26806 members

Rick Perry's Energy Plan Calls For Propping Up Coal Industry

"Critics say such a move would upend energy markets, and that the electric grid is strong enough without what amounts to a massive subsidy for coal and nuclear power." (Image credit: Twitter)

Following the controversial study he commissioned last spring, Rick Perry's Department of Energy has issued a Notice of Proposed Rulemaking (NOPR) that looks to prop up coal and nuclear power plants under the specter of a shaky electric grid.

The NOPR requests that the Federal Energy Regulatory Commission (FERC)—an independent agency that regulates electricity transmission—require utility companies to pay not just for the electricity they buy from power plant companies and supply to consumers, but also for the fixed costs associated with power plants that keep 90 days of fuel on site. That sort of “cost recovery,” as it is called, would be largely unprecedented.

The proposal is unequivocally aimed at coal and nuclear power, as unlike wind, solar, or natural gas, these are the only two contributors to the grid that store fuel onsite.

The stratagem is that by allowing full “cost recovery” for those plants, the government is helping to keep them economically viable whereas normal market forces might have led to their closure.

The plan is not without its critics:

But some experts think such an allowance would come at too great a cost, ultimately paid by consumers. Former [Federal Energy Regulatory Commission] FERC chairman John Wellinghoff says the rule would “blow the markets up.” Former Energy Secretary Ernest Moniz has also pointed out carbon emissions should be considered as a more central part of any such equation than resiliency.

Christine Tezak, managing director of research for ClearView Energy Partners, told Scientific American she doesn't expect the policy to be implemented outright, but that it will likely be taken under serious consideration. She is also among the proposal's detractors:

Tezak largely agrees that the proposal is extreme, as written. If adopted, she says, it would “disrupt” the entire system of how electricity is managed around the country. “That is not an overstatement of fact,” she says. Wind, solar and natural gas would suddenly face an uphill economic battle to compete.

It remains to be seen how FERC will respond.

FERC is an independent federal agency; its rules on electricity and energy are not approved or reviewed by Congress or the executive branch but can be reviewed in federal courts.