Regulators reject Perry plan to aid coal, nuclear plants

Federal regulators rejected U.S. Energy Secretary Rick Perry's plan to bail out struggling coal and nuclear plants, instead asking grid operators to suggest their own ways to ensure reliable power supplies.

In an order Monday, the Federal Energy Regulatory Commission terminated a proceeding that had begun in response to Perry's September directive that suggested power plants should be rewarded for having 90 days of fuel on-site. The proposal would've largely benefited coal and nuclear power plants.

"We appreciate the Secretary reinforcing the resilience of the bulk power system as an important issue that warrants further attention," according to the order. "We expect to review the additional material and promptly decide whether additional Commission action is warranted to address grid resilience."

The defeat is a setback for President Donald Trump's efforts to revive the coal industry and put miners back to work. The Energy Department plan drew criticism from natural-gas producers, grid operators and others who argued it would undermine competition in wholesale power markets. Consumers in more than a dozen states would have been stuck footing the bill.

Perry ordered the commission to consider his plan in September, invoking an obscure 30-year-old statute. His idea was to pay plants a premium to store at least 90 days of fuel on-site to make grids more reliable. Coal and nuclear generators would be uniquely suited because, unlike gas plants, they aren't fed by pipelines. Wind and solar farms, meanwhile, require no fuel.

The energy commission initially had a Dec. 8 deadline to act on the proposal. The day he was sworn in, FERC Chairman Kevin McIntyre asked Perry for a 30-day extension, saying he needed time to review the flood of public comments.

Critics of the proposal said it could have let some coal and nuclear plants continue to operate even if they're not economical to run. That could slow development of gas, wind and solar projects, whose growth depends on aging power plants closing.

Perry has repeatedly said that storing fuel on-site makes coal and nuclear plants less prone to shutdowns than other power generators in the event of disasters and attacks. An Energy Department study released in August doesn't support that claim, finding instead that "attempts to achieve fuel diversity in market designs explicitly would likely result in inefficient and potentially discriminatory practices that are inconsistent with the Federal Power Act."

Grid operators and utilities also rejected Perry's claim, contending instead that resilience has more to do with power lines than about fuel supply.

Business on 01/09/2018

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