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Rejection of Trump plan to have ratepayers subsidize coal, nuclear power applauded by consumer groups

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The Bruce Mansfield Plant in Shippingport, Beaver County, pictured Friday, Aug. 7, 2015, is FirstEnergy's largest coal-fired power plant.

Coal- and nuclear-related companies panned an independent energy agency's rejection of a Trump administration plan to force ratepayers to subsidize their operations, while just about everyone else applauded it.

The Federal Energy Regulatory Commission on Monday voted, 5-0, to reject the proposal. Energy Secretary Rick Perry said the subsidies are necessary to ensure the “resiliency” of the nation's electric grid during severe weather and other catastrophic events.

In the same vote, the commission started a formal process to review the grid's reliability and determine what actions may be needed to improve it.

The proposal drew opposition from industrial and residential consumer groups as well as environmental groups.

Perry's proposal would have required regional transmission organizations such as PJM Interconnection to charge ratepayers the cost of maintaining aging coal-fired and nuclear power plants under the theory that they are the plants that can be counted on to keep operating in adverse conditions because of their on-site fuel stockpiles.

Commissioner Richard Glick noted in a statement explaining his vote that the reverse is often true because those stockpiles freeze solid, get flooded or otherwise become unavailable.

“In fact, initial reports indicate that coal-fired facilities accounted for nearly half of all forced outages in PJM during last week's period of extreme temperatures,” he said. One nuclear plant also was removed from service, he said.

PJM coordinates the wholesale electricity market in Pennsylvania and all or part of 12 other states. It estimated that Perry's proposal would have added more than $30 billion annually to its 65 million customers' electricity bills.

Manufacturers are among the biggest electricity customers, and the Pennsylvania Manufacturers Association opposed the proposal.

“We're grateful that FERC made the right call,” said president and CEO David N. Taylor.

Pennsylvania has successfully deregulated its electricity markets, resulting in rates that are lower than the national average, he said.

“The proposed rule from Secretary Perry would have undermined all of that,” Taylor said.

Coal-fired power plants make up about 58 percent of FirstEnergy Corp.'s generation system and nuclear plants make up 25 percent, according to the company's website.

Those plants operate around the clock with dedicated fuel sources, but the wholesale market doesn't fully compensate them for that reliability, company spokeswoman Jennifer Young said.

“The FERC rule would have helped address some of that,” she said.

The company is conducting a strategic rule scheduled to finish in the summer, and the result could be a decision to close or sell some of its plants, she said.

“The future of FirstEnergy's competitive generating facilities remains challenged ...,” she said. “FERC's decision will certainly play into that process.”

The Pennsylvania Coal Alliance said it believes the new review will validate the industry's position.

“In light of baseload coal plants outpacing all other energy sources by providing 40 percent of electricity during the recent cold snap, we are confident that FERC's new proceeding will demonstrate the need for affordable and reliable coal-fired generation in a resilient portfolio,” executive director Rachel Gelason wrote in an email.

NRG Energy Inc. operates about 50,000 megawatts of generation capacity with about 30 percent fueled by coal, 48 percent by natural gas and 2 percent by nuclear. In comments to FERC, the company agreed with Perry that the current system fails to adequately compensate plants for their reliability but disagreed with his solution.

It applauded FERC's decision to reject Perry's proposal but investigate the issue.

“We believe it's a win for consumers and competitive energy markets,” said company spokeswoman Marijke Shugrue.

Brian Bowling is a Tribune-Review staff writer. Reach him at 724-850-1218, bbowling@tribweb.com or via Twitter @TribBrian.