Feds Spike Administration Plan to Bail Out Coal, Nuclear Plants

Tom Johnson | January 9, 2018 | Energy & Environment
FERC’s decision has ramification in New Jersey, where PSEG has been pushing for subsidies to bolster its three nuclear units

nuclear power plant
A federal agency is scrapping a Trump administration proposal to prop up economically challenged nuclear and coal power plants, a move with implications for three units in New Jersey.

The Federal Energy Regulatory Commission yesterday rejected a plan put forward by Energy Secretary Rick Perry to give financial incentives to baseload power plants like nuclear and coal units, which some view as critical to the reliability of the electric grid.

The proposal, however, met with fierce opposition from PJM Interconnection and other power suppliers as interference with competitive energy markets. Environmental groups objected to subsidizing coal plants that contribute to climate change.

Instead, the federal agency decided to initiate a more overarching proceeding to examine the resilience of the power system. In a press release, the commission said it needs to look at resiliency because affordable and reliable electricity is vital to the country’s economic and national security.

The decision is important in New Jersey because Public Service Enterprise Group had pushed lawmakers here to speedily pass a controversial bill in the lame-duck session that would subsidize three nuclear plants in South Jersey which its subsidiary operates.

That legislation died last night in the Legislature. It would have provided up to $300 million in ratepayer subsidies to the three plants, which the company had threatened to close without some sort of financial “safety net.’’

Ironically, the decision by the federal agency to reject Perry’s proposal may give new impetus to the state bill in the new legislative term, which begins today.

“It indicates that there may be some time before a federal solution will emerge to address the problem,’’ said Paul Patterson, an energy analyst with Glenrock Associates.

PSEG had endorsed the Perry approach, but had cautioned that it may not happen quickly enough to deal with the company’s problems in New Jersey. Nuclear plants around the country are facing economic challenges because of competition from cheap natural gas, leading to the premature closing of six facilities in recent years.

PSEG did not respond to a query about its reaction to the decision by FERC. The company is expected to revive the issue quickly once the new Legislature and Gov.-elect Phil Murphy are sworn in. Murphy has expressed support for keeping the nuclear units operating, but wants any financial assistance to be part of a more comprehensive package that also addresses clean energy investments.

Consumer and environmental groups, who feared the proposal would divert investments away from clean-energy projects, applauded the federal agency’s decision.

“Federal regulators were right to reject a proposal that would have amounted to nothing more than giving coal and nuclear power plants billions of dollars in guaranteed profits at the expense of consumers,’’ said Mike Jacobs, senior energy analyst at the Union of Concerned Scientists.

The Natural Resources Defense Council agreed. “We need a grid that depends on fewer, not more, power plants creating the pollution fueling the extreme weather threatening the system’s ability to bounce back from these events,’’ said John Moore, director of the sustainable FERC project coalition for the NRDC. “That means we need more energy efficiency, wind and solar power to be truly resilient.’’