A decision by federal energy regulators to reject a plan for propping up the nation’s financially suffering coal and nuclear plants could add urgency to state and regional efforts to keep Pennsylvania’s nuclear stations from retiring prematurely.
The decision Monday by the Federal Energy Regulatory Commission was a blow to the Pennsylvania Legislature’s year-old bipartisan nuclear caucus, which had decided that a regional or national strategy — rather than a state-specific solution — would be the fairest way to ensure the survival of the commonwealth’s five nuclear generating stations.
Both chambers of the Pennsylvania Legislature passed a resolution in October urging FERC to act on a proposal by U.S. Energy Secretary Rick Perry to compensate power plants that can keep a secure supply of fuel on site.
But the independent five-member commission rejected that proposal on Monday. Instead, it asked the nation’s regional power grid operators to suggest a new path for evaluating the resiliency of the power system.
“It is a significant blow, no doubt,” said state Sen. Ryan Aument, a Lancaster County Republican and one of the nuclear caucus leaders, but he added that it doesn’t make a Pennsylvania-specific strategy any more attractive.
“Pennsylvania ratepayers ought not and cannot be the only ones paying for a state solution when the issue is much larger than that,” he said. “I don’t believe that a state subsidy, a state bailout, is any more viable today than it was prior to this decision by FERC.”
Policymakers generally prefer a regional or federal strategy that would not have Pennsylvania ratepayers bearing the cost of rescuing plants that export a significant amount of the power they generate to neighboring states.
Workhorse power generating sources like nuclear and coal-fired plants have struggled to compete against low-priced natural gas in wholesale electricity markets.
Ohio-based FirstEnergy Corp., which owns the Beaver Valley nuclear station and the Bruce Mansfield coal power plant in Beaver County, said the FERC decision does not change the fact that “the future of our competitive generating facilities remains challenged.”
The company has already announced plans to shed power plants in competitive utility markets, like Pennsylvania, and it expects to complete a review of those plants this year.
“Baseload coal and nuclear plants have long played an invaluable role in a well-functioning electric grid, yet the markets do not adequately compensate these assets,” FirstEnergy spokeswoman Jennifer Young said.
“Without timely action, more of these facilities will close prematurely, jeopardizing the ability to provide clean, reliable and affordable power to customers while harming economies across the region.”
Chicago-based Exelon Corp., which operates three nuclear plants in Pennsylvania, has said it will close the remaining unit at its Three Mile Island Generating Station in Dauphin County around September 2019 absent policy action to preserve it.
“While FERC’s recognition of the need to strengthen our energy supply against major disruptions is a welcome development, we still need policy and market reforms at both the state and [regional grid] level that address acknowledged flaws in energy markets and place a value on the uninterrupted emissions-free energy provided by nuclear plants,” spokesman Paul Adams said.
Exelon will continue to take steps to retire and decommission Three Mile Island “since we have yet to see any energy policy reforms enacted to prevent the planned shutdown,” he said, although the company is hopeful that the “outpouring of support” for the plant will result in policy interventions to save it.
PJM Interconnection, the Valley Forge-based operator of the 13-state regional grid that encompasses Pennsylvania, has already signaled one strategy for addressing grid resiliency.
It released a proposal in November to allow “inflexible” baseload generating units — such as coal, nuclear and large gas power plants — to participate in setting wholesale energy prices, a move PJM said would better reflect the cost of meeting demand.
The proposal, if adopted, is expected to increase wholesale electricity prices by between 2 and 5 percent.
Enthusiasm for crafting a Pennsylvania-specific path for rescuing nuclear plants waned last year when it became clear that pitting nuclear against coal and gas-fired electricity sources was politically untenable in a state powered by all three.
Citizens Against Nuclear Bailouts, a diverse Pennsylvania coalition that includes the natural gas industry, major manufacturers and the AARP, said it remains on guard and expects the nuclear industry to continue to push Pennsylvania for some type of bailout. It opposes action on the state or federal level that would interfere with competitive markets and raise electric rates.
“We applaud FERC for recognizing that it is not the federal government’s role to be picking energy winners and losers,” coalition spokesman Steve Kratz said.
Laura Legere: llegere@post-gazette.com.
First Published: January 9, 2018, 10:06 p.m.
