What Trump Should -- Or Shouldn't -- Do to Rescue Power Plants
(Bloomberg) -- It didn’t take long at the BNEF Future of Energy Summit for talk to turn to the Trump administration’s push to rescue America’s money-losing coal and nuclear plants.
“Resilience” was the electricity sector’s buzz word du jour, and there’s hardly consensus among utility executives and analysts about whether the White House’s unprecedented plan to ensure it is a good idea. Some deride the administration’s strategy as an assault on free markets. Others defend it as key to keeping the lights on. Here’s what people have said at the summit so far:
Notion of Free Market Is ‘Nonsense’
Bankrupt power generator FirstEnergy Solutions Corp. has asked Energy Secretary Rick Perry to declare a grid emergency, a move that would create guaranteed profits for coal and nuclear plants at risk of shutting. In defense of such an action, Perry said the government exercises plenty of control over power markets “every day.” The idea that they flourish as free markets is “nonsense,” he said. He added, however, that invoking his emergency authority may not be “the most appropriate” way of ensuring grid resilience.
Economics -- Not Politics
Nora Mead Brownell ripped into plans to bail out coal and nuclear power. The co-founder of ESPY Energy Solutions LLC who served on the Federal Energy Regulatory Commission during George W. Bush’s presidency said policy makers need to signal what economic activity they want to see and then let financiers come up with a paradigm. She called this a "proactive" rather than "retroactive" approach to policy change. "We need to step back and make economic decisions, not political decisions," she said.
Trump Gets an “A+”
Southern Co. Chief Executive Officer Tom Fanning gave the White House’s energy policies high marks, particularly for supporting nuclear power. (Southern owns the only nuclear plant under construction in the U.S., and the agency gave the company more federal loan guarantees to complete the project.) While Fanning deferred to the Energy Department on a potential grid emergency declaration, he said the U.S. does need to figure out a way to make existing nuclear plants “economically viable.”
Not Every Megawatt Is Created Equal
Paula Gold-Williams, president and chief executive officer of San Antonio, Texas, utility CPS Energy, sides with the White House when it comes to whether renewables are “resilient.” CPS sees value in wind and solar, but the reality is they aren’t as dependable as fossil-fuel generation, she said. Black ice can knock out wind turbines, and solar can go off line in bad weather, Gold-Williams said. "I do not think every megawatt is equal,” she said.
Don’t Reward Bad Choices
Amy Myers Jaffe, a senior fellow at the Council on Foreign Relations, said power generators who doubled down on coal plants -- even after it became clear they were uneconomical -- don’t deserve a bailout. “In our capitalist system, we don’t reward organizations and companies that are unable to manage disruption,” Jaffe said.
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