Owners of uneconomic coal plants in the US have tried many ways to keep operating, even when it is not profitable to do so, such as out-of-market subsidies and re-regulation (as we discussed in Episode #41), bailouts and wholesale market controls (as we discussed in Episode #70), and seeking capacity payments or other novel payments for alleged reliability (as we discussed in our trilogy of shows on decarbonizing power markets, Episodes #90, #97, and #105).
But there’s another tactic, variously known as “self-committing” or “self-scheduling,” and it happens when a utility that owns a coal-fired power plant elects to operate the plant no matter what the going rate for power is, even if that price is below its operating costs. Fully regulated utilities oftentimes can pass the costs of operation onto their customers even when they’re electing to run at a loss, without having to go to the trouble of asking for additional cost recovery from a regulator, or getting a legislator or wholesale market operator to give them a handout in one form or another. And it all happens more or less invisibly to customers and regulators. Only a researcher with a sharp eye and expert knowledge of what to look for would even detect these uneconomic operations, such as our guest in this episode.
What are the legal issues around new proposed subsidies for nuclear and coal plants? What are the new ways in which the authority of the Federal Energy Regulatory Commission (FERC) has to be distinguished from the authority of the states? Are states with economically challenged power generators sliding toward unintentional re-regulation, or will FERC and the courts step in to protect structured markets? And why is PURPA, the federal law that has undergirded renewable procurement since 1978, under fresh attack? In this episode, we explore these deep, dark, yet important and very contemporary legal questions with a Senior Fellow in Electricity Law at the Harvard Law School Environmental Policy Initiative. In addition to our deep dive on PURPA and around-market reforms, we’ll also discuss some of the likely implications of Trump’s new direction in energy policy, implications for the Clean Power Plan, and how the federal government’s leadership role on climate might be changing.
Owners of old nuclear and coal power generation in the US are on the ropes, because their plants can’t compete with cheaper natural gas and renewables. Some—especially those operating in competitive markets—are simply shutting down, while others are trying a whole host of survival strategies: seeking special payments and subsidies, “around-market reforms,” and even getting states to give up on competitive generation markets and go back to the old regulated utility business. So what are the pros and cons of these strategies, and what are the implications for consumers and for energy transition as a whole? Gavin Bade, an editor at Utility Dive who has written extensively on these topics, leads us through a tangle of legal, technical, and economic implications toward a more clear-eyed picture of how incumbent generators are trying to survive the transition.