Subsidize research, not money-losing coal and nuclear plants

If the Federal Energy Regulatory Commission approves Energy Secretary Rick Perry’s proposal to prevent financially ailing nuclear and coal plants from closing, it will upend electricity markets and force taxpayers to bear the brunt of subsidies. South Carolina is particularly vulnerable, since nuclear power and coal combined supply 84 percent of the state’s electricity.

Across the country, an abundance of low-cost shale gas and subsidized wind power, along with environmental regulations, has led to the shutdown of a number of money-losing nuclear and coal plants. Operators of regional electric grids say this has not caused a loss of reliability and therefore see no need for more subsidies.

Yet Neil Chatterjee, chairman of the federal commission, has called for creating new rules, compensating nuclear and coal plants for the value they offer to the electricity grid. He wants the commission to take immediate steps to save some power plants at risk of early retirement, without waiting until a thorough assessment of the potential losses in grid reliability is completed.

Government interference in electricity markets should be avoided if possible. Subsidizing renewable energy sources with federal tax credits for solar and wind power is a mistake that runs counter to the principles of a competitive market for electricity. Renewable subsidies should be discontinued. Subsidizing nuclear and coal would only compound the problem.

The government instead should increase funding for the development of small modular nuclear reactors and advanced nuclear plants that could be built for a fraction of today’s conventional nuclear plants. Support should also continue for development of more efficient and affordable systems for coal carbon-capture and storage.

There’s no question that nuclear and coal plants face serious challenges. Since the mid-1990s, natural gas has been the fuel of choice for nearly 90 percent of the new electricity-generating capacity in the United States. The loss of a diverse mix of energy sources for power production is something that needs to be addressed. If current trends continue, that diversity is seriously at risk. But subsidizing money-losing nuclear and coal plants isn’t the answer.

This story was originally published December 18, 2017 at 12:02 PM with the headline "Subsidize research, not money-losing coal and nuclear plants."