Federal regulators have shot down a Trump administration plan to subsidize coal and nuclear energy that consumer advocates warned could dramatically increase American utility bills.
Last year Energy Secretary Rick Perry directed the Federal Energy Regulatory Commission to craft a rule designed to guarantee additional revenue for electricity generating plants with a 90-day supply of fuel on hand.
The Trump administration’s plans to subsidize coal and nuclear power could cost American con…
Perry said the measure was needed to slow the retirement of those plants, which increasingly struggle to compete as cheap natural gas has driven wholesale prices down. Perry argues that these legacy baseload plants are critical to “grid resiliency” and should be compensated for remaining in service.
The clean energy policy group Energy Innovation estimated the proposed rule could cost American consumers up to $10.6 billion a year, with most of the proceeds benefiting five companies.
Noting past efforts aimed at grid resiliency, the five-member commission said the proposed rule did not meet statutory standards for adjusting rate structures.
Comments submitted by the companies charged with operating the grid “do not point to any past or planned generator retirements that may be a threat to grid resilience,” the commission wrote.
The commission instead directed the nation’s grid operators to submit information “on certain resilience issues and concerns” and says it will decide then whether further action is needed to address grid resilience.
An array of utilities argued the rule would have unfairly burdened Midwestern consumers, who already pay for reliability services.
Therefore, customers who are already paying for coal-fired plants operated by Xcel Energy or Dairyland Power would also be forced to support unprofitable merchant plants in other states, essentially paying twice for reliability.
Though applauded by coal and nuclear interests, the proposal was panned by manufacturers and other industrial customers, including representatives of Wisconsin and Minnesota mining and paper companies, who urged the commission to scrap it entirely, arguing there are already systems in place to ensure resilience and many of the premises underlying the proposal are “are vastly overstated or demonstrably false.”