Some of the largest coal utilities in the country have different ideas than President Trump about saving money-losing coal and nuclear power plants.
Many of them are switching from coal to cleaner-burning natural gas power plants and renewable energy, and they are more concerned about the cost of making the electric grid more resilient than saving ailing power plants.
“At Duke Energy, we’ve been working to lower carbon emissions cost-effectively for more than a decade and we don’t see our overall strategy changing,” said Neil Nissan, spokesman for the North Carolina company, which is the nation’s largest utility and user of coal.
The low cost of natural gas has made it a more competitive fuel than coal and nuclear in many of the nation’s energy markets.
CEO Lynn Good has been outspoken since Trump took office that the company plans to move forward on its clean energy transition despite the administration’s agenda.
“Over the last five or six years, we’ve retired a lot of our coal capacity and replaced it with lower carbon natural gas,” Good told CNBC June 6.
She said the company has moved from having virtually no natural gas power plants a decade ago to 25-30 percent of its generating fleet now. The company is also investing more in solar energy in the seven states where it operates.
The company plans to invest $25 billion to modernize its power grid and $11 billion on clean energy, Nissan told the Washington Examiner.
When Trump ordered Energy Secretary Rick Perry on June 1 to take steps to save coal and nuclear plants, Duke Energy was celebrating the opening of a new 750-megawatt, state-of-the-art combined cycle natural gas power plant. The plant was built on the site of a closed coal plant in Anderson County, S.C.
The June 1 order by Trump followed a leaked White House memo that spelled out potential actions by the administration to save financially struggling coal and nuclear power plants. The memo argued that the power plants need to be saved as a matter of national security.
One likely scenario would be for Perry to order the federally overseen electricity markets to provide market-based incentives for the power plants. The incentives would be based on their ability to make the grid more resilient or able to bounce back from a weather event or cyberattack. The Federal Energy Regulatory Commission rejected a similar proposal by Perry last year. FERC instead chose to establish a more thorough accounting of the grid’s state of resilience and consider a universal definition for what that means.
Perry has more recently said that he is open to using obscure Cold War-era authority to keep coal and nuclear plants in the energy mix, which FERC commissioners have found questionable.
Duke Energy agrees “resiliency and reliability are critically important issues — given how dependent our society is on electricity,” Nissan said. But the company would like to make sure that any policy would not raise energy prices.
“If there are resiliency issues, we want to work with the administration to identify and address them in a way that avoids customers paying higher costs for their energy,” Nissan said. He said the company still needs to study the Trump proposal, because it has “only seen a draft circulated by media.”
Credit-ratings giant Moody’s issued a report soon after Trump’s order, stating that the proposal likely would raise prices for consumers, while benefiting two companies: Illinois-based Exelon and Ohio-based First Energy.
“Should an action be adopted, owners of fuel-secured power facilities such as FirstEnergy Solutions and Exelon Generation Company LLC, along with U.S. domestic coal producers, would likely benefit,” a Moody’s analysis read.
“Retail customers will likely pay more for electricity to cover the costs of the subsidy, while efficient gas-generating units, such as those owned by Calpine Corp., would likely be dispatched less often by the grid operators,” Moody’s said.
First Energy has filed a petition before the Energy Department asking Secretary Rick Perry to use his authority under the Federal Power Act to keep the plants open.
Moody’s said in a separate report released Friday that new natural gas and renewable energy construction over the next five years would offset the loss of coal and nuclear plants. “The impact of these plant retirements on power capacity in the U.S. will be limited,” Moody’s concluded.
PJM interconnection, which operates the nation’s largest federally overseen energy market in the U.S., said it sees no threat to the resilience of the grid that the Trump order would address.
Ohio-based utility company American Electric Power said resilience is not necessarily a power plant problem, but one that can be overcome through a mix of methods that include more than power plants.
The company supports protecting the reliability and resilience of the grid “during the nation’s ongoing transition to a cleaner energy mix,” and supports a process that embraces a “region-specific” planning analysis to determine the “specific resilience challenges that exist and to identify region-specific solutions,” Tammy Ridout, the company’s communications director for policy, told the Washington Examiner.
“These solutions may ultimately require generation support, but should not be limited to just generation,” she said. “All options should be considered, including transmission and distribution solutions, which may provide more cost-effective ways to ensure grid reliability and resilience.”
The coal utility operates in numerous states and, like Duke Energy, is shifting its coal fleet to more natural gas and renewables.
But until more details are released about how the Trump-Perry proposal might work, it is still too early to speculate about potential impact, Ridout noted.
Nevertheless, American Electric Power “supports moving forward as quickly as possible with region-specific studies to determine the best solutions for ensuring reliability and resiliency of the grid,” Ridout said.
