Innovative GOP Energy Policy: Picking Losers

October 3, 2017

vogtle2

There are some very good arguments to support ” next generation” nuclear plants, technologies that have not yet been proven out, and may in the future provide reliable carbon free power.

Energy Secretary Rick Perry’s latest proposal, so far as I can see, does nothing to bring that closer.
What we have is government throwing public money after very much “old” nuclear projects that have, true to form, gotten bogged down in construction, grossly over budget, and threatening to crush the utilities that commissioned them.

That, and subsidies for coal fired power.

Washington Post:

Energy Secretary Rick Perry took sweeping steps on Friday to buttress a pair of financially-strapped nuclear plants under construction and redefine how coal and nuclear plants are compensated for the electricity they provide — a move that, if agreed to by independent federal energy regulators, could tilt some of the nation’s complex power markets away from renewables and natural gas.

Perry announced the Energy Department would provide $3.7 billion in loan guarantees to three Georgia utilities struggling to complete a pair of nuclear reactors at the Alvin W. Vogtle generating plant. These loan guarantees come on top of $8.3 billion in loans the department has already given to the project, but they still might fall short of what will be required to complete the costly reactors.

The nuclear project has been running far over-budget and behind schedule, and the utilities have been scrambling to come up with financing after the main engineering company, Westinghouse, declared bankruptcy earlier this year.

The nuclear industry has urged the federal government to help, saying the AP1000 reactors are part of a new generation of nuclear plants. “I believe the future of nuclear energy in the United States is bright and look forward to expanding American leadership in innovative nuclear technologies,” Perry said. He noted the project had created approximately 6,000 construction jobs and, if completed, would create about 800 permanent jobs.

The aid for Vogtle partners would be issued by the Energy Department’s loan guarantee program, which President Trump’s 2018 budget proposal would abolish.

“They certainly have courage to contradict their convictions,” said Henry Sokolski, executive director of the Non-Proliferation Policy Education Center and a longtime critic of federal energy loan guarantees.

Many Republicans have criticized the Energy Department’s loan guarantees, often citing a loan given to Solyndra, a photovoltaic panel manufacturer that went bankrupt. Defenders of the program say the loan guarantee program’s failure rate is well below the level Congress anticipated when it created the program.

Note: worth mentioning that the much cited Solyndra bankruptcy was part of a  portfolio of support for cutting edge renewable energy business models, the vast majority of which were successful, so much so that the taxpayers will realize a 5 billion dollar return on the investment.

vogtle

“First it’s losing solar programs. Now it’s losing nuclear programs. When are we going to stop subsidizing losers?” Sokolski said.

The new loan guarantees would provide $1.67 billion to Georgia Power, a subsidiary of Southern Co.; $1.6 billion to Oglethorpe Power Corp.; and $415 million to three subsidiaries of the Municipal Electric Authority of Georgia.

Critics of the loan guarantees say the construction of the Vogtle reactors is risky and there is a strong possibility the loans will not be repaid. The Georgia Public Service Commission must review the utilities’ financial plans and construction progress regularly because the utilities have already been passing along costs to consumers.

“Department of Energy officials should be exercising more caution now, with billions of taxpayer dollars already on the line for the ill-fated nuclear reactor project. Instead, they’ve doubled down on a bad decision,” said Ryan Alexander, the president of Taxpayers for Common Sense, in a statement.

Perry also moved Friday to help nuclear and coal plants competing in regional electricity markets. Citing his department’s recent, contested study about the workings of the electric grid, Perry asked the independent Federal Energy Regulatory Commission, or FERC, to adopt new regulations that would ensure coal and nuclear plants that add to the grid’s reliability can “[recover] fully allocated costs and thereby continue to provide the energy security on which our nation relies.”

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Perry’s letter to FERC, and the proposed regulation, argue these so-called “baseload” plants provide critical stability and reliability to the electric grid and should be compensated accordingly. They cite not only the department’s recent grid study, but also the recent hurricane disasters afflicting the United States and power outages during the 2014 Polar Vortex event.

“What’s most significant about this is that we’ve been working on these issues for the better part of the last 3-plus years, even longer — and what the Secretary has done is said, enough talk, we need to actually act,” said Matt Crozat, the senior director for policy development at the Nuclear Energy Institute, which hailed both of Perry’s moves Friday. “And so what this is going to do is drive to some conclusion what a policy action is going to be.”

FERC has 60 days to decide what action to take, and there is no guarantee the independent agency will go along with Perry’s request. Trump has recently appointed people to key posts at the agency — and the commission’s new chairman, Neil Chatterjee, has already signaled he could be receptive to the move.

Axios:

Bigger picture: This move would help the companies behind the project, but the broader nuclear energy industry is still facing broader challenges, like cheap natural gas and concerns about radioactive waste, that will make it hard for the sector to keep growing. The high cost and protracted process it’s taking to get this project across the finish line could also scare away investors.

The details: Energy secretary Rick Perry is announcing conditional commitments to three separate companies involved in the two reactors, called Vogtle, according to details reviewed by Axios:

  • $1.67 billion to Georgia Power Company
  • $1.6 billion to Oglethorpe Power Corporation
  • $415 million to three subsidiaries of Municipal Electric Authority of Georgia

Context: This makes the total amount of money the government has loaned for this project $12 billion.

Washington Post:

As he did nearly a year ago to win the presidency, Donald Trump has done the seemingly impossible and brought together disparate coalitions of unlikely interests. This week, it happened again when Trump managed to unite an unlikely band of fossil-fuel and renewable-energy advocates.

These 11 energy associations are working together. Together, that is, against the Trump administration’s latest  energy policy directive.

On Monday, a coalition of 11 energy lobbying groups asked the Federal Energy Regulatory Commission to delay issuing and enforcing a new rule issued by the Energy Department. Energy Secretary Perry had asked for FERC to streamline the rulemaking process but the groups want time to weigh in during the traditional comment period.

The coalition attracted some strange bedfellows, including renewable-energy lobbyists such as the American Wind Energy Association and the Solar Energy Industries Association and oil and gas heavyweights such as the Natural Gas Supply Association and the American Petroleum Institute.

“This is the first time we’ve filed a motion in conjunction with API,” said Gil Jenkins, a spokesman for the American Council on Renewable Energy, one of the groups in the coalition.

“So, it’s unprecedented,” Jenkins added. “Just as this very action taken by DOE.”

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One Response to “Innovative GOP Energy Policy: Picking Losers”

  1. webej Says:

    Preferential treatment for coal and nuclear. Just say subsidy. Because all that solar energy would be impossible without government money, and poor people in America need that cheap coal power. All these people are just whores for special interests.

    The idea that you should give guaranteed and preferential treatment to energy plants for their contribution to grid stability is not a free market argument. Grid stable power would command rates at a premium set by the spot electricity market. And if you want resilience (like in Florida), the answer is obviously more diversity of sources and scale, not money for monopolies.


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