The President's Chickens In The War On Coal Have Come Home To Roost: Consumers Will Pay Producers $120/MW (2017 - 2018) Vs $60/MW (2016 - 2017); Unintended Consequences To Follow

At the sidebar at the right, I have a link: "Big Stories."

At "Big Stories," I have a page on the North American Energy Revolution.

The war on coal and the shale revolution are cornerstones of the North American energy revolution.

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The president's chickens in the war on coal are coming home to roost -- mixing metaphors, I guess. Look at the prices consumers are going to pay for the president's war on coal. From investors.com:

On Friday, PJM Interconnection — a regional transmission organization that operates the electric power grid in the 13 states and D.C. — completed an auction to procure supplies for 2017-18.

According to news reports, payments to electricity producers will rise to $120 per megawatt per day from $59.37 in the previous 12-month period.

PJM said the auction continued a trend toward more gas-fired generation and more diversity of resources. Environmental regulations designed to limit emissions from coal and other plants also contributed to the higher costs.

For investors in utilities, their investments have just become more valuable (disclaimer: this is nto an investment site. Do not make any investment decisions based on what you read here or what you think you may have here.):

The news is considered a big positive for power companies in the region because it increases their revenue potential, analysts say.

The auction, in a separate story, by the way, "cratered" the financial outlook for two Exelon nuclear reactors in Illinois:

Exelon Corp.'s financial woes at its nuclear plants in Illinois just got worse—more than $180 million worse. 

For the first time in the 12 years since the Chicago-based nuclear giant's Illinois plants became part of the PJM Interconnection regional power grid dominated by Mid-Atlantic states, two of its Illinois nukes were shut out of the PJM-run annual auction that determines the cost to ratepayers of furnishing power during the highest-demand times of the year. 

The Byron plant, near Rockford, and the Quad Cities plant didn't clear at the $120-per-megawatt-day price that other facilities will earn from June 1, 2017, until May 31, 2018 (see next story below this one). 

The PJM auctions, the most recent of which took place May 23, are held three years in advance. 

That will cost the two plants, which Exelon already has identified as financially troubled, a combined $182 million in revenue based on their production last year. Company executives led by CEO Chris Crane have said they won't hesitate to close the plants if they can't see a way for them to become economic. Exelon declined to comment on how much revenue its plants would lose due to the most recent PJM auction. 

Also on the chopping block is Exelon's Clinton nuclear plant in downstate Illinois. That facility isn't located within the PJM grid, though, so it has never received payments from PJM. Its network, the Midwest Independent System Operator, doesn't use an auction method to set a price for reserving power during future peak periods, and such revenues are much lower than they are in PJM.

The unintended consequences?

At the same time, Mr. Crane has said closing any of Exelon's nukes — by far the largest carbon-free generators in the state — will make it extremely difficult for Illinois to comply with new federal greenhouse-gas rules, which the U.S. Environmental Protection Agency will propose next week. Those rules will put the onus on states to reduce their carbon emissions.

The article said:

“We have an excess of capacity in the region,” said David Kolata, executive director of the Citizens Utility Board, which represents ratepayers. “That is objectively true right now.”

It will be up to state lawmakers, and whoever emerges as governor next year, to decide whether ratepayers should pay more on top of the $120 per megawatt-day to keep the plants open despite the fact that they're apparently not needed.

Exelon's Mr. Crane has maintained that he's not seeking a "bailout"  he's from the state, and that the company is seeking "market-based" solutions to its nuclear woes.

Excess energy capacity? Square that with the links below.

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PJM: The Grid This Past Winter

PJM warns: if it's a cold winter, there could be some "blackouts." -- August 25, 2014. PJM is starting to sound like "pajamas."

The switch from coal to natural gas for electricity generation could harm power reliability in Ohio and surrounding states, according to the group that manages the transmission grid for the 13-state region.

PJM Interconnection said in a new white paper that the “rapid transition” as more utilities retire coal plants and turn to domestic shale gas causes concern about the reliability of the region’s generation fleet. That’s especially worrisome during bitterly cold weather such as that experienced by Ohio and other states during the polar vortex this year. Up to 22 percent of capacity in the PJM region was unavailable during the polar vortex because of weather-related problems, and the outages are a “potentially significant reliability issue,” PJM said.

PJM home page on the web.

PJM: the president's war on coal is moving us toward an electrical grid failure -- April 25, 2014

PJM: experienced a new all-time peak winter load of almost 142 MW; the grid almost went down-- April 23, 2014

PJM: grid required 100% of its coal availability. -- January 28, 2014

PJM: "take it easy" on the grid; unable to ramp up. -- January 27, 2014

PJM: power grids have seen significant spikes in wholesale market prices, brought on by huge increases in underlying natural gas spot market prices -- January 24, 2014

PJM: the New England energy debacle -- January 10, 2014

PJM: "maximum emergency generation alert"; the grid may not hold. -- January 6, 2014

PJM: coal will be replaced by natural gas with/without wind -- July 17, 2013

PJM: $136/MW (non-coal) vs $16/MW (coal); Obama's war on coal. -- May 22, 2012

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A huge thank you to a reader who keeps me abreast of what's going on in PJM's world, a microcosm of the east coast, the south, the mid-continent, and the midwest, but perhaps not comparable to a) the land of fruits and nuts; and, b) the Pacific Northwest.

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Ideology Over Jobs

Bloomberg is reporting:

The nation’s biggest business lobby says President Barack Obama’s plan to tackle climate change could cost the U.S. economy $50 billion a year. Supporters predict it will create jobs and lower power bills.

The U.S. Chamber of Commerce and Natural Resources Defense Council are both releasing economic impact studies this week, signaling that the political battle over the president’s plan will be fought over dollars and cents. For Obama, the risk is the plan gets labeled a job-killer just as campaigns heat up for an election that could determine control of the U.S. Senate.

In an analysis released today -- days before the Environmental Protection Agency unveils a proposal to cut carbon dioxide emissions from power plants -- the Chamber said that an ambitious pollution-control effort could force more than a third of the coal-fired power capacity to close by 2030, resulting in economic losses of $50 billion a year and the elimination of 224,000 jobs. 

Twenty years from now we're going to be wondering how "we" let this happen.