Democrats believe Energy Department Chief Rick Perry’s proposal to make the energy grid more resilient could distort energy markets and give unfair preferential treatment to coal producers.
Conservatives have long-argued that Democrats’ support for green energy subsidies exemplified a desire to pick winners and losers in the market place. Democrats now use the same point to attack Perry’s goal to help coal producers.
Perry gave the Federal Energy Regulatory Commission (FERC) a review of his plan to force grid operators to give higher payments to plants with three months of fuel storage, which would apply almost explicitly to coal and nuclear power. Green energy suppliers generate intermittent power.
“You are distorting the market, damaging the environment and delivering preferential treatment to favored industries,” Democratic Rep. Frank Pallone Jr. of New Jersey, told Perry during the agency chief’s testimony Thursday in front of the House Energy and Commerce Committee.
“At the end of the day, killing off competitive electricity markets just to save generation assets that are no longer economical will lead to higher prices for consumers,” said Pallone Jr., the top Democrat on the committee.
Conservatives and energy analysts made similar points about Perry’s proposal – they argue the former Texas governor and free market supporter should know better than to support policies that tilt markets in favor of one industry.
“This is inconsistent with a longstanding policy of fiscal responsibility and open markets that have always been espoused by what I thought of as the Republican Party,” Nora Mead Brownell, former Republican FERC commissioner, told reporters the day of the Perry’s testimony.
“There is no free market, but you don’t fight intervention with intervention,” said Tom Pyle, the president of free market group Institute for Energy Research. “He’s recognized the symptoms but he’s not proposing the right cure.”
Perry, for his part, argued critics of his proposal were moot because, “we have subsidized the energy industry for a long time,” adding: “I, frankly, don’t have a problem with that.” His proposal comes after the Department of Energy conducted a study earlier this year showing green energy suppliers and natural gas is squeezing the coal industry.
Most of the country’s coal plants are closing because they are unable to compete subsidized green energy technology in a low electricity demand environment, the agency noted August in the study. The agency billed the study as monumental in scope, but the findings dovetail with what most analysts have been saying for several years.
Most of the coal and oil retirements from 2011 to 2015 happened because plant owners chose to shut down rather than invest in expensive instruments required to comply with Environmental Protection Agency’s final Clean Power Plan rule that was finalized during former President Barack Obama’s administration.
Perry’s pushed for the study in April based on the idea that coal provides a base-load level of support for the grid to help defray the risks solar and wind power pose to the grid.
The final study appears to support at least part of Perry’s contention. Coal has historically provided a consistent level of energy, whereas natural gas exists in a more volatile market and clean energy lacks consistency.
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