This week Politico reported that Trump administration plans to save aging coal and nuclear plants have stalled in the absence of clearly identified financial backing. Some speculated the cost burden would fall squarely on the shoulders of customers – potentially bearing an annual price tag of $9.7 billion to $17.2 billion.
Energy Secretary Rick Perry argued the price tag is well worth the infrastructure resiliency afforded by coal and nuclear power plants which are capable of storing months of fuel.
All five of the Federal Energy Regulatory Commission (FERC) members countered there is no emergency justification for the bailout and that the unprecedented federal intervention could lead to an unraveling of wholesale power markets.
Sustained by shared opposition from Trump’s advisers on both the National Security Council and the National Economic Council, without significant tolerance for price increases to pay for the plan, it’s possible as the list of coal and nuclear plants under bankruptcy grows, Trump is quietly walking back his support for coal’s Hail Mary – at least for now.
All five members of FERC, the regulatory group responsible for the U.S. power grid, stated there is nothing to suggest an forthcoming emergency in the country’s electricity markets. Their testimony before Tuesday’s Senate hearing could undermine the Trump administration’s efforts to save ailing coal and nuclear plants through subsidies. Many of the plants have closed or signaled closure in the face of plentiful natural gas, growth in wind and solar power, and stagnant power demand.
Electricity customers would see their rates rise if Energy Secretary Rick Perry moves to save financially struggling coal and nuclear plants, but Ohio utility FirstEnergy, which requested the move, would benefit, credit ratings giant Moody’s said Thursday.
The Nexus pipeline project has run into countless hurdles and road blocks ever since its initial proposal last year. We first reported on the Nexus project back in March of 2016. The intent of the project is to support the growing demand for clean-burning natural gas, by building additional pipeline infrastructure in Ohio, Michigan, and Ontario (Canada). Following completion, the pipeline system is expected to move 1.5 Bcf/d (billion cubic feet a per day) of natural gas from southeastern Ohio, eventually ending in southern Ontario.
As of last March, 13 connection agreements were made with various Ohio markets affected by the proposed route. Since then, the project has faced turbulence from activist groups and countless townships. Just in the last couple of weeks, objection efforts have made news on several occasions. Just a few of these examples are below:
• The city of Green, Ohio has hired law firm, Frost Brown Todd to aid in the city’s fight to reroute the pipeline away from the city. City officials believe the pipeline will have a $120 million impact on the city. • Bowling Green city Council voted months ago to deny an easement offer to build part of the pipeline through the city, and now has protesters on the proposed ground attempting to further stall its construction. UC4POWER a local activist group and BGSU faculty believe the pipeline could contaminate local water supply. • One of the most peculiar reports comes from Medina County, where “the coalition to reroute Nexus” cites bats as an argument against pipeline construction. This part of the state is home to northern long-eared bats, a threatened species. As a threatened species, their habitat is supposed to be protected during the bats’ nesting season, but the coalition is fearful that Nexus could be granted an exception.
In attempt to avoid more conflict, Nexus pipeline partners asked FERC (Federal Energy Regulatory Commission) to expedite the decision to grant permission by February 3rd, to build the pipeline, before one of the FERC commissioners steps down. FERC was inactive in response. The Nexus project isn’t dead yet, but at the moment, the future does appear uncertain.
At this point it is old news, that the largest electric utilities in Ohio have been in discussions regarding “restructuring” competitive markets within the state. Despite their efforts to change the current seven-year construct, Ohio voters may be the biggest political snag in their way.
Based on a poll conducted in January and by Fallon Research and Communications, and first reported by The Cleveland Plain Dealer, Ohio voters are very much in opposition of a return to a regulated market construct that would allow monopoly utilities. The telephone survey was conducted in January polled a panel of 800 Ohio voters about key supporting issues. The results favoring energy choice and objection to monopoly utilities were consistent across party affiliation, gender, age, and location.
Results from Fallon Research’s Poll & The Plain Dealer’s Report:
More than 91 percent would oppose any law change allowing FirstEnergy or Columbus-based AEP to build new power plants and raise monthly rates to pay for them. AEP wants to do exactly that, build wind and solar farms and maybe new gas turbine plants while selling off or closing its old coal units.
Nearly 79 percent would oppose any legislation that did away with a customer’s choice to shop for power suppliers. Dozens of independent suppliers now compete for customers through a state-maintained “Energy Choice” website. A return to old-style regulation could end that kind of competition, say independent power companies, forcing customers to return to their traditional electric utilities for electricity as well as delivery.
Nearly 62 percent said they would oppose paying extra every month to support older power plants that cannot compete well against modern gas turbine plants. FirstEnergy has persuaded state regulators to do just that — though the latest subsidy does not mention its power plants. Federal regulators objected to earlier, more expensive proposals that spelled out exactly how the extra fees — amounting to an extra monthly consumer bill every year — would be spent.
Nearly 60 percent of voters would object to the creation of special subsidies for one fuel source — in this case FirstEnergy’s nuclear power plants, which are expensive to operate and do not always compete well against gas turbine plants. The idea has been adopted in New York and Illinois, but has been challenged as anti-competitive. FirstEnergy is considering asking for such a subsidy but has not made a final decision.
AARP and the Alliance for Energy Choice, a group representing independent power producers funded the statewide poll. The Alliance spokesperson, and former chairman of the PUCO, Todd Snitchler spoke on the results of the poll commenting that, “The results of the poll clearly demonstrate that talk about a need for re-regulation or changes to Ohio’s energy landscape, is pointed in the wrong direction.
Fallon Research and Communications. (2017). Ohio Voters on Energy Choice 2017. The Cleveland Plain Dealer [Distributor]. Retrieved from http://www.cleveland.com/business/index.ssf/2017/02/ohio_voters_want_energy_choice.html.
PJM capacity auction results for the planning year of June 2019 to May 2020 announced 5/24/16, were down significantly, almost 40% across most PJM markets from the prior year. BAD news for generators as it means less revenue to them, but GOOD for consumers in lower costs.
PJM procured 167,306 MW of power at a clearing price of $100 per MW-day in the majority of the region, down from $164.77 per MW-day last year. It met a reserve margin of 22.4%, meaning that PJM has excess capacity in the amount of 22.4% of expected peak demand. It is also the highest reserve margin in PJM auction history, ensuring reliability and availability of power for customers during the term.
The results were somewhat surprising considering PJM’s capacity performance (CP) program. Under this program, which was approved last year, power producers that agreed to deliver electricity whenever PJM determines it is warranted would receive higher capacity payments. PJM’s thought or hope was that the increased revenue would result in generators re-investing into their plant infrastructure, secure fuel contracts, and thus increasing reliability during peak demand periods. However, non-performance under this program results in significant penalties. Penalties that did not exist under the old base capacity program.
The 2019/2020 auction is only the second such event to adhere to PJM Capacity Performance program. In this year’s auction, 80% of the resources had to clear according to “capacity performance” with the remaining 20% clearing under the old capacity product “base capacity”. Next year’s auction for 2020/2021 will move to 100% capacity performance. The takeaway from this year’s auction and the decrease in price is that there would appear to be adequate generation to meet demand, with more coming on-line.
Does anyone remember “as sands through the hourglass, so are the Days of our Lives”? This is what it seems to be as the “Battle in the Buckeye State” has become with FirstEnergy and AEP Ohio and the approval of their respective rendering of the PPA’s. What had captured national attention from investors and regulators watching from the wings has now garnered the attention of the Feds. Specifically, the Federal Energy Regulatory Commission (FERC). The approval by our PUCO has now been put on hold by FERC for additional review and scrutiny for various reasons.
What seems to be at the heart of the issue is that both proposals put the consumers into a position that they are not able to mitigate or get out of having to pay (non-bypassable) charges that these PPA’s would have triggered.