Pallone Takes Trump Administration to Task for Nuclear, Coal Subsidies

Tom Johnson | October 13, 2017 | Energy & Environment
U.S. Representative criticizes plan to have ratepayers subsidize coal and nuclear power to offset losses due to competition with cheaper natural gas

Credit: NJTV News Online
U.S. Rep. Frank Pallone Jr.
Rep. Frank Pallone yesterday criticized a Trump administration proposal to bolster the economically struggling nuclear and coal sectors by paying them more for electricity produced by their plants.

In a hearing in Washington, the ranking Democrat on the House Energy and Commerce Committee told Energy Secretary Rick Perry his proposal to prop up coal and nuclear units to enhance grid reliability would upend competitive energy markets at the expense of consumers.

“You are distorting the market, damaging the environment, and delivering preferential treatment to favored industries,’’ Pallone said in prepared remarks. “At the end of the day, killing off competitive electricity markets just to save generation assets that are no long economical will lead to higher prices for consumers.’’

PSEG under pressure

The issues raised by Perry’s proposal, now pending before the Federal Energy Regulatory Commission, are important because they reflect concerns of Public Service Enterprise Group, which operates three nuclear units in South Jersey. They face economic pressure because they are finding it difficult to compete with cheaper natural gas plants.

PSEG is engaged in an extensive lobbying campaign in New Jersey, in Washington, D.C., and before PJM Interconnection, the operator of the nation’s largest power grid. It is seeking added financial compensation for electricity produced by its nuclear plants.

The company has threatened to close the plants if the units turn unprofitable, saying their closure would likely increase prices for consumers to replace the power they provide. Nearly half of the state’s electricity comes from nuclear power.

About a half-dozen nuclear plants have shut down in recent years, and many more coal units have been retired, including two in New Jersey operated by PSEG this past summer. Two states have adopted new financial incentives funded by ratepayers to keep nuclear units afloat in Illinois and New York.

The proposal before FERC would give higher payments to power plants that produce electricity all the time and reliably, and have 90 days of fuel on site. Perry has argued current energy markets are not accurately pricing the value of those baseload generating facilities.

Pallone said the proposal, however, has serious flaws. He accused the administration of abusing its regulatory authority “to pick winners and losers.’’ The representative argued this is a policy matter that should be left to Congress and the states.

The proposal, opposed by many environmental groups and other segments of the power sector, is expected to be acted on by FERC this fall.