The Energy 202: Coal allies call on Trump administration to use emergency powers to boost business

Source: By Dino Grandoni, Washington Post • Posted: Tuesday, May 15, 2018


Energy Secretary Rick Perry speaks during the Americas Society/Council of the Americas conference at the State Department last week. (Andrew Harrer/Bloomberg)

Aging coal and nuclear power generators, facing increasingly stiff competition from natural gas and renewable energy, are calling on allies in the Trump administration to invoke the emergency powers to prop up their plants.

But critics throughout much of the rest of the energy sector say saving these plants is not actually a national security imperative — and their pending closure is simply a consequence of good old marketplace competition.

One proposal involves dusting off a 68-year-old law enacted at the height of the Cold War. Energy Secretary Rick Perry told a House panel last week that he is “looking very closely” at using off the Defense Production Act of 1950 to revive coal and nuclear plants in the name of national security. The law, which President Harry Truman invoked with the steel industry shortly after the start of the Korean War, would give the government the power to effectively nationalize private industry to ensure it never faces a wartime shortfall of critical goods or services.

Another plan involves invoking emergency powers under the Federal Power Act to guarantee profits so that coal and nuclear plant can stay online. Earlier this year, the Ohio-based electric utility FirstEnergy filed an application with the Energy Department administration asking the government to bail out its nuclear and coal plants under that law, warning of a “power crisis” if the plants close.

But other energy interests usually aligned with the Trump administration — namely, the oil and natural gas producers — are pushing back against both ideas. Even one Republican senator appeared skeptical of using the Defense Production Act.

“I haven’t looked at it closely enough to really talk specifics in terms of his proposal, but in general, I don’t favor nationalizing anything,” Sen. John Hoeven (R-N.D.), a member of the Senate Energy and Natural Resources Committee, told The Washington Post at an Energy 202 event on Thursday.

At the same event, Federal Energy Regulatory Commission Chairman Kevin McIntyre said that using the Defense Production Act to boost coal and nuclear power is “perhaps not the most obvious fit” for the law. His pushback is significant, given that he was appointed by Trump to head of the nation’s main regulator of the wholesale electricity markets.

Other energy law experts expressed similar doubts about being able to use the Defense Production Act absent any imminent wartime threat.

“Commissioner McIntyre was being diplomatic when he said that the Defense Production Act of 1950 was a poor fit for justifying executive action to subsidize coal and nuclear power,” David Spence, a professor at the University of Texas at Austin who specializes in energy law, wrote in an email.

“The proposal is, frankly, a sop to coal-producing swing states,” Spence added. “One can’t really use this wartime authority to subsidize coal and nuclear with a straight face. And I say that as someone who believes that keeping nuclear power plants open is good policy.”

A coalition of lobbying groups representing the oil, natural gas and wind sectors told Perry in a letter last week that “the Defense Production Act cannot be used to command favorable pricing for a favored class of power plants. Moreover, to invoke the concept of ‘national defense’ for what is transparently a domestic effort to boost an uneconomic segment of industry would be an unprecedented abuse of the Act.”

Innovations in natural gas extraction, as well as technological advances in wind and solar power, have driven down the cost of those forms of electricity generation over the past decade. The cheaper competition helped cause the closure of 268 coal-fired power plants since 2010, according to a tally kept by the Sierra Club.

But coal and nuclear plants, their advocates say, provide something essential to the grid: reliability. Unlike solar and wind generators, which only produce power when the sun shines and the wind blow, coal and nuclear plants run 24/7. That so-called “baseload” power is necessary for national security, according coal proponents such as Sen. Joe Manchin III (D-W.Va.).

“The security of our homeland is inextricably tied to the security of our energy supply,” Manchin wrote in an April letter to Perry and Defense Secretary Jim Mattis urging the Trump administration to use the law to prop up coal and nuclear plants. “Therefore, the ability to produce reliable electricity and to recover from disruptions to our grid are critical to ensuring our nation’s security against the various threats facing our nation today — whether those threats be extreme weather events or adversarial foreign actors.”

But Alison Silverstein, an energy consultant who helped draft a recent Energy Department study on grid reliability, countered that many coal plant today are simply expensive to operate for baseload power.  “Money that we spend on uneconomic generation is money that we can’t spend on protecting customers” against power interruptions,” she said.

While FERC may balk at invoking the Defense Production Act, courts have historically granted the president “a lot of deference in deciding what parts of the economy are necessary to national security,”James Coleman, a Southern Methodist University energy law professor, said by email. Earlier this year, the FBI and the Department of Homeland Security may have helped create some basis for invoking the law after accusing Russia of engineering cyberattacks on the U.S. electric grid.

But the law places a limit on how far that presidential authority stretches. Congress must authorize any project under the law costing more than $50 million, which may not be enough to help many coal and nuclear plants.

Perry has been down this path before. Last year, the Energy Department asked FERC to impose a new rule favoring power plants able to store a 90-day fuel supply on site, a requirement coal and nuclear generators can meet but that unlike renewable energy or natural gas plants cannot. That plan also widely opposed by natural gas and renewable energy producers. In January, independent five-member commission unanimously rejected the proposal.

At the same time, FirstEnergy made an appeal under Section 202(c) of another law, the Federal Power Act, which allows the Energy Department to force the regional grid operator to pay nuclear and coal plants enough to make a guaranteed profit. One of FirstEnergy’s main suppliers of coal is Murray Energy, whose chief executive, Robert E. Murray, was a major Trump booster during the 2016 presidential campaign.

The Energy Department told The Post by email that the application “is now under review.” That pitch, too, has been panned by critics outside the coal and nuclear sectors, including the chairman of FERC.

“I don’t think we have an emergency on our hands right now in these sense of our ability of our grid to perform today and in coming weeks and months,” McIntyre said Thursday when asked about FirstEnergy’s 202(c) application. “I don’t think we have that sort of situation.”


President Trump, center, speaks during a meeting with automotive executives at the White House on Friday. Two seats to his right sits Environmental Protection Agency chief Scott Pruitt. (AP Photo/Evan Vucci)

— Top executives from car companies met with Trump on Friday amid tension between the administration and states over auto emissions regulations. The Trump administration is considering freezing auto efficiency standards starting in 2021, rather than following the Obama-administration’s plan to ratchet up emissions requirements as a way of combating climate change. “We’ve made a lot of progress in the last year and a half,” Trump said in the Roosevelt Room before the meeting, per The Post’s Chris Mooney.

But some in the auto industry are worried they have bitten off more than they can chew in regulatory rollback should the Trump administration go forward with its proposal. California and other states supportive of stronger standards have already sued the EPA over its move to change course. Should they succeed, companies may need to manufacture two different lines of cars for the two different standards.

The result: Trump instructed Transportation Secretary Elaine Chao and Environmental Protection Agency Administrator Scott Pruitt during the meeting to negotiate fuel economy standards with California officials, according to the Associated Press. Industry representatives were pleased with the detente, with the leaders of two top auto lobbying groups writing in a statement that they “appreciate the President’s openness to a discussion with California on an expedited basis.”

— And what about Pruitt? And during the meeting, Trump said he still supports his EPA chief amid ongoing ethical probes. While sitting just two seats away from Pruitt, a reporter asked whether he still has confidence in the administrator. Trump responded: “Yes, I do, thank you.”

The Energy Department’s Savannah River site, which the Trump administration has decided not to complete, shown in January. (Reuters)

— MOX nixed: The Trump administration is ending construction on a partially built South Carolina facility that has already cost the government billions that was meant to convert weapons-grade plutonium into a nuclear reactor fuel called mixed-oxide, or MOX, The Post’s Paul Sonne and Steven Mufson reports. “Even though construction will end, the Trump administration wants to spend billions more to wind down the project and retrofit the plant for a new mission, namely, the production of triggers for nuclear weapons,” they write. “The decision marks the culmination of a years-long effort by both the Trump and Obama administrations to end construction of the plant, actions that the South Carolina delegation in Congress blocked, preserving a source of jobs and federal funding in their districts.”


— Every one of the nation’s 57,636 wind turbines, mapped: Kern County in California is home to 4,581 wind turbines, and is what The Post’s Christopher Ingraham is calling “the wind capital of the entire country.” California also boasts “the No. 2 and No. 3 counties in the nation when it comes to turbine density: Riverside, home to the San Gorgonio Pass wind farm, and Alameda, where the Altamont Pass wind farm is located,” he writes. Data on wind turbine locations was compiled in a new U.S. Geological Survey database.

Unlike California, other windy states such as Nebraska and Wyoming lack legal mandates on how much electricity must come from renewable sources like wind and solar. “It’s no coincidence that those states tend to lag on wind-power generation,” Ingraham writes. “Still, the cost of wind is falling to the point where interest in the industry is being driven more and more by plain economics, rather than political ideology.”

A Tesla Model 3 is seen in a showroom in Los Angeles, Calif. (REUTERS/Lucy Nicholson/File Photo)

— Tesla’s funding fate: Numerous production setbacks have complicated the cash flow at Tesla. “While Mr. Musk has said Tesla won’t need to raise more money this year, not many analysts agree,” the Wall Street Journal reports. “To generate cash, they say Tesla needs to be able to consistently build around 5,000 Model 3s a week. That’s more than double the pace the company said it reached at the end of the first quarter, and a target the company has twice set back.” The company now says it expects to make 5,000 of the electric cars by the end of the second quarter.

Meanwhile, in the electric truck department, Tesla’s biggest competition may in fact be Big Oil. Shell unveiled in March its AirFlow Starship, which will begin driving cross country and includes solar panels on top, CNBC reports.


An aerial view of the Puna Geothermal Venture, a plant that lies just downslope of the erupting Kilauea volcano on Hawaii’s Big Island. Smoke rises from the lava flow on May 4 as it made its way through the Leilani Estates subdivision near Pahoa. (Bruce Omori/Paradise Helicopters/EPA-EFE/Shutterstock)

— Power plant that draws energy from volcanic heat now threatened by it: The recent volcanic activity on Hawaii’s Big Island is threatening a geothermal plant that houses thousands of gallons of flammable chemicals, Breena Kerr writes for The Post. Before dawn on Thursday, the Puna Geothermal Venture removed 60,000 gallons of pentane out of fear that the highly flammable solvent used in the powering of turbines could leak or ignite from fissures that have broken through the surface. The power plant, owned by Reno, Nev.-based Ormat Technologies, has long been “a concern for residents and the target of lawsuits challenging its placement on an active volcano,” Kerr writes. Operations at the Puna plant have been halted since May 3.

— A breakdown in recycling: Used newspapers, cardboard boxes and plastic bottles are piling up at landfills, and recycling plants can’t make a profit by processing them, the Wall Street Journal reports. A collapse in prices for scrap paper and plastic is leading local officials to raise fees to send these recyclables to the plants. “Recycling as we know it isn’t working,” James Warner, chief executive of the Solid Waste Management Authority in Lancaster County, Pa. told the Journal. “There’s always been ups and downs in the market, but this is the biggest disruption that I can recall.”