Energy supplier blasts subsidies for nuclear and coal for crimping innovation

The CEO of a national energy company has leveled a withering attack on efforts to subsidize coal and nuclear power production, saying financial support to protect “old, uneconomic power plants and technologies” will undermine competitive markets and increase costs to consumers.

Mauricio Gutierrez, chief executive of integrated power generator NRG Energy, seemed to be aiming a shot at rival Exelon Corp., which says it will shut down its Three Mile Island nuclear power plant in Middletown, Pa., in 2019 unless it receives some kind of financial support.

Camera icon NRG
Mauricio Gutierrez, president and CEO of NRG Energy.

“Competition in our markets provides the path forward, but the owners of these plants — and we all know who they are ─ are begging state legislators and regulators to put in place new subsidies to keep their uneconomic plants profitable,” Gutierrez said at the “Decade of Disruption” energy conference in Hershey, Pa., which is focused on the massive changes energy markets have undergone since the emergence of shale-gas production.

“Shale gas is now cheap and plentiful, and renewables are becoming more widespread and economic,” he said Thursday. “Instead of getting innovative, some generators are asking for bailouts.”

Gutierrez is part of a chorus of conflicting voices that have arisen in the last month, prompted by movements in Pennsylvania and other states to spare power plants struggling to compete with cheap natural gas, as well as the Trump administration’s recent proposal to allow some coal and nuclear plants to recover their full costs of production.

Just this week, the Pennsylvania legislature passed resolutions supporting the Trump efforts, while the state Public Utility Commission told federal regulators that the proposal “threatens the efficient functioning of organized competitive wholesale electricity markets.”

Gutierrez, whose company owns a variety of power plants, including coal and nuclear facilities, acknowledged that NRG that would benefit from the proposed Trump rules, which would protect “baseload” power plants that have a secure 90-day supply of fuel — only coal and nuclear power plants qualify. But he said proposals that favor one form of existing power generation over another were misguided.

“Requests to subsidize uneconomic plants are happening in a number of states, from nuclear to coal generators,” he said. “As an owner of nuclear and coal plants, I have no sympathy for these requests.”

Gutierrez also pressed Pennsylvania policymakers to unshackle competitive energy suppliers, whom he said struggled to serve customers in a market still dominated by incumbent utilities, which control the distribution systems. NRG is also invested in retail energy markets — its regional retail-energy headquarters is in Philadelphia.

“We are 20 years into competitive retail markets in Pennsylvania, and yet we continue to have the regulated utilities playing a central role,” he said. “They not only supply the electricity or natural gas, but also control all transactions and interactions between competitive suppliers like NRG and our customers. This even includes customer switching and billing for the services the retail supplier provides.”

Gutierrez likened the market to online shopping if consumers were forced to go through delivery companies to buy merchandise.

“Think about it in these terms: How could Amazon succeed if we had to shop, place orders, and pay through FedEx or the post office?” he said.

Previous efforts to open up Pennsylvania retail markets to full competition stalled against opposition from consumer groups such as AARP, which argue that some residential customers have no desire to shop for electricity supply and need the protection of a regulated market.