Trapped in subsidy wars
Americans who rely on low-cost, reliable electricity from coal-fired power plants are trapped in what we might think of as subsidy wars. So are the miners and communities that rely on such generating stations as markets.
Here’s the question about that: If you have to pay more for something, does it matter where you’re sending the money?
It was revealed a few days ago that FirstEnergy Solutions, a subsidiary of FirstEnergy Corp. in Akron, is seeking federal bankruptcy protection. The parent firm is not.
FirstEnergy’s problem is that it has too many coal-fired power plants. Some are old and either have been closed or are on schedule to go cold. But even coal-fired generating stations that are relatively new and in good condition, such as FirstEnergy’s Willow Island plant, don’t work very well in the current energy scheme of things. FirstEnergy had tried to sell Willow Island, but found no takers. In February, the company revealed it would shut the facility down.
During former President Barack Obama’s eight years in office, he launched a no-holds-barred assault on coal and affordable electricity. The Environmental Protection Agency was his sword. It was used so effectively that electricity generated from coal is seen as a bad bet by many utility companies.
President Donald Trump has tried to change that, rolling back many of the Obama-era rules. But it may be too late. Electric utilities may have moved on for good.
One strategy Trump hoped would help was his Grid Resiliency Pricing Rule. Its goal was to ensure the survival of enough coal-fired and nuclear power plants to maintain electric grid reliability.
The idea was that utilities could charge more for power from those sources than normally would have been approved by regulatory agencies.
But Federal Energy Regulatory Commission members refused, in a 5-0 vote, to allow use of the rule.
Their reasoning was solid — to a point. Why should any industry be authorized to charge a premium simply to ensure its continued existence?
In short, should customers have to pay more to use electricity from nuclear or coal-fired power plants? Should they have to subsidize the industries?
Ideally, no. But the reality is that all Americans have been subsidizing nuclear and coal competitors for years. Part of the reason for the Trump proposal was to allow coal and nuclear to recover from the costly, unfair Obama-era assault.
During the former president’s tenure, taxpayers paid out billions of dollars to subsidize solar and wind power. Without that money, those “alternative” technologies could not have been competitive.
Meanwhile, the Obama White House, through the EPA, ensured the coal and coal-fired power industries had to spend billions more to cope with new regulations. At the same time, government funding to develop new technologies to meet those rules was slashed.
The FERC said no to customer subsidies of coal-fired and nuclear energy.
Obama said yes to taxpayer subsidies of “alternatives.” He also said yes — even bragged about it — to making it prohibitively expensive to build new coal-fired power plants.
So you see the institutionalized hypocrisy of what’s happening. Uncle Sam is very concerned about giving anyone in the private sector a customer-funded advantage. But when it comes to someone Uncle Sam likes in the private sector, and taxpayers’ money can be used … well, that’s another story.
Had the FERC approved Trump’s plan, some consumers might have saved money by reducing their use of electricity. But government subsidies keep flowing whether consumers use the product in question or not.
At least we don’t have to write our subsidy checks to the electric company. We can just send them to Washington. Makes life less complicated, doesn’t it?
Mike Myer can be reached at firstname.lastname@example.org.