WASHINGTON — Federal regulators on Monday rejected a proposal by Energy Secretary Rick Perry to subsidize struggling coal and nuclear plants, in a major blow to the Trump administration’s efforts to revive America’s declining coal industry.
Over the past decade, an influx of cheap natural gas and the rapid rise of renewable energy has transformed the nation’s power sector, driving down electricity prices and pushing many older coal and nuclear plants into retirement.
In September, Mr. Perry warned that the loss of these plants could threaten the “reliability and resilience of our nation’s grid” and asked the Federal Energy Regulatory Commission, which oversees regional electricity markets, to guarantee extra compensation to any power plants that can stockpile at least 90 days’ worth of fuel on-site — which, in effect, meant subsidizing coal and nuclear plants. (Natural gas plants are usually fed by pipeline and would not qualify.)
While a few power companies with significant coal and nuclear capacity supported the idea, Mr. Perry’s proposal generated a fierce backlash from a broad coalition of utilities, electricity consumers, and former regulators.
Critics argued that Mr. Perry’s proposal would upend competition in the nation’s electricity markets, which currently tend to favor the lowest-cost sources of power. And they pointed out that blackouts usually occurred because of problems to transmission lines, not because power plants had insufficient fuel on site.
In its decision, FERC largely sided with the critics, although it did say it would conduct its own separate investigation into the resiliency of the nation’s power system, asking grid operators for their own ideas. Four of the five members of the panel were nominated by President Trump.
“There is no evidence in the record to suggest that temporarily delaying the retirement of uncompetitive coal and nuclear generators would meaningfully improve the resilience of the grid,” the agency said. “Rather, the record demonstrates that, if a threat to grid resilience exists, the threat lies mostly with the transmission and distribution systems, where virtually all significant disruptions occur.”
While the Trump administration has moved to roll back climate and pollution regulations in an effort to help coal plants, the industry continues to struggle in the face of cheap natural gas. Utilities shut down more than 22 gigawatts of coal capacity across the country, and more retirements are expected this year.
“I appreciate the Commission’s consideration and effort to further assess the marketplace distortions that are putting the long-term resiliency of our electric grid at risk,” Mr. Perry said in a statement. “As intended, my proposal initiated a national debate on the resiliency of our electric system.”