October 2, 2017 Read More →

In Move to Prop Up Coal and Nuclear, Trump Administration Aims to Undermine Gas and Renewables

Utility Dive:

The Department of Energy’s proposed rulemaking to cover the costs of baseload coal and nuclear generators could lead to an unraveling of wholesale power markets if adopted by the Federal Energy Regulatory Commission, energy regulators and industry analysts told Utility Dive.

“This would blow the market up,” former FERC Chairman Jon Wellinghoff, a Democrat appointed to the commission by President Obama in 2010, told Utility Dive. “And you can quote me on that.”

On Friday, the DOE directed FERC to open a rulemaking proceeding to provide “full recovery of costs” for power plants that keep 90 days of fuel supplied onsite. DOE officials wrote that the Notice of Proposed Rulemaking (NOPR) would enhance the resilience of the nation’s electric system and “protect the American people from energy outages expected to result from the loss of this fuel-secure generation.”

The DOE directed FERC, which has the final say over power market regulation, to act on its proposal within 60 days. Energy lawyers say the vagueness of the NOPR language and the need to build a regulatory record will make that nearly impossible, adding that FERC will likely extend its rulemaking timeframe.

Coal and nuclear operators praised the proposal, saying it could enhance power system resilience by ensuring baseload generators threatened by retirement stay online. But much of the sector joined with the former FERC commissioners in criticizing the rule on Friday, saying it could increase customer costs and power sector pollution while actually doing little to enhance system resilience.

“It’s gonna be as expensive as hell,” Wellinghoff said. “Expensive as it can be because we will be paying the full freight on coal and nuclear plants.”

FERC is unlikely to take up the proposal as written, analysts and former regulators agreed, but regulators currently at the agency have indicated they plan to address plant compensation and reliability questions — making the NOPR the Trump administration’s opening salvo in what is likely to be a long and contentious regulatory battle over the future of the fuel mix and competitive electricity markets.

The administration’s concern is that across the nation’s wholesale power markets, low-priced natural gas generation and renewable energy are threatening older coal and nuclear plants, forcing many to retire before the end of their operational lives.

More: How DOE’s baseload power rule ‘would blow the market up’

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