Plan to support coal, nuclear divides U.S. energy industry

WASHINGTON (Reuters) - U.S. industries that rarely agree - gas drillers and renewable energy producers - urged a federal agency on Monday to dump a government directive to prop up ageing nuclear and coal plants, saying the electricity grid was already reliable.

The split in the energy industry showed that a Trump administration push to make the country energy “dominant” by boosting output from every part of the sector may face hurdles.

A group of 20 organizations including the Independent Petroleum Association of America and the Solar Energy Industries Association submitted comments to the Federal Energy Regulatory Commission as it considered a regulation proposed late last month by U.S. Secretary of Energy Rick Perry.

Perry’s directive would reward certain nuclear and coal fired power plants that store 90 days of fuel on site for contributing to the reliability of the power grid. He wants the FERC to pass the rule before the winter season starts.

The groups said Perry’s request “fails to provide substantial evidence” for its claim that competitive markets do not already value fuel security.

The proposed rule would “prop up uneconomic generation that is unable to compete … and that is not otherwise needed for reliability,” the groups said.

The FERC rejected a request to extend the comment period on the directive that ended on Monday. But its three commissioners have hinted that they may not pass the rule, or that it could be changed, because they do not want to damage competitive markets. The FERC panel is supposed to be five members strong, but the U.S. Senate has not yet voted on two other FERC nominees.

Coal and nuclear interests insisted that many plants need the support in order to survive. Coal producer Murray Energy MUYEY.UL said in comments to FERC that it and other coal producers and related industries are "threatened with bankruptcy and significant economic harm" if plants and other operations are forced to shut by "unreasonable and unsupportable market pricing mechanisms."

Robert Murray, the head of the company, has urged the Trump administration to kill many environmental rules that affect coal producers and he stood by the president’s side earlier in the year as he signed a law repealing limits on the dumping of coal waste into streams.

Maria Korsnick, head of the Nuclear Energy Institute, an industry group, said that the failure of power markets to value nuclear power’s contribution of reliable power to the grid has led to early retirements of many nuclear reactors, which generate electricity almost free of emissions linked to climate change.

Reporting by Timothy Gardner; Editing by Andrew Hay