The New Trump Administration Push To Blow Up Energy Markets

David Roberts has a great post on efforts by Energy Secretary Rick Perry to essentially blow up the wholesale energy market in a naked effort to protect coal (and, to a lesser extent, nuclear) power plants from free competition. Basically, he proposed a new rule that would guarantee coal and nuclear power plants a positive return on their investments, regardless of whether their power capacity was used or even is economical. Whereas other power plants (ranging from wind to natural gas) make money based on their ability to compete effectively in the marketplace, a few preferred operators would get their profits guaranteed.

Nominally, this is because they uniquely contribute to grid "resilience" by being a source of power able to ramp up quickly in the event of a major disruption (like, say, a major weather event). The problem (well, the short version of the problem) is that all the relevant studies -- including those conducted by the DOE under the supervision of Secretary Perry in the hopes that they'd confirm his political preferences -- conclude that coal and nuclear power don't actually improve grid resilience, and that, in fact, the grid is generally quite reliable and resilient right now (and only improving). So the only real upshot is to serve as a massive intrusion on the market in favor of uneconomical coal power.* It's thus no surprise that one Republican former FERC commissioner described it as "the antithesis of good economics," or that simply said it would "blow the market up."

The whole article is worth your read, both as an introduction to how energy markets work (Roberts is great at explaining for a lay audience) and as an entry in the infinite-series of "Republicans don't actually care about market competition.

After laying out a litany of obstacles to passing the rule -- ranging from wall-to-wall opposition in the energy sector (outside of coal/nuke lobbyists) to severe time pressures to a complete lack of legal or policy justification necessary under the relevant statutes, Roberts concludes by saying the future of this proposal depends "on just how hackish and partisan FERC is willing to get." In other words, hold on tight.**

* As Roberts notes, while nuclear power is in a somewhat different boat from coal, this rule is also terrible policy as applied to supporting nukes.

** FERC is actually normally a relatively well-run agency, but at the moment it is controlled by Trump partisans who are, shall we say, not typically concerned with abiding by standards of technical expertise. So we'll see.