Federal regulator denies Rick Perry’s proposal to compensate coal, nuclear

But regulator admitted resilience is an issue and started a new docket.

Megan Geuss - 1/8/2018, 4:28 PM

On Monday, the Federal Energy Regulatory Commission (FERC) denied a rule proposed by Energy Secretary Rick Perry earlier this year (PDF) to compensate coal and nuclear generation facilities over and above the compensation they currently receive if they kept 90 days' worth of fuel on site.

Perry's rule was written to be fuel agnostic at face value, but its details would have bolstered coal and nuclear plants in the energy market because natural gas- and oil-fed generators generally can't keep 90 days' worth of fuel onsite (they receive their fuel via pipeline), and renewable energy generation is variable. One of President Trump's key campaign promises has been to revive the coal industry, which has suffered in the shadow of plentiful, cheap natural gas.

In Monday's notice, FERC wrote that the proposed rule never met the threshold requirement of showing that grid managers are currently offering "unjust and unreasonable" compensation to existing coal and nuclear plants.

The commission wrote:
[W]e note that the Proposed Rule would allow all eligible resources to receive a cost-of-service rate regardless of need or cost to the system... The record, however, does not demonstrate that such an outcome would be just and reasonable. It also has not been shown that the remedy in the Proposed Rule would not be unduly discriminatory or preferential. For example, the Proposed Rule’s on-site 90-day fuel supply requirement would appear to permit only certain resources to be eligible for the rate, thereby excluding other resources that may have resilience attributes.
FERC's decision culminates a year of contentious politics at the Department of Energy. Perry issued a memo in April accusing the previous administration of implementing policies that destroyed jobs and made the coal industry unprofitable, never mentioning renewable energy but hinting at a censure of its rise. Perry commissioned a study of "baseload" energy (primarily coal and nuclear plants, which are kept constantly running because of the enormous cost to start and stop them), but when the study was published it was more even-handed. While it recommended that the Department of Energy review how coal and nuclear power were valued on the grid, it also correctly stated that coal and nuclear were suffering because they were too expensive compared to cheap natural gas, not because renewables or clean air policy had driven them out of the market.
More here: https://arstechnica.com/tech-policy/...-coal-nuclear/