FirstEnergy Scores One For Free Market Capitalism

Did you hear about last month’s appeal by FirstEnergy Solutions to the United States Department of Energy? It may have been one of the most unusual requests that was ever directed to a Cabinet-level Department of the United States government.

FirstEnergy, a struggling coal and nuclear energy producer of electricity, asked the Energy Department to declare a national emergency and order its customers to pay it above-market prices for its power. In theory, the federal government possesses the authority to do so under the Great Depression era Federal Power Act, derived from an earlier law that was first enacted in 1920.

Why did FirstEnergy need this support? Its coal and nuclear generated electrical power plants have been struggling to compete against less expensive and cleaner energy facilities. So FirstEnergy appealed for direct price intervention by the federal government, asserting that the insolvency of nuclear and coal plants would constitute a national energy emergency.

Department of Energy Secretary Rick Perry declined to grant the request. And how did FirstEnergy respond?

Instead of intensifying its political lobbying activities in hopes of a direct government intervention, the struggling company reached an agreement with the creditors of its nuclear and coal division. Although the firm is not yet on stable footing, it appears to be negotiating a path through its period of financial distress.

So let’s score one for free market capitalism. Although it must have been tempting for the Presidential administration of the United States to respond to the appeal of a struggling coal energy producer, it opted instead for a non-interventionist market based response.

That’s not to say, of course, that all of the parties acted in a perfectly consistent manner. FirstEnergy did issue the original appeal for a highly questionable government declaration of a national emergency. And it did take Secretary Perry more than one week to express skepticism about the request.

Eventually, though, the private corporation and the government entity both embraced a free market strategy. Their decisions represented an unremarkable, conventional conclusion to a remarkable, unconventional appeal.

A Tale Of Three Nations

This is a tale of three nations, with each writing its own unique story.

Or are they? After all, appearances can be deceiving. There are times when ostensibly unique stories are woven together into a common narrative.

So let’s review our trio of tales and ask ourselves whether the three nations are indeed writing their own distinctive histories. Or, conversely, whether they are each playing a different role within a single universal saga.

First, let’s discuss Great Britain. During Victorian times, the Industrial Revolution roared to life, powered by the coal mines of Newcastle. Did you know that the phrase “London Fog” often referred to smog events? With a heavy manufacturing economy based on burning fossil fuels, the British air was filthy.

But last week, the fifth largest economy on the planet enjoyed its first full day of coal-free energy in its industrial history. This epochal event was made possible by the nation’s embrace of renewable energy sources.

Now let’s discuss China. Two weeks ago, Greenpeace East Asia released a report that predicted that Chinese renewable energy production would replace 300 million tons of coal by the year 2030. They attributed this projected transformation to the planned quintupling of the size of China’s wind and solar power industries between 2015 and 2030.

Finally, let’s discuss the United States. How is America responding to emerging trends in the global energy industry?

Well, four weeks ago, President Trump signed an executive order to repeal his predecessor’s prior actions to minimize carbon emissions. With a group of West Virginia coal miners standing beside him, Trump justified his desire to support “the truly amazing people … our incredible coal miners … (who) love to mine …

To a certain extent, these are three distinct actions by a trio of unique nations. Each one resides on a different continent, and each one is confronting its own set of social and economic priorities.

But each nation shares our common planet, and each is managing its interests within an increasingly globalized society and economy. If it’s possible to weave together a common story from these individual tales, it might also be possible to anticipate which nations will prosper, and which will become impoverished, as this tale unfolds.