Energy Interests at Odds Over DOE Proposal
Investments in transmission and distribution infrastructure, rather than in subsidies to keep coal and nuclear plants operating, would be a better way to make the electric grid more resilient and reliable, representatives of a variety of energy interests told the House Energy and Commerce Committee’s energy subcommittee at recent hearings.
The hearings, held on Oct. 3 and Oct. 5, focused on a Sept. 28 Dept. of Energy directive ordering the Federal Energy Regulatory Commission to write a rule to allow utility companies full cost recovery for nuclear and coal plants.
Nuclear and coal plants in wholesale markets are becoming unprofitable and being retired early because of competition from lower-cost natural-gas plants and renewable energy. DOE says its proposal to retain these so-called base-load plants—which can operate 24 hours a day, seven days a week—is necessary to ensure the electric grid is resilient and reliable.
But at the Oct. 3 hearing, Tom Kiernan, American Wind Energy Association CEO, said, “Building a more robust transmission system is the single most effective tool for improving resiliency and providing customers greater access to low-cost sources of energy, whether nuclear, renewable or fossil.”
Several witnesses at the hearings, as well as FERC commissioners and other energy industry officials independently, say DOE’s proposal would “blow up” the wholesale markets. Rep. Pete Olson (R-Texas) at the Oct. 5 session said the proposal could pick “winners and losers” and drive up electricity costs.
Of the seven witnesses who spoke at the Oct. 3 hearing, only a coal-industry representative unconditionally supported DOE’s proposed rule. A nuclear-industry official called it a good starting point. Both urged quick action to prevent more coal and nuclear plants from prematurely shutting down. Some states and regional transmission operators also are looking at ways to help nuclear plants stay afloat.
Other witnesses, from petroleum, wind, solar and energy-storage interests, pointed out that the North American Electric Reliability Council and a DOE grid study, released this summer, have said the grid’s reliability is good and continues to improve. The DOE proposal “may make the problem worse by undermining markets and freezing out other resources … and send billions of dollars to outdated technologies,” says John Moore, director of the Natural Resources Defense Council’s Sustainable FERC Project. Moore says NRDC has estimated the proposal would cost consumers at least an additional $15 billion.
Moore says distribution systems are responsible for more than 90% of power outages. He adds, “This suggests that efforts to ensure reliability and resilience during extreme weather should focus largely on the distribution system, rather than on any particular type of generation system.”