For more than a year, talk of a coal bailout has hung over Washington.
First, the Trump administration tried to push its grid resilience rule through the Federal Energy Regulatory Commission. When that failed, they huddled on a strategy to preserve ailing generators using federal emergency powers, and even pressured a utility on Twitter to keep uneconomic plants open.
None of those actions has stemmed the tide of coal closures as cheaper natural gas and renewables undercut the large, inflexible generators. But according to one analyst, many wholesale power markets include a wrinkle in their rules that already has ratepayers subsidizing coal generators at more than a billion dollars a year.
"There are a lot of coal plants that are operating for months or years at a time when the market price would never actually justify it," Joe Daniel, senior energy analyst at the Union of Concerned Scientists (UCS), told The Electric Power Station at the annual meeting of the National Association of Regulatory Utility Commissioners in November.
The issue is market rules that allow plants owned by monopoly utilities to "self schedule," or choose when they generate power regardless of market clearing prices. Over three years, Daniel calculated that the practice cost ratepayers $4.6 billion across four markets — PJM, MISO, SPP and ERCOT.
"[Utilities] are able to pass those costs on to customers, so we end up footing the bill," Daniel said. "That's why I call it 'the coal bailout no one is talking about,' because every month when some customers are paying their bills they are unwittingly subsidizing these coal plants that should just operate less or not at all."
Why are utilities doing this and what can be done about it? Listen to the latest episode of EPS and check out Daniel's links below.
The coal bailout no one is talking about, UCS Blog