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Former commissioners urge U.S. FERC to reject coal, nuclear subsidies

Oct 20 (Reuters) - Eight former commissioners of the U.S. Federal Energy Regulatory Commission sent a letter to the agency opposing Energy Secretary Rick Perry's proposal to subsidize coal and nuclear power plants because they are not economic in the current low price market.

"Our common goal has been to encourage competition in the electricity sector in order to benefit customers, enhance reliability and facilitate construction of the infrastructure necessary to allow our great nation to grow and prosper," the eight commissioners said in the letter on Thursday.

Perry wants FERC to issue rules that protect so-called fuel secure plants in FERC sponsored power markets from early retirement by compensating them for the reliability benefits they provide, according to a Notice of Proposed Rulemaking (NOPR) filed with the agency on Sept. 28.

Fuel secure plants include nuclear reactors and coal plants with 90 days of fuel on site in the event of supply disruptions.

"The commission has always been fuel-agnostic, refraining from favoring one fuel over another," the former commissioners said in their letter.

"Subsidizing resources so they do not retire would fundamentally distort the markets. The subsidized resources would inevitably drive out the unsubsidized resources, and the subsidies would inevitably raise prices to customers," the former commissioners said.

Several coal and nuclear plants have either retired or are in danger of retiring because they cannot make enough money to keep them operating in a low power price environment.

In 2016, natural gas prices fell to their lowest level in 17 years, pressuring electric prices in PJM Interconnection and other power grids to their lowest levels on record, according to data going back to 2001. PJM is the biggest power system in the nation, covering parts of 13 U.S. Midwest and Mid Atlantic states and the District of Columbia.

"We urge you not to move forward with the published proposal, and instead address the issues of power system reliability and resiliency consistent with the commission's long history and in the transparent, bipartisan, policy-centered manner for which this commission has long been respected," the former commissioners said.

The eight commissioners are Elizabeth Moler, James Hoecker,

Donald Santa, Linda Breathitt, Pat Wood, Nora Brownell,

Joseph Kelliher and Jon Wellinghoff. (Reporting by Scott DiSavino; Editing by Marguerita Choy)