Exelon Corp. President and CEO Christopher Crane praised the Trump administration Wednesday for taking action to shore up the nation’s economically distressed coal and nuclear power plants to ensure grid resilience and reliability.
As utilities across the nation increasingly shift to natural gas and renewables, “getting the market design right and looking at the resiliency is really a requirement that we need federal intervention on,” Crane said on stage at the Edison Electric Institute’s annual convention in San Diego.
Utilities don’t have resource planning at the national level to determine which type of power — be it baseload, peaking capacity or renewables — is necessary to meet system needs, as well as affordability and environmental targets.
“That’s what I think the administration is doing now...not only price formation to make sure the units are adequately compensated, but the resiliency review from the unintended consequences of driving plants out of the stack that we need for reliability,” Crane said.
The CEO's comments come shortly after a leaked memo revealed the Energy Department is seeking to mandate that grid operators must buy power from failing coal and nuclear plants to prevent them from shuttering. The memo states federal action is necessary to stop the premature retirement of “fuel-secure generation capacity” in the name of national security.
The memo suggests the administration draw on emergency authority enabled under two laws: the Defense Production Act and the Federal Power Act. Both offer the federal government the power to shore up fuel supplies and other national resources in the event of an emergency.
Exelon owns all or a portion of 16 nuclear power plants across the Eastern U.S. The company announced earlier this year it’s closing one of those plants ahead of schedule, citing high operating costs and competition from other energy resources.
Crane has repeatedly called for market reform to boost compensation for struggling nuclear power plants, which he says are critical to maintaining grid reliability and keeping carbon emissions low.
“This is not a war on gas or a war on renewables; it’s the physics of the system and how it works,” he said Wednesday.
“We have an administration that we greatly appreciate now that recognizes this is an under-analyzed situation, and if we don’t focus on resiliency and national security, we could end up in a very dire situation,” he added.
The Trump administration has yet to officially release the proposal described in the leaked memo. But the president has formally tasked Energy Secretary Rick Perry with presenting him with policy proposals to stem the loss of coal and nuclear resources.
According to the memo, the DOE would require grid operators to purchase power from those facilities for a period of 24 months while the department completes a more in-depth analysis on vulnerabilities in U.S. energy delivery systems, including electric generation and transmission, natural gas and petroleum pipelines, and supply chains.
This type of analysis “has to be done, and that’s the analysis the government has taken on,” said Crane. However, the leaked memo does not offer enough detail on the interim coal and nuclear bailout proposal for Exelon to say whether it’s the right solution.
When asked by reporters if he wanted to see the DOE take emergency action to address power plant retirements Crane said: “We want action. I don’t know how you call it emergency or not emergency — we want action. This administration supports action; we support this administration.”
As for the memo: “There’s not enough information for us to pass judgment on it,” he said, clarifying an earlier statement.
The Federal Energy Regulatory Commission opened a proceeding in January to “holistically examine the resilience of the bulk power system.” It initiated that proceeding after rejecting DOE’s previous proposal to support coal and nuclear plants.
Crane said the FERC chairman is expediting that proceeding. He said the focus and the agency’s work on the matter is “exactly what we want to see” to help understand any vulnerabilities in the system.
“We’re getting a greater dependency on gas, and that’s great for the economy and great for manufacturing, but at the end of the day, we’re going to be held accountable for keeping the lights on and keeping it affordable,” Crane said.
“One thing I know is when we shut a nuclear plant down, it's never coming back.”
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