By George Harvey
Rick Perry has directed the Department of Energy (DOE) to do a 60-day study of the United States electric grid. The memo was not publicized or posted, but I got a copy from the DOE. When this article appears online, the memo will be attached. (It is below.)
At first glance, itlooks innocuous. Nevertheless, it was based on bad assumptions and seeks answers that support the administration’s political views. Perry started the memo by expressing a concern about what he called a “need for an energy transition utilizing greater efficiency and fuel diversity.” That might sound innocuous, but it is not because it makes an assumption. It says right from the start that we need to use fuel.
Perry went on, saying, “Baseload power is necessary to a well-functioning electric grid. We are blessed as a nation to have an abundance of domestic energy resources, such as coal, natural gas, nuclear, and hydroelectric, all of which provide affordable baseload power and contribute to a stable, reliable, and resilient grid.”
Neither wind power nor solar was mentioned as a resource. From Perry’s memo, I can only assume that he believes they cannot contribute to baseload power, which they are doing in power grids in other parts of the world. Wind power, for example, is starting to be used to stabilize the grid in northern Germany and Denmark.
Perry said, “[Some people] have highlighted the diminishing diversity of our nation’s electric generation mix, and what that could mean for baseload power and grid resilience. This has resulted in part from regulatory burdens introduced by previous administrations that were designed to decrease coal-fired power generation.” Clearly, Perry’s assumptions are based on Trump’s propaganda.
Continuing, Perry said, “Finally, analysts have thoroughly documented the market-distorting effects of federal subsidies that boost one form of energy at the expense of others.” And now we another unstated assumption, which is that we should operate in a “free market,” in which the government should not choose sides, but should allow the operation of the market full of big businesses, advertizing companies, and lobbyists, to choose whose product will succeed. “Those subsidies create acute and chronic problems for maintaining adequate baseload generation and have impacted reliable generators of all types.” Perry seems to think, however, that the free market needs baseload generation that is powered by fuel. I am not sure how you can get there without choosing sides.
As governor of Texas, Perry oversaw the greatest build-out of wind power in the United States. And yet he seems not to understand at all that the times are changing. We are moving to a time when renewable power, a smart grid, distributed power generation, and new business plans are changing the world.
Coal is not being undermined by subsidies for wind and solar power. It is being undermined by the fact that its technology is obsolete. Given climate change and pollution, it is dangerous. It is too expensive. And no previous administration had anything to do with those facts.
Rick Perry does not get it.
Text of Rick Perry’s Memo of April 14, 2017
April 14, 2017
MEMORANDUM TO THE CHIEF OF STAFF
FROM: RICK PERRY
SECRETARY OF ENERGY
SUBJECT: STUDY EXAMINING ELECTRICITY MARKETS AND RELIABILITY
At the most recent G7 Energy Ministerial, my colleagues discussed the need for an energy transition utilizing greater efficiency and fuel diversity. There was also notable concern about how certain policies are affecting, and potentially putting at risk, energy security and reliability. It impressed upon me that the United States should take heed of the policy choices our allies have made, and take stock of their consequences.
A reliable and resilient electric system is essential to protecting public health and fostering economic growth and job creation. The U.S. electric system is the most sophisticated and technologically advanced in the world. Consumers utilize heating, air conditioning, computers, and appliances with few disruptions. Nonetheless, there are significant changes occurring within the electric system that could profoundly affect the economy and even national security, and as such, these changes require further study and investigation.
Baseload power is necessary to a well-functioning electric grid. We are blessed as a nation to have an abundance of domestic energy resources, such as coal, natural gas, nuclear, and hydroelectric, all of which provide affordable baseload power and contribute to a stable, reliable, and resilient grid. Over the last few years, however, grid experts have expressed concerns about the erosion of critical baseload resources.
Specifically, many have questioned the manner in which baseload power is dispatched and compensated. Still others have highlighted the diminishing diversity of our nation’s electric generation mix, and what that could mean for baseload power and grid resilience. This has resulted in part from regulatory burdens introduced by previous administrations that were designed to decrease coal-fired power generation. Such policies have destroyed jobs and economic growth, and they threaten to undercut the performance of the grid well into the future. Finally, analysts have thoroughly documented the market-distorting effects of federal subsidies that boost one form of energy at the expense of others. Those subsidies create acute and chronic problems for maintaining adequate baseload generation and have impacted reliable generators of all types.
Each of these and other related issues must be rigorously studied and analyzed, and the Department of Energy is uniquely qualified for the task. The results of this analysis will help the federal government formulate sound policies to protect the nation’s electric grid. In establishing these policies, the Trump Administration will be guided by the principles of reliability, resiliency, affordability, and fuel assurance—principles that underpin a thriving economy.
I am directing you today to initiate a study to explore critical issues central to protecting the long-term reliability of the electric grid, using the full resources and relationships available to the Department. By Wednesday, April 19, 2017, present to me an implementation plan to complete this 60-day study, that will explore the following issues:
- The evolution of wholesale electricity markets, including the extent to which federal policy interventions and the changing nature of the electricity fuel mix are challenging the original policy assumptions that shaped the creation of those markets;
- Whether wholesale energy and capacity markets are adequately compensating attributes such as on-site fuel supply and other factors that strengthen grid resilience and, if not, the extent to which this could affect grid reliability and resilience in the future; and
- The extent to which continued regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement of baseload power plants.
I have committed to the President that this report will not only analyze problems but also provide concrete policy recommendations and solutions. I also committed to the President that I will do everything within my legal authority to ensure that we provide American families and businesses an electric power system that is technologically advanced, resilient, reliable, and second to none.