Read the full CNBC article here.
Matt Mooren and David Cherney, energy market experts at PA Consulting Group, discuss a PJM plan to change the way electricity is priced in its wholesale market, and Energy Secretary Rick Perry’s proposal to subsidize coal-fired plants and nuclear power stations.
The article notes that PJM put forward a plan last month that would allow inflexible power plants, which include coal and nuclear facilities, to help set the price of energy, which is forecast to boost revenues for all power generators. Unlike the Perry plan, PJM is not explicitly trying to subsidize coal and nuclear plants. Instead, it aims to better reflect the true cost of delivering power by acknowledging the role that coal and nuclear plants play in supplying the grid and compensating them for it.
David says the PJM plan would provide some benefits to power plant operators, but it would not be a game-changer.
He adds: "It's helpful at the margins, but if you're talking about making long-term investment decisions about assets that can have a 40, 50, 60, 70-year useful life, that is not going to change that calculation at the end of the day."
Matt notes that a more direct way to keep certain types of plants on the grid is through state-level support. Illinois and New York have recently approved zero emissions credits to save clean-burning nuclear plants.
Matt adds that this strategy faces opposition because it undermines the open market competition the deregulated markets are supposed to promote.
Learn how to navigate the uncertain future of the electricity sector