The only Democrat on the commission called FERC’s move ‘illegal, illogical and truly bad public policy.’
Dan Gearino reports for Inside Climate News
Federal energy regulators issued an order Thursday that likely will tilt the market to favor coal and natural gas power plants in the nation’s largest power grid region, stretching from New Jersey to Illinois.
Critics say that it effectively creates a new subsidy to prop up uneconomical fossil fuel plants and that it will hurt renewable energy growth and, ultimately, consumers.
The new rules, approved by the Federal Energy Regulatory Commission, are designed to counteract state subsidies that support the growth of renewable energy and use of nuclear power. The rules involve what are known as “capacity markets,” where power plants bid to provide electricity to the grid. The change would require higher minimum bids for power plants that receive such subsidies, giving fossil fuel plants an advantage.
The FERC order, passed 2-1, is a response to complaints from operators of coal and natural gas power plants who say that state subsidies have led to unfair competition in the grid region managed by PJM Interconnection.
Richard Glick, the panel’s lone Democrat, cast the dissenting vote and said during the commission meeting that his Republican colleagues were trying to “stunt transition to a clean energy future that states are pursuing and consumers are pursuing.”
In his written dissent, he called the order “illegal, illogical and truly bad public policy.”
Environmental groups and clean energy advocates have long criticized PJM for rules that provide an economic lifeline to old fossil fuel plants, which produce greenhouse gases that drive climate change.
“Today’s order erects a major new barrier to clean energy, undercutting efforts by states to slash pollution and address climate change,” Tom Rutigliano, a senior advocate for the Natural Resources Defense Council’s Sustainable FERC Project, said in a statement. “Federal regulators are forcing customers to pay for dirty power they don’t want or need.”
Expect Court Challenges
The Trump administration has taken other high-profile steps to try to boost the coal industry, but many of them are tied up in legal challenges. The new FERC order accomplishes many of the same goals.
But FERC’s action also is likely heading to court, where opponents will argue that the regulator has overstepped its authority and is now dictating state policy.
One issue going forward is that the order has a broad definition of “subsidy,” saying this includes direct or indirect payments, concessions and rebates, among other things. Glick said the definition is so broad that it may end up affecting many more power plants than the other commissioners intended.
In the meantime, PJM has 90 days to say how it will implement the rules, and power plant operators will need to figure out what this means for them.
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