US delivers electric shock with coal and nuclear subsidy plan

2 Oct 2017   Coal, Nuclear, USA

A legal battle over the future of the US electricity system is looming after the Trump administration shocked the industry with proposals for new subsidies for coal-fired and nuclear power plants. If implemented, the plan could mean the most radical shake-up of the market in decades. Rick Perry, the energy secretary, on Friday sent a proposal to the Federal Energy Regulatory Commission calling for payments for power plants that provide “essential energy and ancillary reliability services” — and defined these in a way that means only coal and nuclear generators are likely to qualify.  Travis Kavulla, the Republican vice-chairman of the utility regulator for Montana, said Mr Perry was proposing to move US power markets from competition to a “command and control” system.  “This way, they will be predetermining through industrial policy who stays in the market and who goes out,” he said.  The plan has been drawn up under a rarely-used legal provision that allows the energy department to propose rules to FERC, an independent government agency. Mr Perry has given FERC 60 days to come up with plans for payments at a “just and reasonable rate” for power plants that meet certain criteria, including having a 90-day fuel supply on site. That requirement would be achievable for coal plants, but not generally possible for gas-fired plants. The policy is diametrically opposed to the Obama administration’s Clean Power Plan, regulations for cutting carbon dioxide emissions that would have accelerated the closures of coal-fired plants. The rules were finalised but never implemented after the Supreme Court issued an order that put them on hold in 2016.

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