By John Stang
Nine states and the District of Columbia have formally called on Energy Secretary Rick Perry not to use the Federal Power Act to bail out FirstEnergy Solutions’ ailing nuclear and coal power plants.
A few days later, Sen. Edward Markey (D-Mass.) joined their opposition.
Just before declaring bankruptcy in late March, Akron, Ohio-based FirstEnergy Solutions said it would by October 2021 halt power production at three nuclear plants: the Davis-Besse Nuclear Power Station in Oak Harbor, Ohio; the Perry Nuclear Power Plant in Perry, Ohio; and the Beaver Valley Power Station in Shippingport, Pa.
The company then asked Perry to use his authority under Section 202(c) the Federal Power Act to order regional power clearinghouse PJM Interconnection to sign contracts that guarantee FirstEnergy’s nuclear and coal plants can fully recover their costs along with a return on their investments.
Section 202(c) allows the federal government to take measures to keep struggling power plants online in cases of unexpected disasters or for national security— situations that critics argue don’t apply to FirstEnergy’s case. Such contracts would guarantee FirstEnergy a steady revenue stream, with critics worried that this could be a subsidy provided by ratepayers.
“Abusing section 202(c) in the manner requested by FirstEnergy would set a dangerous precedent that threatens all of our states, including those located outside of PJM’s service territory,” the state officials wrote in a May 9 letter to Perry. “The Request is legally flawed, and you should unequivocally deny it. Because the requested section 202(c) order would be unlawful. … The requested order would undermine competitive regional power markets, burden customers with excessive costs, undercut state energy laws and policies, and exacerbate pollution and public health harms.”
The letter was signed by officials from Massachusetts, Connecticut, Illinois, Maryland, North Carolina, Oregon, Rhode Island, Virginia, Washington, and the District of Columbia. Of those, PJM serves Illinois, North Carolina, Maryland, Virginia, and the District of Columbia.
“The ‘sudden’ “emergenc[ies]’ contemplated in section 202(c) do not include inefficient generators’ failure to turn a profit or their orderly displacement by other resources—a natural consequence of competitive markets,” the letter says.
In an appendix to that letter, the nine states said FirstEnergy and the Energy Department have not compiled statistics and facts to support arguments that the region’s power grid faces shortages and reliability issues if FirstEnergy’s nuclear and coal plants close. The proposal also does not include details on how PJM and FirstEnergy should map out potential contracts, the officials argued. The states also argue that renewable energy sources — such as wind power — are blossoming enough to counteract closures of FirstEnergy’s power plants.
“The proposal is a solution for a problem that does not exist. First and foremost, there is no evidence that electric system reliability is in any present danger,” said the appendix to the states’ letter.
Then on Monday, Markey also wrote to Perry: “I urge you to follow the law and respect the Federal Power Act, and not attempt to proceed with misusing obscure provisions of law to issue rules to artificially and unnecessarily prop up generators that are no longer competitive.”
The senator’s letter cited Perry’s May 9 testimony, before the U.S. House Science, Space, and Technology Committee, in which the DOE chief said his agency “is looking very closely at (a) number of ways to approach this.” He said, though, that DOE should in this case not apply Section 202(c) the Federal Power Act or the Defense Production Act, which Perry is also reportedly pondering.
FirstEnergy Solutions declined to comment on the two letters.
The Energy Department has not yet ruled on the FirstEnergy Solutions’ request, which PJM Interconnection also opposes. The agency did not respond to a request for an update.
