From the WSJ Weekly Review email:
Trump Administration on Power Plants
By Timothy Puko | Jan 09, 2018
TOPICS: Energy, Regulation
SUMMARY: Federal energy regulators Monday rejected a Trump administration proposal aimed at shoring up struggling coal-fired and nuclear power plants.
CLASSROOM APPLICATION: Students can discuss whether Federal Entergy [sic] Regulatory Commission should alter the electricity market rules to promote coal and nuclear generation. Students can evaluate whether the benefit of multiple energy sources outweighs the allocative efficiency benefits of competitive markets. "The five-member Federal Energy Regulatory Commission ruled unanimously that the administration hadn't provided enough evidence that the measures proposed were needed. The commissioners said the government hadn't provided adequate justification for changing the rules currently governing competitive electricity markets and that the proposal would have unfairly limited competition."
QUESTIONS:
- (Introductory) What are the benefits to power system of having multiple sources of energy?
- (Advanced) What are the economic welfare benefits of designing an electricity market that is competitive?
- (Advanced) Should the federal government distort the electricity market so as to promote coal and nuclear power plants? Should the federal government do so for the purpose promoting multiple energy sources?
Reviewed By: James Dearden, Lehigh University
My answers:
- security
- low prices
- no, the government should not be subsidizing a particular energy source unless there is a market failure (let's say that non-coal and non-nuclear energy gets real expensive, it shouldn't be too hard to quickly ramp up production of coal)
