Coal Industry Tells FERC the Last 7 Years Was a Catastrophe it Must Now Fix

Via The Washington Examiner:

The coal industry claims the last seven years was a catastrophe federal grid regulators under the Trump administration are now bound by the law to fix by supporting Energy Secretary Rick Perry’s grid plan.

“In the last seven years, 101,000 megawatts of coal-fired generating capacity has retired or has announced plans to retire,” read joint comments by the National Mining Association and the American Coalition for Clean Coal Electricity representing the coal industry.

One megawatt equals the electricity demand from between 750 to 1,000 homes.

“This catastrophic pace of retirements has caused cascading effects throughout the coal industry and industries that support coal, like railway and barge transportation, not to mention coal producing communities.”

The comments were submitted to the Federal Energy Regulatory Commission on Monday night as the deadline for groups to make their case for or against Perry’s grid plan approached at midnight.

“The country is at a crossroads, and urgent Commission action is required before the value provided by critical baseload generation capacity is lost forever,” the groups wrote.

Perry’s proposed rule would change the rules of the FERC-overseen electricity markets to ensure coal and nuclear power plants receive payments for being able to keep the grid stable during severe weather incidents like hurricanes.

“Our members are substantially interested in preserving baseload electric generation that has the systemic and economic resiliency attributes that coal can provide, such as the ability to host fuel on-site,” the joint comments read.

Any “large-scale blackout could result in billions of dollars in economic impact, and risk injury or death,” the coal groups noted.

Perry’s proposed changes to the FERC-overseen markets would provide payments to power plants based on their ability to keep a 90-day supply of fuel on site. Perry argued this attribute makes coal and nuclear plants resilient to major power outages and therefore must be compensated.

The groups argue the coal plants have been harmed by unfair market subsidies being provided to the wind and solar industry. These unfair advantages make FERC legally bound to give them the market relief they seek, they argue under the commission’s cost oversight authority.

“Baseload coal-fired generation facilities are essential to reliability and resilience, but have not been able to recover their costs of operation through the existing restructured administrative markets,” the groups argued, referring to coal as a baseload plant because it provides electricity 24 hours a day.

“These issues have been compounded by the fact that much new generation, particularly renewable generation, receives significant extra-market subsidies at both the federal and state level – an advantage that has worsened the economic plight of traditional baseload coal-fired generators.”

“As a result, the past several years have seen an unprecedented wave of retirements of coal-fired and nuclear generation capacity, and many more facilities are at risk of closure in the coming years, unless the Commission takes immediate action,” the coal groups wrote.

The coal groups argued FERC must use its authority under the Federal Power Act, which gives it the ability to intervene in the markets if it can show that electricity rates have increased unreasonably or have unfairly favored one group over another.

“[I]t is critical that the Commission make such a finding, and direct [regional transmission operators it oversees] to modify their tariffs to ensure that existing coal-fired generators are able to fully recover their operating costs,” the groups wrote.

Such action “will ensure that the essential reliability, resiliency, and long-term price stability benefits of existing coal-fired generating facilities can be saved,” they explained.

“Without action by the Commission to remedy these tariffs and market structures, the electric system will devolve to lose the value of fuel diversity and end up overwhelmingly dependent on intermittent renewable and natural gas generation,” the comments read.

“If that happens, essential reliability, resiliency, and long-term price stability benefits of coal-fired generating facilities, and other generation with fuel on-site, will be lost for good. For the sake of the nation’s consumers and suppliers, the Commission cannot let that happen.”

The Nuclear Energy Insitute’s comments, also submitted ahead of the midnight deadline, voiced similar concerns as the coal industry.

NEI is the lead trade group for the nuclear power industry, which faces premature retirements of its power plants due to market factors such as low natural gas prices. The low price of natural gas has made it attractive for utilities to switch from using coal to using natural gas to produce electricity. This switch has also made it hard for nuclear power plants to compete in the FERC markets, which favor the lowest cost generation resource in order to keep electricity prices low.

But the nuclear industry argues it has been the failure of the market, not its success, that has undervalued its power plants.

“The current failure to value important attributes of nuclear generation, including those that significantly contribute to grid resiliency, has prompted retirements of well-functioning, highly-efficient, and environmentally-valuable nuclear plants,” said Maria Korsnick, the nuclear group’s president and CEO, in sending NEI’s comments to FERC.

“While we may not see the impact of a less resilient grid until another emergency challenges the delivery of electricity to this nation’s citizens, neglecting to address this problem today could lay the groundwork for serious breakdowns in electricity service tomorrow.”

Both the coal and nuclear industry appear to be aligned in their support for the Perry grid plan. Meanwhile, a broad coalition of natural gas, oil industry, and renewable energy groups submitted joint comments rejecting the Perry plan as unnecessary and an affront to the free, functioning markets that FERC oversees.

They argued “there is substantial evidence showing that electric systems that lack, or are transitioning to lesser reliance on, coal and nuclear resources are nonetheless operated in a manner that is both reliable and resilient,” according to coalition’s comments. Furthermore, any “outages caused by disruptions of fuel supply to generators appear to be virtually nonexistent.”

Therefore, FERC’s proposed rule would “prop up uneconomic generation that is unable to compete … and that is not otherwise needed for reliability,” the coalition argued.

Finally, the proposed rule “has not been shown to be just and reasonable and cannot be adopted by the Commission.”

The coalition included renewable energy groups that included Advanced Energy Economy, American Biogas Council, American Council on Renewable Energy, the Energy Storage Association, the Solar Energy Industries Association, and the American Wind Energy Association.

It also included oil and natural gas industry groups like the American Petroleum Institute, the Independent Petroleum Association of America, the Interstate Natural Gas Association of America, and the Natural Gas Supply Association. Power utilities were represented by the Electric Power Supply Association and large manufacturers were represented by the Electricity Consumers Resource Council.

 See the article here.