August 24, 2017 Read More →

Long-Awaited U.S. Government Energy Report Concedes Electricity-Generation Market Forces Are Driving Decline of Coal and Nuclear

Wall Street Journal:

A widely anticipated federal report suggests minor market reforms can help ensure a reliable electric power grid and shies away from handouts to struggling coal and nuclear-power producers.

The Energy Department study of the electric grid says cheap natural gas is the primary culprit behind dozens of coal and nuclear plant closings in recent years. Renewables and expanding regulations are only secondary factors, says the study, which suggests more research investment can help the grid better adapt to increasing wind and solar power.

When Energy Secretary Rick Perry commissioned the study in April, some in the coal and nuclear industries anticipated that it would encourage the federal government to help them. And critics alleged rhetoric from Mr. Perry suggested he was prescribing conclusions for a rollback of regulations or government incentives for renewable power.

“It is apparent that in today’s competitive markets certain regulations and subsidies are having a large impact on the functioning of markets, and thereby challenging our power generation mix,” Mr. Perry said in a letter issued Wednesday along with the study results. “It is important for policy makers to consider their intended and unintended effects.”

But the report called those regulations and subsidies secondary factors, and it shied away from major policy initiatives. Senior staff members who worked on the study said that in such a short time their work amounted to bringing more attention to the changing risks of blackouts or attacks on the grid. And their prime recommendations urge regulators and grid-operators to speed up ongoing, but slow-to-come policy changes.

“Current rules that dispatch power plants on a least cost basis are in the best interest of consumers and the economy and should not be tampered with lightly,” said John E. Shelk, president and chief executive of the Electric Power Supply Association, an industry group that represents non-utility power producers, many of which favor natural gas.

It is the second setback this week for a coal industry that has supported Mr. Trump. The Associated Press reported Tuesday that the department rejected a request for emergency intervention to keep coal-fired plants from closing. The request came from Murray Energy Corp., one of the country’s largest coal miners. It will go bankrupt this year without department help, its leaders said in letters obtained by The Wall Street Journal.

There will be “devastating consequences from further inaction by your office,” Murray’s chief financial officer Robert Moore wrote in a letter to Mr. Perry last week.

Mr. Perry is now poised to accept recommendations from his staff that aren’t nearly so dramatic. Their report’s top recommendation is for regulators to change how they price electricity to reward steady production, common at nuclear and coal-fired plants. Other recommendations include cheaper and faster permitting for fossil fuel infrastructure, and increased research and development on integrating renewable power.

More: ($) Minor Market Reforms Are Called Enough to Support Electric Grid: U.S. report offers little in way of help for coal and nuclear-power producers

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