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Perry's Plan Would Subsidize Coal And Nuclear Power – But It Wouldn't Apply To Texas

Mengwen Cao
Energy Secretary Rick Perry has proposed subsidizing coal and nuclear power plants.

One of the many things Donald Trump promised during his campaign was that he would boost the country’s coal industry. Soon after he won the presidency, though, it became clear to some experts that the future of coal in the U.S. was dim; that natural gas, wind and solar were pushing it out of the market.

The coal industry found an ally in Trump’s pick to helm the Department of Energy: former Texas Gov. Rick Perry.

This month, the typically free-market-minded Perry has pushed a policy that UC-Berkeley’s Severin Borenstein says may be the only viable way to save coal – and it looks like the administration agreed.

The proposal would federally subsidize coal and nuclear power, and it’s a dramatic reversal from a man who had spent his political career extolling the virtues of market competition.

But Perry has changed his tune, it appears.

“The idea that there is a free market in the energy industry is a fallacy,” he told a congressional subcommittee earlier this month.

He argued coal and nuclear power are the only two electricity-generators with power sources that can be stored on-site. That could be valuable to keep the grid running in the event of a natural disaster or attack, so propping up nuclear and coal facilities would be a matter of national security.

Borenstein says he’s not buying it.

“The Trump administration has manufactured a special [value] that coal and nuclear provide,” he said. “The problem is there isn’t a study that shows it’s incredibly valuable and, in fact, the earlier version of the Department of Energy study of resiliency … actually said it wasn’t incredibly valuable.”

A bipartisan group of former commissioners for the Federal Energy Regulatory Commission – the group tasked with implementing the subsidies – has come out against it, as well. The natural gas industry argues it is unfair, too.

But environmentalists argue that, if coal and nuclear power’s negative environmental impacts aren’t priced into its cost, their potentially positive qualities shouldn’t be subsidized either.

In Texas, there’s one other catch: The subsidies wouldn’t apply here, because the group that regulates the Texas grid – the Electric Reliability Council of Texas – operates independently of FERC.

“The thing with ERCOT is because its self-contained within Texas, it’s not under federal jurisdiction,” said Joshua Rhoades, a fellow at UT’s Energy Institute. “So any rule that FERC made that may prop up coal or nuclear plants would not apply here in Texas.”

So what are the odds that the subsidies take effect?

Lawyers at Harvard’s Environmental Policy Initiative have called the plan legally “dead on arrival.” FERC could also try to block or stall it through administrative procedure, and U.S. lawmakers could revolt and pass legislation to reverse it.

But Bornstein, who thought subsidies were unlikely last year, says he thinks they’re a least slightly more likely now.

“The way they’re doing it is administratively, not through Congress,” he said. “So they may have a shot at it because the president gets to appoint the commissioners of FERC, and he is likely to appoint people who do what he says.”

Mose Buchele focuses on energy and environmental reporting at KUT. Got a tip? Email him at Follow him on Twitter @mosebuchele.
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