FAST Act transportation bill, which includes giving Perry the authority to issue emergency orders 15 days at a time to ensure grid security. The president must order the action before the energy secretary can act.
The utilities’ letter details why the options are not the right course. They would distort the market in favor of certain resources, while going against basic free-market principles, according to John Shelk, the president and CEO of the utility group.
“The policy choices facing the administration should not be limited to either the status quo or even more subsidies,” Shelk said, warning that “subsidies are contagious.”
Taking the proposed actions would undermine the federally overseen markets, moving them from being based on competition to being based on subsidies.
“Thus, the policy choices the administration is examining should also include the best choice, which is eliminating discriminatory and fuel-specific ‘thumbs on the scale’ for electricity,” Shelk wrote.
Shelk is part of a large coalition that is opposing the First Energy petition, including both large oil and solar industry trade groups. The coalition supports working with the federal grid regulator on a long-term plan to analyze if there is the need for some emergency relief for nuclear and coal, but only if it is proved necessary.
The Federal Energy Regulatory Commission is examining whether coal and nuclear need market-based relief under the law. Shelk reiterated to Perry the need to allow FERC to finish its work to find a market-based solution that addresses reliability and resilience of the grid.
“The department should not miss this historic opportunity to promote competition and open markets,” Shelk said. “Effective competition will achieve the type of secure, reliable and resilient ‘all-of-the-above’ mix of generating facilities the administration seeks.”
Instead of issuing any emergency relief order, Shelk recommended that Perry start an investigation on the effect of subsidies on the competitive FERC-overseen markets. The review would determine if the subsidies are still needed or should be eliminated.
Shelk also recommended that FERC “swiftly conclude” several pending examinations and issue orders that address “the parasitic and distorting effects of material discriminatory subsidies, both federal and state, whether supply-side or on the demand side of the electric meter.”
