Dear FirstEnergy, America doesn’t need your coal plants

Why do grocers mark down the price of asparagus in the spring, or strawberries in the summer? Because they’re in season and stores have excess supply, and they need to increase demand by cutting prices. The lower prices are a sign, or “price signal,” of excess supply, and the grocers are following the economic law of supply and demand.

Electricity markets follow the law of supply and demand, too. Falling electricity prices are a price signal that we have more power plants than we need. The Federal Energy Regulatory Commission (FERC), which oversees our nation’s electric grid, reports on wholesale electricity prices, and their latest State of the Markets report is an eye-opener.

The report shows that we’re retiring old coal plants at a fast clip, but we’re adding new natural gas plants at an even faster clip – causing power prices to plummet. In PJM, the largest regional electricity market in the country, 1.9 GW of coal plants closed in 2017 as 2.8 GW of new natural gas plants were added.

Utility companies must have access to enough power plants to produce all the electricity needed to serve their customers – known as “capacity.” In the PJM region, utilities purchase electricity capacity through auctions in which power plant owners bid to meet the utilities’ demand. In the latest PJM capacity auction for 2020-2021, prices fell 23 percent – showing that we have more power plants than we need, as far as the eye can see.

So why is FirstEnergy – an Ohio-based utility that recently filed for bankruptcy – asking the Trump Administration to bail out its old coal and nuclear plants? Because it’s trying to make up for more than a decade of bad business decisions investing in outdated coal and nuclear plants that can’t compete with newer, more efficient natural gas and renewable plants. The company wants customers to pay higher prices for the electricity from its coal and nuclear plants we don’t need – especially when there are cleaner, more affordable energy options available to serve Americans in this region.

As Rep. Frank Pallone (D-N.J.) recently analogized, “This request from FirstEnergy, in my opinion, is like calling 911 because your credit card got declined.”

FirstEnergy is trying to justify this unprecedented government handout by claiming its coal and nuclear plants closing constitutes a national emergency, even when the PJM grid operator found these claims to be unfounded.

To push its bailout claim, FirstEnergy has spent millions to buy a dream team of K-Street lobbyists connected to President Trump. And Secretary of Energy Rick Perry is on record last week saying he’s “looking very closely” at using an obscure, Korean War-era law to protect uneconomic coal and nuclear plants from retiring, confirming fears that the administration is still considering a bailout more than a month and a half after FirstEnergy’s original request.

But as Rep. Frank Pallone (D-N.J.) recently analogized, “This request from FirstEnergy, in my opinion, is like calling 911 because your credit card got declined.”

Just like seasonal fruits and vegetables on sale, falling electricity prices show we have more power plants than we really need. Hopefully, our elected leaders will reject FirstEnergy’s greedy plea and allow our energy markets to do what they do best: operate according to the laws of supply and demand

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