- - Thursday, January 11, 2018

ANALYSIS/OPINION:

The Trump administration took a blow this week from its own Federal Energy Regulatory Commission, which ruled against further subsidies to financially ailing coal and nuclear plants. The blow was deserved. Energy Secretary Rick Perry had endorsed renewed taxpayer subsidies of several coal and nuclear plants that face bankruptcy due to historically low prices of natural gas, the chief alternative to coal and nuclear.

Mr. Perry argued that these subsidies are needed to preserve the reliability and resiliency of the nation’s electric power supply. That’s important, and crucial to the nation’s economy and security. But rejecting further handouts to failing plants was nevertheless the right thing to do. Subsidies and mandates only pass higher costs on to taxpayers and ratepayers.

As a result of the ruling, as many as 23 coal plants may be shut down over the next few years, according to a report by Bloomberg News. The Nuclear Energy Institute says that six nuclear plants will be mothballed, and that’s a lot of power generation to lose, but the boom in cheap and abundant shale gas can easily make up the difference.

Notwithstanding the cheering from the “green energy” left, there remains an economically viable future for nuclear and coal power. Coal is hardly going away. In the first six months of this year, U.S. coal production was up by more than 10 percent and remains the single largest source of electric power generation in the United States. Coal is no dying industry. Nuclear generation provides about twice as much power as wind and solar combined.

The best way to ensure low-priced electric power to homes and businesses, and to promote the reliability of the grid so that the lights stay on, is to let the free market work. The vast and dizzying array of subsidies, credits, and taxpayer handouts in the power industry has become an arms race.

It’s ironic that the wind and solar industries led the charge for ending subsidies for coal and nuclear plants. Studies by the Department of Energy and the Institute for Energy Research find that taxpayer support for green energy has exceeded $100 billion over the last decade, and those subsidies are many times higher than for subsidies of natural gas, hydro, coal, or nuclear power per kilowatt hour. This is because wind and solar power are very expensive, and very unreliable.

The Institute for Energy Research finds that “electricity from new solar is nearly five times more expensive than from existing nuclear and more than three times more expensive than from coal. Electricity from the wind is more than three and a half times more expensive than from nuclear, and more than two and a half times more expensive than from coal.” The wind industry concedes that without the federal Production Tax Credit subsidy — which Congress failed to eliminate in the tax reform legislation — wind energy would go out of business. Wind turbines turn only when the tax dollars flow in their direction.

The survival of those unwarranted credits has only prompted the coal and nuclear industries to seek similarly sweet tax credit incentives in an upcoming tax extender bill and a cornucopia of state bailout money.

In a rational world, this week’s ruling by the Federal Energy Regulatory Commission would be the first of many steps to taking the government out of the electric power markets and enabling competition and innovation to lower prices.

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