The Trump administration’s coal bailout
Federal energy regulators will soon vote on a hamfisted Trump administration proposal to subsidize coal-fired power plants. This plan could cost families and businesses billions of dollars in higher electricity prices for no discernible public benefit.
The measure in question comes from the energy secretary, Rick Perry, and amounts to a devious and reckless attempt to prop up coal-fired plants, which have been shutting down in recent years because they cannot compete against cheaper and cleaner natural gas plants and renewable sources of energy like wind and solar.
Mr. Perry’s plan would provide what amounts to a bonus for power plants with at least a 90-day supply of fuel on site, which he says will make the electrical grid more reliable. Coal and nuclear power plants are the only ones that fit that description, because natural gas plants are supplied by pipeline and wind and solar require no fuel. But it is clear that the primary aim here is to bolster the coal industry, which President Trump embraced unreservedly on the campaign trail and whose moguls embraced him right back.
The fate of this boondoggle rests with the Federal Energy Regulatory Commission, an independent regulator that is not bound to do what the administration wants. Its five commissioners — three Republicans and two Democrats — ought to think carefully before casting their votes. Mr. Perry’s proposal could add around $11 billion a year to the cost of electricity, depending on how the rule is interpreted, according to four separate research reports. Yet it would do little to improve the electrical grid. That’s because less than one-hundredth of 1 percent of power failures between 2012 and 2016 were caused by fuel supply emergencies, according to the Rhodium Group, a research firm.
Regrettably, facts do not seem to matter to Mr. Perry, who famously called for the elimination of the Energy Department without understanding what it does. He has used a number of disingenuous arguments to justify his cockamamie proposal, including suggesting that it would have helped the grid deal with emergencies like the 2014 polar vortex, when frigid winds slammed the Northeast. In fact, the grid worked reasonably well then thanks to wind turbines and demand response, the system where grid operators ask big electricity users to temporarily use less juice. By contrast, some coalfired power plants were unable to generate electricity because their coal piles froze and their equipment malfunctioned in subfreezing temperatures.
This proposal has been so poorly thought out that it has made odd bedfellows of groups that are often on opposing sides of big policy debates. The oil and gas industry, for instance, has teamed up with renewable energy and environmental groups to fight it. Eight former FERC commissioners from both parties have sent a letter opposing the plan, arguing that it “would be a significant step backward from the commission’s long and bipartisan evolution to transparent, open, competitive wholesale markets.”
If the Trump administration were truly concerned about reliability and resilience, it would have taken time to study the issue and identify the grid’s weakest links. It would have found that many power failures are caused when hurricanes and other severe weather knock out transmission lines and other equipment. During Hurricane Harvey in Texas, where Mr. Perry was once governor, coal-fired power plants had to switch to natural gas because their fuel became too wet to be moved.
There is no question the government needs to think about and prepare for more blackouts. Most scientists expect an increase in severe weather events because of climate change, which Mr. Trump has described as a “hoax.” But it is doing the country no favors by using electrical reliability as a ruse to prop up its favored fossil fuel and stick ratepayers with the bill.