Trump seeks to stem coal, N-plant shutdowns

Bloomberg

President Donald Trump ordered his energy secretary to take immediate action to stem power plant closures, arguing that a decline in coal and nuclear electricity is putting the nation’s security at risk.
“Impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation’s energy mix and impacting the resilience of our power grid,” White House spokeswoman Sarah Sanders said in an emailed statement. Trump has directed Energy Secretary Rick Perry “to prepare immediate steps to stop the loss of these resources and looks forward to his recommendations.”
Trump’s directive comes as administration officials search for ways to extend the life of money-losing coal and nuclear power plants that face competition from cheaper natural gas and renewable energy. The plants are considered “fuel-secure” because they house coal and nuclear material on site and are not dependent on pipelines that can be disrupted, wind that stops blowing or a sun that sets.
Coal producers rose on the news, with Peabody Energy Corp. climbing the most since August 1, 2017 and closing up 4.8 percent to $45.35. Arch Coal Inc. rose 2 percent to $83.81. Consol Energy Inc. gained 3.7 percent to $45.70, while Alliance Resource Partners LP was up 1.3 percent to $19.50. The Stowe Global Coal Index was up 1 percent.
Administration officials are still weighing the best approach, Sanders said. The department’s strategy, outlined in a memo obtained by Bloomberg News, would use authority granted under a pair of federal laws to establish a “strategic electric generation reserve” and compel grid operators to buy electricity from at-risk plants. The steps are necessary, the memo says, to protect national security.
The move comes as Trump uses similar national security arguments to justify market interventions aimed at protecting other treasured political constituencies — steelworkers and automakers — at the expense of US allies. “National security is being invoked by people who once favored markets,” observed John Shelk, president of Electric Power Supply Association, at a conference in New York. “Everybody loses in a fuels war.”

TWO-YEAR STUDY
The draft plan is meant to buy time for a two-year study of vulnerabilities in the American energy delivery system, extending to natural gas pipelines as well as power plants. The agency argues that power plant closures must be managed for national security reasons, because nuclear and coal-fired facilities can easily be restored after extreme weather events, cyber-attacks and other emergencies.
Trump administration officials have already spent a year contemplating action. After the Energy Department conducted a study of grid reliability last year, Perry proposed a rule to compensate coal and nuclear plants. Federal regulators shot down the idea in January.

FIRSTENERGY REACTION
FirstEnergy President Charles Jones welcomed the administration’s announcement. “Baseload coal and nuclear plants help maintain electric system resiliency and national security while also playing an irreplaceable role in the regional economy,” Jones said in an emailed statement. “Preserving these vital facilities is the right thing to do for the industry, the electric grid and our customers.”
The move would represent the president’s most direct effort to bring back coal mining jobs and reward voters who helped put him into office, ahead of pivotal midterm elections that could decide whether Republicans retain control of the House and Senate.
Some 12,000 megawatts of coal-fired power are expected to retire this year, the National Mining Association said. “Without action, we may pass a reliability and resiliency crisis point of no return,” the trade group said by email. “We need a plan to preserve the reliable, affordable energy that continues to slip away each day, and it is encouraging that this administration is taking the issue seriously.”
Opponents of the new proposal contend the intervention is a solution in search of a problem and that there are other ways to back up the grid. PJM Interconnection said in a statement that the power system is more reliable than ever.
“There is no need for any such drastic action,” the grid operator said. “Any federal intervention in the market to order customers to buy electricity from specific power plants would be damaging to the markets and therefore costly to consumers.” The administration’s plans drew a swift rebuke from Trump allies in the oil and gas industry, aligning them with renewable power boosters also threatened by the action.