PSC Chairman Criticizes Plan to Prop Up Coal

by Kyle Massey  on Wednesday, Oct. 11, 2017 10:10 am   5 min read

The state’s top utility regulator expressed deep doubts Tuesday about Energy Secretary Rick Perry’s proposed rule to fortify the national electric grid’s “resilience” by providing cost recovery for coal and nuclear power plants.

Ted Thomas, chairman of the Arkansas Public Service Commission, made his remarks in a question-and-answer session after delivering the keynote address at the Arkansas Advanced Energy Association’s annual meeting and policy conference in Little Rock.

Thomas said Perry’s rule-making proposal before the Federal Energy Regulatory Commission is unnecessary because America’s electricity supply has already been deemed reliable, and that the move won’t save coal jobs because, by the Department of Energy’s own study, coal-fired electricity has lost ground in the market to cheaper power generated by natural gas.

“If it’s a gas problem, then the way to solve it is to ban fracking if you want to bring coal miners back to work,” said Thomas, a lawyer and former state lawmaker who was state budget director under former Gov. Mike Huckabee. “When the DOE grid study came out, I was relieved because it said the main culprit in the struggle that coal is having is natural gas, and I had said publicly that anybody who believed otherwise probably believes Elvis is still alive.”

The crowd erupted in laughter, but Thomas turned serious, calling the DOE study and the proposal Perry derived from it inconsistent. FERC members like Rob Powelson, a former Pennsylvania public utilities commissioner, have directed pointed criticism at the plan. “I did not sign up to go blow up the markets,” Powelson said this week, to which Perry replied that “there is no free market” for electricity.

Thomas, who was appointed to the PSC by Republican Gov. Asa Hutchinson, described the DOE’s plan as a way of picking sides. “What we have is a proposal that takes … a fuel-neutral policy and turns it into one where we’re picking winners, even though yesterday the EPA administrator was quoted as saying we’re not going to pick winners,” Thomas told the AAEA, a trade group made of renewable energy and efficiency businesses and allies. “This program picks winners, but it also performs a shift, saying that it’s renewables that cause the problems for coal when the DOE study found that it was gas. What they’re doing is choosing coal and nuclear over gas and renewables.”

Supporters of the proposed rule argue that coal and nuclear generators could fill any gap caused by potential problems with natural gas supplies, and can keep running when renewable sources are unavailable.

However, critics say that coal has already been effectively defeated in the market, and that the plan is basically a subsidy for the coal industry. Perry himself has compared his rule with Obama administration efforts to spur renewable energy advances, saying the previous administration “had their thumb on the scale at the great detriment to reliable baseload industries” that are crucial to the nation’s energy security.

In a somewhat related development, the Trump administration last week moved to rescind Obama’s Clean Power Plan, which sought to limit carbon releases by the energy industry and had been challenged in court by Arkansas Attorney General Leslie Rutledge. Rutledge hailed the widely expected announcement by Scott Pruitt, administrator of the Environmental Protection Agency, but environmental groups were outraged. Glen Hooks, director of the Arkansas chapter of the Sierra Club, said the decision proves that Pruitt cares more about “propping up the dirty fossil fuel industry” than about Americans’ health.

Hooks noted that the market in Arkansas and elsewhere had already turned against the use of coal for electricity generation, and said the job-creation potential of renewable energy makes the quest for resurrecting coal industry jobs irrational. “Pruitt is not just ignoring the deadly cost of pollution, he’s ignoring the clean energy deployment that is rapidly creating jobs across the country and right here in Arkansas,” Hooks said. The state’s utilities are “importing hundreds of megawatts of wind energy while also constructing multiple solar energy plants.”

Katie Niebaum, executive director of the AAEA, said that in just six years, her organization had grown to more than 80 members, with businesses and organizations representing 25,000 jobs and $2.8 billion in annual sales.

In Tuesday’s discussion, Thomas also said the Trump administration has altered the terminology of the grid reliability debate.

“They’ve invented a new term that folks are trying to figure out exactly what means, and that term is resilience,” as opposed to “reliability,” Thomas said. He noted that engineers with the North American Electric Reliability Organization had found that the current system is “sufficiently reliable,” but that its engineers’ judgment had been supplanted by voices “saying we need to elevate the standard so that we can charge more money and give it to coal and nuclear” generation.

“I don’t think that we should second-guess engineers in what is fundamentally an engineering business,” Thomas concluded.

AAEA Honors Morris Jenkins, Gerardo Galdamez

The PSC chairman’s remarks came after a flurry of policy conferences and awards presentations by the AAEA, which honored Morris J. Jenkins as the recipient of the Ron Bell Advanced Energy Leadership Award.

The Ron Bell award goes each year to a business leader, researcher or public servant for outstanding contributions to the cause of advanced energy in Arkansas.

Jenkins, who retired in 2015 after 41 years of service to the state, was director of the Arkansas Energy Office from 1987 to 1998. Later he was director of strategic planning and legislative liaison for the Arkansas Economic Development Commission. A Pine Bluff native, he is a graduate of the University of Arkansas at Fayetteville.

Other finalists for the award included Bill Harrison, CEO of Harrison Energy Partners; Chris Ladner, a founding parter of the sustainability and energy services company Entegrity and owner of Home Energy Rx; and Frank Mayfield, a former vice president of Harrison Energy Partners and an advanced energy advocate for 35 years.

The association also honored Gerardo Galdamez of Entergy Arkansas as the winner of its Rising Star Award, and Entegrity as its Business Innovation Award winner.

Galdamez, a New Orleans native and first-generation American, earned a mechanical engineering degree at Tulane University and a master's degree in business administration at the University of Arkansas at Little Rock. He joined Entergy in 2011 and helps manage the company’s nationally recognized efficiency portfolio.

Founded in 2007, Entegrity has grown to more than 70 professionals working in Fayetteville, Memphis, Little Rock, St. Louis, Denver and Jackson, Mississippi.

The AAEA used the conference to showcase its priorities of supporting solar and other renewable power before the PSC, promoting energy-performance contracting and public utility energy efficiency, as well as backing innovative advanced energy finance programs like PACE.

PACE, for Property Assessed Clean Energy, allows the financing of energy efficiency programs through the creation of energy improvement districts that allow projects to be paid off with an assessment on customers’ property tax bills.

One of the sponsors of the conference was Ygrene Energy Fund, one of the nation’s leading PACE financiers and one that, coincidentally, announced a major acquisition on the same day as the AAEA event. Ygrene has acquired Energy Equity Funding LLC, a pioneer administrator of commercial PACE lending. The combined operation will be based in St. Louis.

Byron DeLear, the former CEO of Energy Equity Funding and now managing director and central regional executive for Ygrene, spoke at the AAEA event, held at the Hilton Embassy Suites on Financial Centre Parkway.

DeLear said that PACE financing had provided some $4 billion for 150,000 projects nationwide, and that about 90 percent of that total was devoted to residential projects. Arkansas’ PACE programs are exclusively for commercial projects, something that advocates would eventually like to change.

“There are now three states with active PACE residential programs, California, Florida and Missouri,” DeLear said. “My home state of Missouri leads the entire Midwest in clean energy job growth, adding 13,000 jobs in 2015-16 and growing at 8.3 percent a year.” He said the American Council for an Energy-Efficient Economy had specifically recognized the role of PACE financing in that growth.

 

 

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