Foes of Trump coal plan worry it will work

Source: Zack Colman, E&E News reporter • Posted: Tuesday, June 12, 2018

President Trump’s latest gambit to bolster coal and nuclear power plants is worrying the oil and gas industry and its allies.

They concede this new approach could be successful.

The most recent plan, leaked to Bloomberg News this month, aims to keep economically strapped coal and nuclear power plants afloat. It would employ two powerful statutes to direct certain power plants to remain running to stabilize the electric grid and critical operations, like military bases.

The White House now intends to use national security — specifically cybersecurity — as a linchpin for buoying coal and nuclear power plants. That move has rattled the industry, in part because courts generally give presidential administrations significant leeway in determining national security policy.

It’s gotten some groups worried enough to wage a counterattack.

Trade associations such as the American Petroleum Institute and the Natural Gas Supply Association are emailing member companies, encouraging them to prod lawmakers and the administration. To many observers, the pushback appears to be a flailing, fleeting exercise, given Trump’s determination to preserve coal.

“The strategy they’re employing is a losing strategy,” said a source close to the administration. “The bottom line is the president directed this. You don’t tell the president not to do anything.”

The administration’s evolving plan, which hasn’t been finalized, builds on an earlier Energy Department proposal to keep certain power plants operating to maintain grid “resilience.” While it’s unclear how the plan would work, it could have significant implications for climate change. Maintaining costly nuclear generation could benefit the climate, but keeping uneconomical coal-fired power plants operating longer than they would have otherwise wouldn’t.

The idea was that coal and nuclear power plants should receive a financial benefit for storing fuel on-site. The administration contended that on-site storage would make those generators less susceptible to disruption than natural gas, which relies on delivering energy through pipelines. But the move was illegal — such decisions belong to the Federal Energy Regulatory Commission, not DOE. And, either way, the problem DOE identified wasn’t a problem at all, regulators said.

But now the administration has pivoted to blaming smaller utilities — chiefly, natural gas distribution companies — as an electric grid vulnerability.

Privately, administration officials grouse at the idea of a GOP White House taking action that would intervene in energy markets. But they note national and cybersecurity give the plan more heft than its predecessor. Influential offices that resisted the previous attempt on free-market grounds, such as the National Economic Council and Office of Management and Budget, might have less sway.

“It’s going to be a lot easier to co-opt them now that the narrative has changed than it would have been in the power markets, subsidy space,” an industry source said.

No one disputes the fact that Trump is personally invested in rescuing coal and nuclear, both of which face challenging economics caused by cheap natural gas and falling renewable energy prices, said George David Banks, the president’s former international energy and climate aide. Trump even implored Energy Secretary Rick Perry to hold a news conference announcing a plan to save those industries, according to audio obtained by The Washington Post.

“The campaign promise to save coal is of high political importance to the president,” Banks said. “It’s like floodwater — it will find a way to flow.”

The cybersecurity approach

Cybersecurity is the newest current.

DOE issued a recent report assessing the electric grid’s ability to respond to disruptions that found cybersecurity funding at such utilities “often falls short of the full scope of capabilities needed to improve prevention efforts.” Some industry sources said it’s a fair criticism of a clutch of tiny utilities.

An administration source said cybersecurity is now just as much part of the conversation as electric grid resilience and capacity. DOE has homed in on the issue in recent weeks (Energywire, May 31).

“There’s no question that [the] grid is vulnerable to cyberthreats,” Bruce Walker, assistant secretary at DOE’s Office of Electricity, said last week in a House Science, Space and Technology Committee hearing. “It is extremely important as we integrate additional technologies on the system, we do it with a cybersecurity focus.”

Gas utilities, however, reject the notion they’re ill-prepared.

American Gas Association President Dave McCurdy addressed his concerns about the administration’s direction in a Thursday meeting with Perry. He said Perry is “conflating two issues” — fuel security and cybersecurity. McCurdy accepted Perry’s invitation for an updated briefing.

The latest iteration may also reflect the effect key staff departures have had on policy. McCurdy recalled briefing Trump on why it’s a problem that information sharing about cyberthreats is hindered because grid company CEOs face obstacles obtaining security clearances.

“The people around the president understood it — [former Homeland Security Adviser] Tom Bossert and [cybersecurity coordinator Rob] Joyce. But guess what — they’re now gone,” McCurdy said. “I’m concerned that the people with the knowledge and the experience aren’t there.”

McCurdy worried that the plan is a “solution in search of a problem,” which echoes security consultants like Patrick Miller, a managing partner at Archer International. He said smaller gas-distribution utilities carry no greater cyber risks.

“They’re using the security angle to get what they want politically. My concern is by using that, we end up with a ‘crying wolf’ situation,” Miller said. “We can’t keep claiming ‘security, security, security’ when you really have a different motive.”

Banks said any plan to assist such power plants has faced a major question: Is it legal?

Legal minds are split (Energywire, June 8). Short of definitively answering that question, some analysts at least think invoking national security could improve the policy’s chances of clearing legal hurdles.

Morgan Stanley wrote that the Defense Production Act, the Korean War-era law the Trump administration would use to achieve its objective, is “potent” and gives “DOE fairly broad authority when the DOE activity relates in some way to national security matters.” The analysts added, “In our view it may be challenging for plaintiffs to overcome a court’s likely deference to DOE’s judgment on this topic.”

Miller, the security expert, said leaning on national security “absolutely” enhances the administration’s chance of success.

“If they wrap it in security — when you talk about national security, it strikes a visceral chord,” he said.