Powered by Max Banner Ads 

Dumb and Dumber: Feds Want to Subsidize Coal and Nuclear

Dakota Accessbudget shortfallMike Krancer and Keith Naughton
Principals, Silent Majority Strategies, LLC

 

ALERT: Coal and nuclear energy industries threatened by the economics of natural gas want subsidies from taxpayers, joining renewables advocates and everyone else.

DOE just rolled out a Notice of Proposed Rulemaking (NOPR) with FERC that amounts to requiring subsidies for nuclear plants and coal plants. This would be a sea change in how competitive electricity markets work. Some would say the proposal scraps competitive wholesale electricity markets.

The proposed rule would provide for “accurately pric[ing] generation resources necessary to maintain reliability and resiliency.” There would be “recovery of costs of fuel-secure generation units frequently relied upon to make our grid reliable and resilient.”

coal and nuclear

The proposed rule applies to wholesale generating units that have a 90-day fuel supply on site—that means nuclear units and coal units (hydro units also could qualify).  They are the only units with a 90-day fuel supply on site. Such units would be guaranteed “full recovery of costs” and a “fair rate of return”—courtesy of ratepayers of course. What is a “fair rate of return”? Critics would say that it’s as much as the recipients of the largesse can get from consumers.

To be precise, the DOE “NOPR” is really not a proposed Rule itself but, if enacted by FERC, would require FERC to require RTOs and grid operators to establish rate tariffs that ensure such units recover their costs and earn a fair profit.

This is no question that this would be the biggest change to the competitive wholesale electricity market operations since we have had competitive markets. This is terrible news for natural gas producers or developers of natural gas generating plants and consumers who will foot the bill.

coal and nuclear

This proposal would leave clean, economical natural gas generation in the cold.  Natural gas generation would be left to actually have to compete to earn their “full recovery of costs” and a “fair rate of return”.  Moreover, natural gas generation would be competing against folks that have government guaranteed cost recovery and profits, courtesy of ratepayers. Some will view this as the evaporation of the energy cost savings that have driven the new American manufacturing renaissance into the the balance sheets of older uneconomical power plants.

It will be important for participants in the natural gas sector, producers and generators, as well as consumer groups and others to participate actively and smartly in this NOPR process. Strategic building of the comment record will be critical to their cause. They must act very quickly. The DOE says that FERC must act on this NOPR within 60 days after it is published in the Federal Register. If that cannot happen then DOE says FERC should issue the Rule as an Interim Final Rule adopting the DOE proposal, effective immediately, with provision for later modifications after consideration of public comments. Either way, hope is not a plan in this case and natural gas sector participants and others should be involved on this rule making.

Mike Krancer and Keith Naughton are Principals and Co-Founders of Silent Majority Strategies LLC, an energy focused communications, permitting strategy and messaging strategy firm active in the Appalachian Basin on a variety of state and federal messaging, permitting and regulatory matters.

Print Friendly, PDF & Email
Email this to someoneShare on FacebookShare on LinkedInShare on Google+Digg thisFlattr the authorShare on RedditShare on YummlyShare on StumbleUponTweet about this on TwitterShare on TumblrBuffer this pagePin on Pinterest

4 thoughts on “Dumb and Dumber: Feds Want to Subsidize Coal and Nuclear

  1. During Hurricane Irma both FPL’s nuclear power plants were shut down, as safety pre-caution, while the base-loaded Combined Cycle Natural Gas Unit remained on-line. This shows that proposed FERC favorable rates for nuclear to maintain a reliable grid does not reflect emergency condition practice.
    Richard W Goodwin West Palm Beach FL 101/1/17

  2. Things go better for Koch,
    Is there anyone left that the Donald has yet to pee on ?
    I am still waiting to see those illusive tax returns of his.Maybe he will trot them out before the wonderful overhaul of our taxes, Ya think ?
    My bet is we will be talking about football knees instead !
    And another thing, how did those solar panels hold up to Irma in Florida?
    Be American, buy American energy!
    Coal stinks ! Nukes destroy everything.

  3. How interesting that the authors couldn’t bring themselves to say it is the Trump administration that has screwed natural gas supporters. Perry and Pruitt are the result of then Acting President Bannon picking the worst possible cabinet officers. Perry was the presidential candidate that didn’t know what the DOE did, but wanted to eliminate it. Pruitt likewise is doing his best to make sure the EPA “ends the war on coal”.

    https://www.washingtonpost.com/news/energy-environment/wp/2017/09/22/epa-chief-pruitt-met-with-many-corporate-execs-shortly-before-making-decisions-in-their-favor/

    http://hot96.com/news/articles/2017/aug/03/epa-administrator-visits-boonville-coal-mine/

    How much do you want to bet that the Koch backed American Legislative Exchange Council (ALEC) not only wrote the NOPR, but also has the new rules already written, ready to implement. Nothing the free market, libertarian Koch brothers like better than write the rules that give a free government hand out.

Leave a Reply

Your email address will not be published. Required fields are marked *


 Powered by Max Banner Ads