Energy & Environment

Trump proposes higher payments for coal, nuclear power

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The Trump administration wants to mandate that coal, nuclear and hydroelectric power plants get paid higher prices for electricity than they are currently receiving.

Energy Secretary Rick Perry sent the proposed requirements Friday morning to the Federal Energy Regulatory Commission (FERC), asking for quick action from the commission to protect coal and nuclear plants that are on the verge of closing because of competition or other economic factors.

Perry is seeking the new regulation in the name of electric grid resilience, which he said is threatened by coal and nuclear plant closures in recent years.

It is the most concrete action yet by the Trump administration to try to save coal and nuclear plants, something Perry has named as a top concern.

{mosads}“A reliable and resilient electrical grid is critical not only to our national and economic security, but also to the everyday lives of American families,” Perry said in a statement.

“A diverse mix of power generation resources, including those with on-site reserves, is essential to the reliable delivery of electricity — particularly in times of supply stress such as recent natural disasters. My proposal will strengthen American energy security by ensuring adequate reserve resource supply and I look forward to the commission acting swiftly on it.”

The Energy Department does not itself have the authority to create the rule.

Instead, Perry is relying on a little-used authority he has under a 1977 law to formally call upon FERC to issue the regulation. While FERC commissioners are appointed by the president, the agency is otherwise independent and not obligated to follow through on Perry’s request.

Under Perry’s proposal, independent system operators and regional transmission organizations — the entities that operate regional electric grids — would be required when signing wholesale electricity contracts to allow certain “resilient” power plants to get a “fair rate of return,” even when prices would otherwise be lower.

Currently, grid operators in most of the country use competitive markets, in which the lowest-cost power sources usually get contracts.

Since FERC’s rules must not choose one power source over another, Perry’s proposal would apply to plants with a 90-day on-site fuel supply and “be able to provide essential energy and ancillary reliability services.”

That definition appears to apply to coal, nuclear and hydroelectric power. Natural gas plants usually receive fuel via pipeline, but could ostensibly store a 90-day supply.

Perry might have some support at FERC. Neil Chatterjee, FERC’s temporary chairman, said on an agency podcast in August that “generation, including our existing coal and nuclear fleet, need to be properly compensated to recognize the value they provide to the system.”

But Chatterjee has also pledged to protect FERC’s independence, and said he prefers to avoid making any major decisions until Kevin McIntyre, Trump’s pick to be the commission’s long-term chairman, is confirmed by the Senate and sworn in.

The commission must consider the proposal within 60 days, though it is not obligated to take any policy action on it.

The proposal comes after an Energy Department report on grid resilience last month. That report concluded that coal and nuclear plant closures could cause resilience problems at some point in the future, but grid operators are currently handling the challenges well.

Tags Coal Energy Department Federal Energy Regulatory Commission Nuclear power Rick Perry

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