Coal Coal power plant cc by x1klima on FLickr

Published on September 29th, 2017 | by Jeremy Bloom

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Rick Perry’s Energy Department Plans To Prop Up Coal Plants With Direct Subsidies

September 29th, 2017 by  

In a blatant money-grab for the coal industry, Rick Perry’s Energy Department is pushing for direct subsidies to dirty, un-economical coal-fired power plants.

So much for “The government shouldn’t pick winners and losers.” So much for “Let market forces decide.”

Coal power plant cc by x1klima on FLickrIronically, after years of environmentalists urging that the true cost of fuels be figured into pricing equations — including the cost of pollution, health effects, and cleanup — the DOE is now basing its bailout for coal on a similar argument. They claim that “baseload power generators,” including coal, nuclear and hydro, provide an added benefit to the grid over and above their nominal cost.

Perry calls it a matter of National Security.

Stocking up on coal

Here’s the idea:

  • Baseload power is the generation that happens day-in and day-out, regardless of swings in demand (which vary widely from daytime peaks to nightime lows)
  • Baseload also tends to rely on nuclear plants (which can’t be started or stopped very easily) and coal-fired plants (which can be switched on and off fairly quickly).
  • As renewable energy prices come down, there’s an incentive to run solar (as long as the sun shines) and wind (as long as the wind blows). Conveniently, these also generate a lot more during the day, during peak demand.
  • But but but… Coal! Nuclear! These sources tend to come from very expensive plants with huge sunk costs that are no longer cost-competitive. But it’s good to have them around just in case we need them, like during a heatwave.
  • So… subsidies!
  • Perry has filed a Notice of Proposed Rulemaking (NOPR) under the Federal Power Act, directing the Federal Energy Regulatory Commission (FERC) to “accurately price generation resources necessary to maintain reliability and resiliency” and provide for “recovery of costs of fuel-secure generation units frequently relied upon to make our grid reliable and resilient.”

UtilityDive describes how this would work:

Under the NOPR, generating units in wholesale power markets that have a 90-day fuel supply onsite would be eligible for “full recovery of costs.” The plants must be able to provide ancillary and reliability services, be compliant with environmental regulations, and not be subject to cost-of-service recovery by a state.

The rule requires power market operators to “establish just and reasonable rate tariffs for the recovery of costs and a fair rate of return.”

The NOPR does not mention specific generation technologies, but would give immediate assistance to coal, nuclear and hydroelectric generators, which all have multi-day fuel supplies onsite.

DOE draws on themes from the grid study to justify the rule, saying it is necessary to protect from “energy outages expected to result from the loss of this fuel-secure generation” and because of “recognition that organized markets do not pay generators for all the attributes they provide.”

All this comes out of the DOE’s grid study, which was supposed to prove that renewables made the grid more vulnerable, but instead found they made the grid more stable. It also came under fire for rewriting its conclusions to favor coal. Today’s NOPR is a direct result of those manipulated conclusions.

“Secretary Perry’s entire tenure at the Department of Energy has been one effort after another to prop up the coal industry,” said Jim Marston, vice president of the Environmental Defense Fund for clean energy. “His directive to FERC would set aside competition and free markets to instead mandate winners and losers by favoring coal over other energy resources. It would ultimately increase customers’ energy bills and air pollution, and weaken the critical independence of FERC.”

And Mary Anne Hitt, Director of Sierra Club’s Beyond Coal campaign, adds:

“Make no mistake, Perry is shamelessly trying to force electricity customers to pay billions of dollars to prop up old, dangerous, and uneconomic coal and nuclear plants… Perry is ignoring the fact that FERC is an independent agency tasked with listening to stakeholders to fix actual problems with the grid, not imaginary ones that only benefit a few uncompetitive industries – namely coal and nuclear.

“The Federal Power Act clearly states that FERC cannot favor one energy source over others in its rulemakings, and Perry’s ask – without evidence or common sense – seeks to prop up dangerous coal and nuclear plants that can no longer compete in the wholesale market. We are prepared to take to court any illegal rule that props up dirty fossil fuel plants or weakens clean energy’s market access.”

FERC’s independence is pretty much toast already. The new Chairman is Neil Chatterjee, who before Trump appointed him to be the energy watchdog for the country was the energy policy staffer for Senate Majority Leader Mitch McConnell of Kentucky. So… yeah, coal guy. Bigly.

The Myth of Baseload Power

And what about the notion that protecting baseload power is somehow a matter of national security?

Writing at RedGREENandBlue this summer, Bruce McF disputed the very idea that baseload power even exists.

  • In reality, there are no special “baseload electrons” needed to supply baseload power demands, “following load electrons” needed to supply following load power demands, and “peak load electrons” needed to supply peak load power demands.
  • In other words, the electrons needed to meet demands for power are fungible.
  • Instead of Baseload Power, what exists are baseload generating plants. The “Myth of Baseload Power” is simply that baseload generating plants are required to meet the part of power demand that we presently serve using baseload power generating plants.
  • The Baseload Power Myth is, in other words, that the way we do things now is the only way things can be done.

He quotes an Australian academic, Mark Diesendorf, who writes in Baseload power is a myth: even intermittent renewables will work:

The old myth was based on the incorrect assumption that base-load demand can only be supplied by base-load power stations; for example, coal in Australia and nuclear in France. However, the mix of renewable energy technologies in our computer model, which has no base-load power stations, easily supplies base-load demand. Our optimal mix comprises wind 50-60%; solar PV 15-20%; concentrated solar thermal with 15 hours of thermal storage 15-20%; and the small remainder supplied by existing hydro and gas turbines burning renewable gases or liquids. (Contrary to some claims, concentrated solar with thermal storage does not behave as base-load in winter; however, that doesn’t matter.)

In other words, the baseload power plants we have today are already obsolete; subsidizing them will only delay the change-over. And make it much more expensive.

Leaving it all up to FERC

“This is an unprecedented attack on American’s health, environment, and wallets,” said Marston, “Undermining and politicizing our grid will only increase electricity bills throughout the nation while increasing dangerous air pollution in our communities.”

On the other hand, things may not go so smoothly. As we’ve seen with taxes and with health care, the Trump administration has a history of making vague statements that undo Obama-era accomplishments and please the base, and then tossing the ball of snakes at the people who actually know what’s going on and saying, “Here, figure out how to make this work.”

Here’s UtilityDive again:

When FERC does act, it will open a regulatory proceeding to detail how generation attributes should be valued. Already, some energy lawyers have expressed skepticism that the agency can finalize a rule under DOE’s proposed timeframe. On Twitter, energy lawyer Ari Peskoe, senior fellow in electricity law at Harvard Law School’s Environmental Policy Initiative called the 60-day proposal “practically and legally impossible.”

(Coal power plant photo CC by x1klima on Flickr)





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About the Author

Jeremy Bloom is the Editor of RedGreenAndBlue.



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