Grid operator PJM says federally-imposed power plant subsidies not needed

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Photo from the Delaware Emergency Management Agency.

PJM, the operator of the region’s electric power grid, says federally imposed subsidies for aging power plants in the region are not needed

Claims of a looming crisishave led the Trump Administration to order Energy Secretary Rick Perry to take measures to stop power plant closings.

The measure could force PJM and utilities to buy higher-priced power from coal and nuclear plants would boost electricity prices for customers. The measure triggered criticism from many quarters over federal intervention under the guise of national security.

Operators have been closing down plants as power costs squeeze profit margins. In some cases, subsidies are being sought on a state level for nuclear plants, which do not emit pollutants into the air.

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The generating capacity is being replaced by natural gas-fired plants that employ only a handful of employees when compared to the workforces of coal and nuclear plants.

“Our analysis of the recently announced planned deactivations of certain nuclear plants has determined that there is no immediate threat to system reliability. Markets have helped to establish a reliable grid with historically low prices. Any federal intervention in the market to order customers to buy electricity from specific power plants would be damaging to the markets and therefore costly to consumers,” PJM stated.

PJM noted that its capacity auction saw an increase in coal resources that along with a diverse mix of natural gas generation, nuclear generation, renewable resources, demand response and energy efficiency will lead to lower prices into the early 2020s. (See story below)

“The PJM electrical grid is more reliable than ever, with 23 percent reserve margins and billions of dollars of new investment. All of this is occurring while emissions are decreasing and wholesale prices are at historic lows for the 65 million consumers we serve. From 2008 to 2017, wholesale prices in PJM fell by more than 40 percent. Competition has required generators to operate more efficiently while also attracting new, more efficient technology, resulting in more than $1.4 billion in annual savings,” the grid operator stated.

PJM stated that it “acknowledged the concerns raised by officials and regulators about the long-term resilience of the grid and we are embarking on a fuel security initiative that we announced just a few weeks ago. Our goal with that initiative is to ensure that the already reliable electric grid will continue to remain both reliable and resilient for years into the future without the need for government intervention in the marketplace.”

PJM power auction could bring lower electricity prices in 2021

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