October 31, 2017 Read More →

‘Unusual Alliances’ in Broad Ohio Opposition to Federal Coal Bailout

Midwest Energy News:

Ohio energy companies, state agencies and other groups are forming some unexpected alliances in their positions for and against a federal proposal to subsidize coal and nuclear power over other forms of electricity.

The proposed rule from the Department of Energy calls on FERC to revise its pricing rules to guarantee recovery of costs and profits for various coal and nuclear plants with on-site fuel storage. The move would protect those plants from some of the competition from natural gas generation and, to a lesser extent, from renewables.

“This case is about whether Ohioans and other customers across the country will be made to subsidize uneconomic power plants at a time when Ohioans should be benefitting in their electric bills from lower prices in the competitive generation markets,” said a filing by the Office of the Ohio Consumers’ Counsel with federal regulators. “Making customers pay subsidies to power plant owners is a bad idea.”

The Public Utilities Commission of Ohio likewise opposed the rule. “The PUCO…is deeply concerned about the additional costs that will be borne by Ohio’s consumers and businesses as a result of the DOE’s proposed rule,” said its filing with the Federal Energy Regulatory Commission. The DOE’s failure to quantify the costs of the proposed rule “is also deeply concerning,” it added.

Grid operator PJM Interconnection said the proposed rule “is unduly discriminatory and, therefore, unlawful in at least two critical respects.” Among other things, the rule would undermine federal law promoting competition in energy markets. Additionally, the “generic mandate of cost recovery improperly ignores the well-established rights of states and wholesale customers to challenge the prudence of particular utility costs.”

PJM’s filing also noted that the Trump-Perry plan fails to consider recent rule changes that it and other grid operators have to follow to ensure reliability. “The shortsightedness of the DOE…suggests that reliability and resilience may not be the underlying goals of the DOE,” the comments noted.

“The energy technologies of earlier generations are unable to compete in the present,” said the Environmental Defense Fund’s filing. In its view, the proposal goes against federal law forbidding “any undue preference or advantage” under the Federal Power Act.

Although the Buckeye Institute in Columbus has not filed formal comments on the proposed rule, the free market group nonetheless opposes it. “Subsidies of any kind make outcomes worse for consumers,” said economic research analyst Quinn Beeson. If federal regulators ultimately determine that any changes are necessary to address a rapidly changing mix of power plants, “they should look to market-based solutions and not something as heavy-handed” as the Department of Energy’s proposed rule, she said.

More: Unusual alliances emerge in Ohio over plan to prop up coal and nuclear plants

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