Determining the appropriate mix of energy sources for the U.S. economy is a complex concept to contemplate.
At the moment, we can only produce so much intermittent energy without improvements to our grid or innovations that boost our ability to store energy, making it difficult to increase current wind or solar energy production. However, the fracking revolution has made natural gas much less expensive in the last decade, and its share of energy production has grown as a result with few constraints upon it.
Much of the gain in market share of gas (as well as wind and solar) has come at the expense of coal and nuclear. Obama-era environmental regulations contributed to coal’s decline by nudging numerous coal plants that were already having trouble remaining competitive out of business, while many of the nation’s remaining nuclear plants are hamstrung not just by the lower energy prices engendered by gas but also by the growing costs of maintaining aging plants that were largely constructed in the 1960s and 1970s.
Few people think it would be beneficial if natural gas completely displaced coal and nuclear power: both fuel stocks remain plentiful and there is hope that new technological innovations could serve to reduce both the emissions from coal as well as the costs of constructing new nuclear power plants. And no one can predict what might happen to relative energy prices a decade from now.
However, it is difficult to make the argument that there is a pressing public interest in subsidizing existing coal or nuclear power plants simply to maintain the current energy mix. If natural gas continues take market share and leads to further mothballing of coal or nuclear plants, so be it.
But that has not stopped policymakers from coming up with possible reasons to toss a lifeline to failing coal and nuclear plants. Last year, Energy Secretary Rick Perry asked the Federal Energy Regulatory Commission to consider a “resilience” rule ensuring full cost recovery to energy producers that keep at least 90 days of fuel on site, a proviso that would only apply to coal and nuclear power. It declined to do so, stating that the commission did not see the need for such an act and that it was, in fact, legally prohibited from taking any such actions in the name of resilience.
The administration recently proposed new support for the coal and nuclear sectors by arguing that they are supposedly less susceptible to cyber infiltration, and that the natural gas pipeline network is uniquely vulnerable to sabotage. Therefore, the argument goes, we need to ensure that coal and nuclear continue to maintain some minimum market share–close to their current levels–to ensure that our economy has some minimal level of energy production should a comprehensive cyber attack wreak havoc on the energy sector. To achieve this, rate payers could be charged higher prices to maintain viability.
But this is a facile argument. For starters, the mere physical presence of a fuel on site is not in itself any guarantee that a power plant can withstand a cyber attack without a disruption. Coal plants require extensive supply chains to operate, and nuclear power offers its own cybersecurity risks that could threaten both production and waste disposal. While the threat of a cyber attack against our energy supply is a real one, there is no reason to think that the ability to have fuel stored on site obviates the risk.
What’s more, it begs the question of whether asking rate payers to pay billions of dollars more for energy in the name of cyber security is worth the potential benefits. Energy providers already spend heavily to guard against hackers and the damage they could do—a recent study by API, the trade association for oil and natural gas producers, details some of the myriad steps its members invest in to that effect. FERC also indicated that it would dedicate itself to studying the issue more thoroughly when it voted down Perry’s proposal.
The fight over subsidies for coal and nuclear has engendered a fear that the Trump Administration may decide that it wants a more politically pliant FERC. With the departure of FERC Commissioner Robert Powelson, there is some concern that the administration’s expectation of its appointed commissioners is for them to automatically support administration initiatives—such as the cost guarantees for coal and nuclear plants.
While there most certainly is a real cybersecurity threat to our energy infrastructure—something the industry invests billions of dollars a year to combat—using this as a motivation to subsidize nuclear and coal is clearly an example of fishing for a reason to help a politically-favored sector of the economy. Imposing such costs on American energy consumers in the name of providing a salve for potential cybersecurity hacks is impossible to justify.
