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  1. Lauding such policies is fine, as long as one looks at the overall effect the trump administration has on energy policies and the environment. Ms Korsnick lauds this policy, in part, because of its environmental effect..

    “The clear benefits they provide in terms of jobs, economic growth and environmental protection disappear too, thus the need for this decisive action now”

    …while ignoring the totality of the current deregulation policies, that are a disaster to our environment, both in air quality, and water quality, and in combating global warming..

    One step forward does not negate the impact of five steps backwards.

    1. @Jon Hall

      It’s incorrect to use the term “deregulation” to describe the policy efforts underway, especially in the context of a Grid Resiliency Pricing Rule. The focus of regulations may be different than they were in previous administrations, but I haven’t heard of any proposals that aim to eliminate all rules.

  2. Many of the (hyperventilating) reactions to this proposed policy, shown in the Utility Dive article below, are (AFAIK) record-breaking in terms of hypocrisy.

    Small amounts of subsidy or support for coal and nuclear plants will “blow up”, “unravel” and “destroy” the wholesale power market?? And yet, far larger market interventions on renewables behalf, including not just heavy subsidies but outright mandates for use are not a problem?? If these supports, for existing coal and nuclear plants, would “destroy the market”, and competition, then how could it be that CA’s 50% (soon to be 100%??) mandate for intermittent renewable energy would not also destroy the market, to an even greater extent? CA’s mandates for intermittent generation will (and already has) have a huge impact on the grid of the entire Western US. Competition??

    Whereas coal and nuclear supports may affect the competition somewhat, these RPS policies have called the competition off entirely, and declared renewables the winner.

    Why is nobody asking about (or suing) over this? If coal/nuclear supports like this can be blocked, for the reasons given, then why can’t RPS policies be blocked, by the courts? Fair competition matters for all sources except renewables?

    In the Utility Dive article, all the “esteemed experts” just repeatedly made those assertions about how the market would be “destroyed” w/o ever giving any explanation as to why or how. Given that, and the utter incoherency (and hypocrisy) of their statements, I can only conclude that they are not arguing in good faith, and that those “experts” are all in the pocket of the oil/gas industry. That is their only motivation.

  3. Despite the hypocrisy of the negative reactions to this policy, I have concerns as well. For starters is the obvious, that it would support coal plants and keep them open, coal being the worst of all sources in terms of public health and the environment.

    Also, I initially thought that they were talking about giving subsidies, to reflect coal and nuclear’s grid reliability benefits. Perhaps ~1 cent/kW-hr. I believe in policies like that. However, if I understand Rod correctly, qualifying plants would be given whatever it takes to cover their costs, plus a profit. Thus, they would stay open no matter what they cost? I don’t agree with this. Like anything else, grid reliability benefits are of a tangible, but finite, value, justifying a fixed (limited) subsidy.

    One of the reasons this is problematic is that it would render coal plants immune to any other policy inputs that would otherwise act to phase coal out, or at least make the market reflect its environmental impacts. A perfect example is the carbon fees proposed by CCL and others. Under this (DOE) policy, would coal plants be unaffected by a CO2 fee or tax, because they would just get those costs covered by the ratepayers? Thus, there would be no way to favor nuclear (or even gas) over coal, to reflect environmental attributes? In other words, this reliability policy would trump all other policies, such as those concerned with environmental impacts.

    Am I understanding all this correctly? What if there are multiple (more than enough) generators that can meet the grid reliability requirements? How would the policy decide which ones remain open? If all costs are covered for all facilities that meet the requirement, how would the market decide? Again, this all argues for some kind of subsidy, not having all costs covered.

    Personally, I think these grid reliability arguments are strained. The fact is that gas plants can maintain grid reliability, even with some significant amount of renewables penetration. What’s frustrating, for me anyway, is that people feel the need to make such (weak) arguments as opposed to making the real arguments in favor of nuclear (not coal), i.e., its environmental benefits. I suppose they think they need to come up with other arguments because Trump and the GOP are in charge.

    BTW, critics have pointed out that many gas plants can just start storing 90 days worth of oil on site, thus allowing them to qualify.

    1. @JamesEHopf

      Personally, I think these grid reliability arguments are strained. The fact is that gas plants can maintain grid reliability, even with some significant amount of renewables penetration.

      Gas plants depend on just in time fuel delivery. They can contribute to grid reliability as long as no one attacks their fuel source delivery system.

      As a career submariner who has a deep interest in history, I can testify that one great way to put stress on an enemy nation is to attack their fuel delivery systems.

      In places like Texas, with a profusion of gas sources and pipelines, this is not a major concern of mine. In Florida, California and New England, however, attacks on one or two key pipelines can cause a common mode failure in dozens to hundreds of power generation sources.

      I’d love to see a system proposal with rough cost estimates that effectively stores 90 days worth of gas. It’s possible with large underground reservoirs or maybe LNG, but it wouldn’t be “cheap gas” anymore.

      I’m with you on the risk of compensating all units with individually determined cost of service plus reasonable profit prices.

      One potential solution would be to determine a fair floor price for all units that can meet the established standards. Units that are well designed, maintained and managed would become better profit makers than those that are less competitive, but no sources could be unfairly driven out of the market by competitors that can afford to give away their products for a finite period of time.

      As far as I can tell, the words “predatory pricing” and “dumping” have not been used often enough to describe the behavior of certain market participants whose fixed costs have been covered by subsidies, mandates and other preferential treatment. We also need to keep reminding interested listeners that the electricity market has been destabilized by rapidly building more capacity than needed during a period when there was already insufficient demand for the product.

      1. Another consideration is the planned export of large quantities of natural gas as part of an economic warfare strategy against Russia. Because hydraulic fracturing rapidly depletes wells, new drilling must be continuously expanded. Both the supply and demand ends of the string will be extremely tight and prices could show extreme volatility on the upside in a few years – just when some of the currently unprofitable nuclear merchant plants are scheduled for shutdown.

      2. No, it’s no accident. The natural gas industry would welcome it. It would be interesting to see how much the natural gas industry has founded organizations, think tanks etc. to promote this strategy.

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