Team Trump‘s plan to save coal and nuclear plants is likely to fall short
The Trump administration has a plan to keep coal and nuclear power plants running, but analysts are skeptical it will do enough to prevent more of the facilities from closing down.
Energy Secretary has coal-fired plants and nuclear power stations to compensate them for the reliable energy they provide to the nation‘s grid. The Federal Energy Regulatory Commission, which Perry directed to study the issue, is scheduled to deliver a decision on the proposed rule on Monday.
On Thursday, incoming FERC Chairman Kevin McIntyre for a 30-day extension.
Ahead of that decision, energy analysts say the plan — along with a related proposal from a regional energy organization — would likely boost cash flow for some embattled power producers. But those benefits might not be big enough to dissuade them from shuttering noncompetitive plants, even as the plan raises electric power costs for ratepayers.
In vowing to revive the coal industry and stop the decline of nuclear energy, President is fighting against a tide of coal and nuclear power plant closures. That trend is being driven by growing competition from cheap, cleaner-burning natural gas and renewable energy, as well as weak power prices and environmental regulations.
Perry‘s rule would apply in several regional wholesale energy markets established during a wave of deregulation in the early 2000s. Companies that generate electric power and sell it into these markets have struggled to find a winning business model in the face of seismic shifts in the utility space.
Some say Perry‘s plan is too little, too late. Many publicly traded utilities have for years been shedding coal and nuclear power plants, says Travis Miller, director of utilities research at Morningstar.
“If we rewind 10 years, this would be a major issue for many of the utilities,” he said. “Now, it‘s almost irrelevant for the publicly traded utilities. But it‘s very relevant for the market.”
The plan would raise electric power prices by hundreds of millions or billions of dollars per year, three separate studies found. The range is wide because there are few details about the plan.
Asked by Democrats about rising costs , Perry said, “I think you take costs into account, but what‘s the cost of freedom? What‘s the cost to keep America free? I‘m not sure I want to leave that up to the free market.”
In Perry‘s view, ratepayers would be rewarded with a more resilient power grid. That‘s because coal and nuclear plants, which keep fuel stockpiles on site, would ostensibly remain online to back up natural gas facilities and wind and solar power.
Over the next decade, power costs could rise between $18 billion and $288 billion under the Perry plan, according to a study by PJM Interconnection, which runs the transmission grid and energy market in all or part of 13 eastern states and Washington D.C. Analysts say Perry‘s rule would mostly affect the PJM region, which includes Pennsylvania, New Jersey and Maryland.
Regional Transmission Organizations, source: FERC
PJM put forward a separate plan last month to change the way electricity is priced in its wholesale market. It would allow inflexible power plants, which include coal and nuclear facilities, to help set the price of energy, which is forecast to boost revenues for all power generators.
Unlike the Perry plan, PJM is not explicitly trying to subsidize coal and nuclear plants. Instead, it aims to better reflect the true cost of delivering power by acknowledging the role that coal and nuclear plants play in supplying the grid and compensating them for it.
That plan would provide some benefits to power plant operators, but it would not be a game-changer, said David Cherney, an energy industry adviser at PA Consulting.