Rick Perry’s coal bailout is an attack on competitive energy markets, with customers footing the bill
Secretary of Energy Rick Perry – whose agenda as governor of Texas was squarely focused on states’ rights and free markets – is now pushing for a federal plan that could disrupt organized electric markets.
Perry’s proposal to the Federal Energy Regulatory Commission (FERC) aims to prop up uneconomic coal at the expense of Americans’ health and wallets.
Perry’s proposal would effectively pay owners of coal and nuclear power plants their operating costs, plus a guaranteed profit, regardless of whether those plants are selling electricity at a competitive price. These aging plants are currently being driven out of the competitive market by flattened energy demand and a growing list of cheaper, cleaner, more efficient alternatives – from natural gas and renewables to demand response and grid-scale battery systems. Simply put, Perry’s proposal shields uneconomic coal power, replacing competitive markets with profit guarantees.
That’s not a thumb on the scale supporting obsolete and expensive energy; it’s an elephant.
Because carbon pollution from coal plants causes asthma attacks, heart attacks, and a staggering number of premature deaths every year, propping up this dirty energy source will not only raise electricity bills, it will hurt American families.
Undercutting markets, stifling innovation
Perry’s plan promises more than just a subsidy: It’s a legally guaranteed, multi-billion dollar profit margin for coal owners, paid for by millions of families and businesses nationwide.
What Perry’s proposing is a complete abandonment of the market principles we were led to believe this administration supports. In fact, just last week, Environmental Protection Agency head Scott Pruitt himself proclaimed that "regulatory power should not be used by any regulatory body to pick winners and losers."
Moreover, federal law clearly prohibits FERC from favoring energy resources for political reasons.
Federal law clearly prohibits FERC from favoring energy resources for political reasons.
The plan is also a death sentence for innovation, applying discriminatorily (in fact, only) to the competitive, regional energy markets where cost-effective wind, solar and other clean energy solutions are now flourishing. It’s no wonder virtually every stakeholder is lining up against the proposal. It’s rare to see oil and gas producers align with wind and solar developers, consumer advocates and environmental groups. But that’s exactly what’s happening.
Billions of dollars have been invested in renewables and energy efficiency, responsive and efficient natural gas, and smart energy management solutions in almost every state across the nation, based on thoughtful, rigorous stakeholders’ processes and the expectation that they will fairly compete in an open marketplace. Abandoning that premise poses a direct threat to one of the most dynamic, promising sectors of the economy.
Fake solutions for real problems
Recently, the National Academy of Sciences issued a comprehensive energy resiliency report that says nothing about rescuing inefficient, uncompetitive coal and nuclear units. Rather, it looks to the future, suggesting refinements to strengthen and improve market competition (including by strengthening alignment between wholesale gas and electric markets). The author of Perry’s own grid reliability “study” said much the sameearlier this month.
Embracing the truth – rather than drawing at straws to save a dying industry – would be a boon for our health and our economy.
Perry claims his plan will improve resilience and reliability. But experience proves that new energy competitors are holding up just fine – whether it’s Texas wind generators weathering a hurricane or California’s solar system surviving a massive eclipse. When major disruptions do occur within our heavily-matrixed electricity system, power generation is almost never the problem. Instead, it’s distribution failure, as we see today with the extreme devastation in Puerto Rico.
By attempting to cook the books in favor of Trump’s broader pro-coal agenda, Perry ignores extensive research – including his own DOE study – that shows the transition to cleaner energy is making America’s electricity system more affordable, resilient, and reliable. Embracing the truth – rather than drawing at straws to save a dying industry – would be a boon for our health and our economy nationwide.
Republished with permission from the Environmental Defense Fund
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