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FirstEnergy Shamelessly Begs DoE to Prop Up Uneconomic Coal and Nukes

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Yesterday, FirstEnergy submitted an outrageous request to the U.S. Department of Energy (DoE).

The Ohio-based utility giant wants DOE to bail out not only its uneconomic coal and nuclear plants, but all ailing plants across the PJM Interconnection region – which includes 13 states and Washington D.C.

FirstEnergy’s request, if granted, would fundamentally undermine important energy policy and represent a major step backwards for the American electric grid.

Federal regulators and many, many experts agree there is no imminent threat to the electric grid’s resilience. Yet FirstEnergy is attempting to mislead the government and American public by arguing its outdated plants are needed to keep the lights on.

This is far from the first time the company has requested a bailout, but this latest effort is its most shameless yet. By arguing that the federal government got it wrong earlier this year – when it declined to provide profit guarantees for the company’s expensive coal and nuclear plants – FirstEnergy is attacking the agency that oversees the interstate electric grid, ignoring evidence, making an illegal recommendation, and asking the American public to foot the bill for a multibillion-dollar-a-year bailout.

Federal regulators already said “no” to FirstEnergy

If FirstEnergy’s request sounds familiar, that’s because it is.

Late last year, the DOE asked the Federal Energy Regulatory Commission (FERC), the federal agency responsible for overseeing the interstate electric grid, to bail out uneconomic coal and nuclear plants on the misguided and incorrect argument that those plants were necessary for grid resilience. Those bailouts, which would have given over $14 billion a year to plants too expensive to compete in electricity markets, were rightly rejected by FERC, which found “the extensive comments submitted by the [United States grid operators] do not point to any past or planned generator retirements that may be a threat to grid resilience.”

FERC’s decision chose evidence over corporate advocacy, and was informed by hundreds of stakeholder filings by groups including consumer advocates, environmental groups (like Environmental Defense Fund), power companies, academic institutions, state attorney generals, and innovative technology companies. FirstEnergy, owner of uneconomic coal and nuclear plants, was one of the isolated, few entities that argued in favor of DOE’s proposal to prop up ailing coal and nuclear plants. And without evidence on its side, FirstEnergy was unsuccessful.

Ask again, by hook or by crook

FirstEnergy’s bailout request to the DOE doubles down, arguing that FERC was wrong (as well as hundreds of other industry stakeholders). In doing so, FirstEnergy makes clear that it wants the DOE to do what FERC did not: Ignore evidence and gift the company money, drawn from the bank accounts of Americans.

FirstEnergy’s argument is flawed because it’s based on cherry-picked, faulty studies. Ignoring the many others, the utility giant chose the isolated few studies that support its argument. For example, the study by National Energy Technology Laboratory (NTEL) (the DOE’s fossil energy laboratory), which FirstEnergy relies upon in its request to DOE, has been roundly criticized.

FirstEnegy’s bailout plea would never survive in court…

Not only is FirstEnergy asking the DOE to dismiss FERC’s decision, they’re also asking the federal agency to ignore the law.

The DOE is already on record stating it “would never” use 202(c) to keep uneconomic plants online – and for good reason.

The legal basis for FirstEnergy’s request is section 202(c) of the Federal Power Act, a rarely used section that authorizes the DOE to keep plants on in times of emergency or war. The DOE is already on record stating it “would never” use 202(c) to keep uneconomic plants online – and for good reason.

202(c) is designed for the incredibly rare, specific, and last-resort situation when a power plant going offline would make it impossible to keep the lights on. This can occur once in a blue moon, when a specific power plant retires, but it is not meant for an entire set of power plants, nor is it meant for an entire region or times when no crisis exists. As the Director of the Electricity Law Initiative at Harvard Law summarized: “Perry’s DOE can try to use 202(c) to favor coal, but ultimately it will lose in court.”

…and is also uneconomic

Make no mistake, FirstEnergy is asking for a bailout for its unprofitable coal and nuclear plants because they simply can’t compete. And when a product can’t compete in a market, it should make way for more affordable options – in this case, clean energy resources like cheaper wind, solar, and energy storage. FirstEnergy is asking for that market to be upended, and the American public would foot the bill: Initial estimates put the price tag at $7.3 billion a year.

FirstEnergy’s request has been asked and answered. It boils down to little more than an exorbitant, illegal cash-grab. The DOE would be right not to fold to an unprofitable company’s tantrum and stick to its public assurance that it will not attempt to use 202(c) to bail out unprofitable plants. Americans don’t deserve to be charged for more expensive, dirty power when cheaper, clean options exist.

By Michael Panfil, Dick Munson

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Bob Meinetz's picture
Bob Meinetz on Apr 2, 2018

Dick, in your title you disingenuously link the cleanest source of dispatchable electricity (nuclear) with the dirtiest (coal), then bizarrely claim continuing to operate existing nuclear plants is “uneconomic”.

According to the Energy Information Administration, the marginal cost of generating nuclear electricity is 19% cheaper than renewables plus natural gas, and 42% cheaper than coal:

Jarmo Mikkonen's picture
Jarmo Mikkonen on Apr 3, 2018

Americans don’t deserve to be charged for more expensive, dirty power when cheaper, clean options exist.

Just getting to 80 percent of demand reliably with only wind and solar would require either a US-wide high-speed transmission system or 12 hours of electricity storage. A storage system of that size across the US would cost more than $2.5 trillion for a battery system.

Bas Gresnigt's picture
Bas Gresnigt on Apr 3, 2018

Your link doesn’t include the renewable solution….
Furthermore it’s clear that Germans authorities don’t agree with your conclusions.

Even here in NL the integral cost of e.g. wind are already lower than only the marginal costs of nuclear (forgetting about investment costs)…

The real situation seems similar in USA, considering the many (requests for) closings of NPP’s….

Bas Gresnigt's picture
Bas Gresnigt on Apr 3, 2018

Of course such battery storage system won’t be implemented as it’s much cheaper to use PtG + storage in deep earth cavities for large amounts, such as those needed for seasonal storage.

Furthermore there are more renewable sources than wind+solar.
E.g. geo-thermal, biomass/-fuel, hydro, etc.
Those alternatives will also deliver an important contribution.

Jarmo Mikkonen's picture
Jarmo Mikkonen on Apr 3, 2018

If wind is so cheap in the Netherlands, why do you Dutch depend so much on fossil fuels? You are actually more dependent on fossil fuels than China. Where is your “renewable solution”?

If you’re looking for global leaders in renewable energy to fight against climate change, don’t look to the Netherlands. The Dutch are the most dependent on fossil fuels of any country in Western Europe, with 91.77% of their energy needs being met by these environmentally destructive fuels.

Helmut Frik's picture
Helmut Frik on Apr 4, 2018

Maybe because the wind power expansion is just under construction or in planning stages?
If nuclear is so cheap, why is Sweden just closing nuclear power stations, and is not building or at least planning new ones?

Bas Gresnigt's picture
Bas Gresnigt on Apr 4, 2018

Due to its high population density, NIMBY is a major problem in The Netherlands.
And offshore wind was expensive until a few years ago.
But now, helped by its lower costs (cheaper than the marginal costs of our only NPP), we just started to take the climate and CO2 reduction serious.

We now tender ~740MW offshore wind (av. capacity factor ~55%) per year. The last one, to be operational in 2022, was won by Vattenfall. Vattenfall offered to install, operate and decommission in 2052 without any subsidy (av. whole sale price ~3cnt/KWh).
In a few years we will tender 1GW/a offshore wind (Tennet will then have developed standard offshore under-stations / concentration platforms that can handle those amounts).

Luckily our part of the North Sea (57,000km², NL is 35,000km²) is large enough to produce all energy we need.

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