Energy

A National Effort Is Underway To Prop Up Nuclear Plants. Here’s What It All Means

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Federal and state officials are weighing proposals to keep otherwise uneconomic nuclear and coal-fired power plants from retiring.

Waves of coal and nuclear plant retirements in recent years have sparked a nationwide debate over the value of baseload power, dividing conservatives and breeding new political alliances.

At the federal level, Energy Secretary Rick Perry proposed a rule to the Federal Energy Regulatory Commission to compensate baseload power plants that keep at least 90 days worth of fuel on-site — basically all nuclear power plants and some coal plants.

At least four states have either implemented or introduced legislation to keep nuclear power plants from shutting down. Those plans could cost ratepayers billions of dollars over the next decade.

Environmentalists have traditionally opposed nuclear power, but have new allies in the natural gas industry and conservative groups opposed to subsidizing coal and nuclear power. Nuclear and coal proponents, however, have backed such policies as a way to keep thousands of people from losing their jobs and to promote a resilient electric grid.

The Federal Battle

“I sympathize with their plight,” Tom Pyle, president of the free market Institute for Energy Research. “It’s hard to argue nuclear is not an option to reduce CO2.”

Pyle, who headed Trump’s transition team for the Energy Department, opposed Perry’s plan to keep nuclear and coal plants open, saying it would only add to the “death spiral of subsidies” the energy industry already deals with.

Environmental Protection Agency (EPA) regulations, permitting requirements, green energy subsidies and mandates, and of course low-priced natural gas have contributed to coal and nuclear plants being closed down.

Pyle said scaling back burdensome regulations would help more in the long-run than subsidies. So far, six nuclear plants were retired in the last seven years, and more are expected as operators decide if it’s worth keeping them open.

“We shouldn’t go down that road of fighting subsidies with subsidies,” Pyle said. “Let’s work to unwind these subsidies and make the markets more competitive.”

On the other side of the debate is the Nuclear Energy Institute (NEI), the industry’s lobbying arm, supports Perry’s plan to compensate baseload power. NEI’s John Kotek says they’ve been working at the state and federal level to keep nuclear plants open.

“We think the risk of retirement needs to be addressed now,” said Kotek, NEI’s vice president for policy development and public affairs. NEI has also stressed the economic benefits nuclear plants provide to local communities, including jobs and tax revenues.

NEI’s Matt Crozat said current power markets don’t properly value baseload power sources, like coal and nuclear. Crozat said policies from Perry and a recent one from regional grid operator PJM would allow plants to capture revenue for providing “resilience” to the grid.

“The problem is most acute in PJM,” Crozat said, noting wind power coming from the midwest is proving economically and technically challenging for nuclear plants.

Ultimately, NEI contends Perry’s proposal to keep nuclear plants open is a good thing for those concerned about carbon dioxide emissions and making sure the grid remains reliable.

“You’ve got to make sure the design of your market achieves the outcome you want,” Kotek said. “If you want a low-carbon energy future, nuclear has a role to play.”

The coalition opposing Perry’s plan has another perspective. The recently formed Affordable Energy Coalition (AEC), for example, says the plan would shake up wholesale electricity markets and raise electricity rates.

“The DOE grid proposal would raise costs for millions of American families and make it harder for American businesses to compete,” the group’s spokesman Michael Steel told Axios.

AEC plans on building public opposition to Perry’s plan. Its members include, the American Wind Energy Association, BP and the R Street Institute.

The American Petroleum Institute joined green energy companies and even the Conservation Law foundation to file comments with FERC opposing Perry’s baseload plan.

The coalition wrote that coal and nuclear power have proven to be uncompetitive in wholesale markets, and that “there is no evidence demonstrating that RTOs/ISOs need to subsidize resources with 90 days of on-site fuel in order to maintain reliable service during severe weather events or otherwise.”

They continued, “indeed there is substantial evidence showing that electric systems that lack, or are transitioning to lesser reliance on, coal and nuclear resources are nonetheless operated in a manner that is both reliable and resilient,” the coalition wrote in comments filed in October.

Interim FERC Chairman Neil Chatterjee wants to issue a decision on Perry’s proposal in December to extend a “lifeline” to failing coal and nuclear power plants.

State Battles

Two states — New York and Illinois — allow nuclear plants to take advantage of existing programs to promote green energy. New York’s plan to keep upstate power plants afloat is expected to cost nearly $1 billion over two years.

Most of those benefits would go to Exelon, which lobbied for similar benefits in Illinois. State lawmakers passed a bill in 2016 giving two nuclear power plants $235 million in carbon-free energy credits.

That same year, Connecticut created a separate market where the state’s only nuclear power plant could sell up to half its electricity, insulating itself from competition from natural gas.

In New York, opponents of Democratic Gov. Andrew Cuomo’s nuclear policy challenged its legality in court, but lost in July. Opponents categorized the policy as a “bailout.”

New Yorkers for Fair Energy, a coalition of energy providers and environmentalists, were one of the groups suing to stop Cuomo’s plan, saying it would cost ratepayers $7.6 billion over 12 years.

Interestingly enough, New York Attorney General Eric Schneiderman pledged to fight the Energy Department’s plan to prop up coal and nuclear power. He said it “puts the interests of special interests ahead of the health, safety, and wallets of New Yorkers.”

Ohio lawmakers are also debating a bill to keep two nuclear plants owned by FirstEnergy open. The bill would create a Zero Emission Nuclear Resource (ZEN) that tacks on $2.50 a month to residential customers.

It’s not the first time Ohio has debated such legislation, but in its current form, it would be less generous to nuclear power plants than past iterations.

“We don’t think that taxpayers, ratepayers, families are going to benefit in the long-run,” Pyle said of plans to subsidize power plants.

“We have an example of how this ends, and it doesn’t end well,” Pyle said, referring to energy subsidy experiences in California and Europe.

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