Rick Perry Still Wants to Bail Out Failing Coal Plants

JM Ashby
Written by JM Ashby

Although the Federal Energy Regulatory Commission (FERC) unanimously rejected Energy Secretary Rick Perry's request for subsidies for failing coal and nuclear power plants, Perry is reportedly considering implementing subsidies through executive action.

Bloomberg reports that Perry is considering using his authority under the Federal Power Act which allows him to act in an emergency.

The approach would require Rick Perry to use his authority as U.S. energy secretary to spur emergency compensation for coal plants run by FirstEnergy Solutions that may be at risk of shutting, said the people, asking not to be identified because the information isn’t public. Some Energy Department officials are weighing this option after federal regulators rejected a proposal by Perry last month to pay coal plants more for their “resilience,” they said. FirstEnergy hasn’t formally requested the aid, one of the people said. [...]

Perry has the authority under Section 202 of the Federal Power Act to order a power plant online should he determine it’s needed in an emergency to “serve the public interest.” Regulators may then prescribe reasonable compensation to keep the plant in service. While some officials are weighing the merits of a 202 order, the Energy Department may still decide to pursue other options -- or none at all.

The problem with Perry's plan is that there is no emergency.

In fact, the FERC rejected Perry's proposal because there is no emergency. Perry was unable to persuade the commission that alternative energy sources, such as solar and natural gas, are unreliable.

“There is no evidence in the record to suggest that temporarily delaying the retirement of uncompetitive coal and nuclear generators would meaningfully improve the resilience of the grid,” wrote Commissioner Richard Glick, concurring with the agency’s decision to reject the proposal. “Rather, the record demonstrates that, if a threat to grid resilience exists, the threat lies mostly with the transmission and distribution systems, where virtually all significant disruptions occur.”

Given the FERC's decision, if Rick Perry does use his authority to subsidize ancient coal-fired power plants that are scheduled to shut down, I presume he will immediately run into legal trouble at the state level. Subsidizing a local power plant would require raising energy rates on other customers in the state and most state governments will not look too kindly on that if there is no immediate emergency.

Aside from state governments, environmental groups and even industry competitors could also make a legal issue out of it. After all, why should one form of energy, or one specific energy producer, enjoy the benefits of a subsidy at expense of other customers when there is no real emergency?

What makes Rick Perry's potential plan extraordinarily stupid is the fact that FirstEnergy is not in danger of shutting down. The company just recently received billions of dollars of investment from GOP megadonor Paul Singer.

Republicans love the Free Market until the moment that they don't.

  • Draxiar

    I expect to see the coal industry die out worldwide in my lifetime.

  • muselet

    Coal mogul Bob Murray [has] warned that his company, which supplies some of the units, may face default if they shut.

    A reliable GOP donor may lose money. That’s the emergency.

    They’re not even trying to come up with plausible explanations, are they?


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