FERC Right to Reject Perry Proposal to Bail Out Coal and Nuclear Industries But Wrong to Invite RTOs to Offer Their Own Bailout Proposals

Statement of Tyson Slocum, Director, Public Citizen’s Energy Program

Note: The Federal Energy Regulatory Commission (FERC) today rejected a proposal by U.S. Energy Secretary Rick Perry that would revise the way the nation’s electricity grid is managed by boosting coal and nuclear power. The proposal ostensibly was designed to address what will happen as uneconomical coal and nuclear power plants close.

The good news is that FERC has rejected Energy Secretary Perry’s ill-conceived bailout for uneconomic coal and nuclear power plants. The bad news is that FERC is asking Regional Transmission Organizations (RTO) for their perspective on whether market changes are needed to address the fact that uneconomical coal and nuclear plants are closing. The closings reflect the fact that renewables and natural gas simply are cheaper, and the nation’s electricity grid will remain stable without those plants.

It is likely that PJM, a regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia, will use this opportunity to promote its terrible “price formation” proposal, which would adjust complex market rules to deliver billions a year in extra payments to Exelon, Dynegy, NRG and other owners of economically failing nuclear and coal power plants. This would be just as harmful and expensive for consumers as Perry’s proposal, even though it is dressed in pro-market language to make it seem a more palatable option to Perry’s bailout. And we expect the other RTOs to come up with their own bailout proposals, threatening consumers across the United States.

But a multibillion-dollar bailout has the same impact on working families, whether it is designed by Perry or PJM. Make no mistake, PJM’s proposal also is a bailout for Exelon, Dynegy, NRG, and other nuclear and coal generators.

There is no “resilience crisis” requiring such a bailout, as consumers are well-served by an energy revolution that features renewable energy and energy efficiency.

As long as RTOs like PJM actively discriminate against public interest participation, FERC cannot consider proposals developed in its discriminatory “stakeholder process” to be consistent with just and reasonable rates.