Bailout for Nuclear, Coal Industries Makes for Strange Bedfellows

WASHINGTON(CN) — Advocates of renewable energy teamed up with proponents of natural gas to challenge a plan that would prop up aging nuclear and coal-powered electric producers.

The proposed rule, spearheaded by Energy Secretary Rick Perry, would exempt coal and nuclear power plants from having to compete in the market with other sources of power, like natural gas, wind and hydropower. Instead of customers buying the best product at a competitive price, the proposed rule would require customers to pay the coal and nuclear power plants for all of their expenses plus a profit, regardless of inefficiencies or above-market costs.

On Monday a diverse group of 12 energy industry associations representing oil, natural gas, wind, solar, efficiency and other energy technologies submitted 96 pages of comments against the DOE NOPR, short for the Department of Energy’s Notice of Proposed Rules..

“Even if there were a need to incentivize resiliency in the targeted markets (a supposition that is not supported by the evidence cited in the DOE NOPR), the proposed solution – full cost of service payments to eligible resources with 90 days of on-site fuel – leaves key questions unresolved about the basis for an on-site fuel preference, why other generating resources that provide resiliency benefits should not also receive payments, the cost of such payments, how such costs would be allocated to customers, and how the payments would impact price formation in the organized markets,” the submission states. “Accordingly, the proposed rule has not been shown to be just and reasonable and cannot be adopted by the Commission

Among the groups that signed on to the comments are American Council on Renewable Energy, American Petroleum Institute and American Wind Energy Association.

“We support efforts to ensure reliability, and we look forward to fully participating in the rulemaking process to come,” Marty Durbin, executive vice president and chief strategy officer of American Petroleum Institute, said in a statement posted on the organization’s website. “However, as we review the proposal we are concerned the agency has mischaracterized the lessons learned from past weather-related events and appears to suggest that additional regulation is the answer where markets have already proven the ability to greatly benefit consumers and give our electric system the flexibility needed to meet constantly, and often rapidly, changing electricity demands.

Todd Foley, a senior vice president at American Council on Renewable Energy, also criticized Perry’s plan.

“We’re concerned this proposed rulemaking uses grid resilience as an excuse to prop up plants that have not been shown to be needed, preventing consumers from buying the power they want to buy,” Foley said in a statement.

Maria Korsnick with the Nuclear Energy Institute meanwhile argued that nuclear power stations need support since their failure would present a risk to long-term reliability and resiliency of the national electricity grid.

“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,” Korsnick said in a statement.

In addition to comments from competing energy industries, the DOE’s proposal drew objections from the attorneys general of California, Connecticut, Illinois, Maryland, Massachusetts, North Carolina, Oregon, Rhode Island, Vermont, and Washington, as well as the Connecticut Department of Energy and Environmental Protection, the Rhode Island Division of Public Utilities and Carriers, and the New Hampshire Office of Consumer Advocate.

“DOE does not analyze how its proposal would affect the wholesale electricity markets, provides no assessment of the proposal’s costs, makes no attempt to define or quantify the Proposal’s benefits, and provides no support for making such a dramatic change on an expedited basis,” Maryland Attorney General Brian Frosh said a press release.

“Consumers should not foot the bill to prop up a failing, polluting industry,” Frosh added. “This proposal gives coal and nuclear power plants an advantage over cleaner, more efficient energy options while increasing costs to consumers and threatening to mitigate – even rollback – states’ efforts to reduce air pollution and climate change.”

Secretary Perry is seeking to complete action on the rule in 60 days — a timeline that the challengers say denies consumers and other stakeholders the ability to provide meaningful comment and prevents FERC from fulfilling its legal duty to act in a deliberative and independent manner.

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