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Wednesday
Jan102018

FERC stands by competitive utility market by rejecting Trump’s nuke-coal bailout

The Federal Energy Regulatory Commission (FERC) unanimously rejected Energy Secretary Rick Perry’s proposal to rig the nation’s competitive wholesale marketing of electricity with a colossally expensive bailout through rate tariffs for financially failing nuclear power and coal-fired generators. On January 8, 2018, the FERC Order terminated the Trump Administration Energy Department’s September 29, 2017 proposed rulemaking for “Grid Reliability and Resilience Pricing.” The FERC regulates interstate electricity and gas transmission as well as the licensing of hydroelectric dams.  

In October 2017, the Department of Energy (DOE) had ordered the FERC to open a proposed rulemaking aimed at providing full cost recovery for financially ailing plants that have 90-days of fuel stored onsite as a national security measure to assure electric grid reliability and resilience during disruptive events like extreme weather. Secretary Perry’s disingenuous attempt was in fact more focused averting the impending economic failure and closure of increasingly expensive and unreliable nuclear power plants and coal-fired generators. But merely having a 90-day onsite fuel supply, such as enriched uranium fuel rods or a humongous coal pile, does not assure grid stability during extreme events. To the contrary, when hurricane force winds cause perturbations on the electrical transmission lines that supply 100% power to an operating reactor’s safety systems, nuclear power stations are designed to automatically shut down. Federal safety standards, in fact, require all U.S. nuclear power stations to manually SCRAM once a hurricane’s sustained wind exceeds 73 miles per hour (Category 1). It is because of safety concerns that nuclear power plants cannot re-energize or “black start” the electrical grid even once its repaired.  Similarly, extreme cold weather is responsible for shutting down coal-fired generators when coal piles freeze solid as did during the Polar Vortex of 2014. A frozen coal pile cannot be efficiently transferred as fuel to the generator’s furnace.  

Critics of Perry’s rulemaking, including Harvey Peskoe, a senior fellow of electricity law at the Harvard Law School of Environmental Policy Initiative, pointed out that DOE didn’t bother to make a cogent argument nuclear power’s reliability and failed to even define “resilience” of fossil and fissile power generators. What is crystal clear from expert and former regulators testimony alike is just how unpredictably expensive the Trump nuke and coal bailout was going to be. Former FERC Chairman Jon Wellinghoff was quoted to say “It’s going to be as expensive as hell. Expensive as it can be because we will be paying the full freight on coal and nuclear plants.”

Meanwhile, FERC is predicting an additional 116 gigawatts of renewable wind and solar power to be installed in the US by 2020 with the continued decline of coal and nuclear over the same timeframe.