Trump's Love for Coal Not Enough to Save Money-Losing Plant

(Bloomberg) -- The Tennessee Valley Authority will close an aging coal-fired power plant, resisting pressure from President Donald Trump to keep the Kentucky facility operating.

The TVA board voted 6-1 Thursday to shutter the Paradise Fossil Plant Unit 3, which gets most of its coal from mines operated by a longtime and vocal Trump supporter, Robert Murray. Trump tweeted Monday that the board should consider “all factors before voting to close viable power plants.”

The decision came down to money. Cheap natural gas and renewables are driving down the price of electricity, prompting utilities around the country to close coal-fired generators. Even in Kentucky, the heart of coal country where voters backed Trump almost two-to-one in the 2016 election, there’s no getting around the fact that operating aging coal plants can be more costly to ratepayers.

“This decision is not about coal,” TVA Chief Executive Officer Bill Johnson said during the meeting in Chattanooga, Tennessee. “It’s about economics. It’s about keeping rates as low as feasible.”

Burning coal accounted for about 27 percent of U.S. electricity last year, down from 44 percent a decade earlier, according to BloombergNEF. Growing concerns about climate change have prompted regulations that often make coal plants money losers. The industry closed almost 13 gigawatts of coal capacity last year, second only to 2015 when 15 gigawatts were shuttered. For comparison, a typical nuclear reactor has about 1 gigawatt of capacity.

Kenneth Allen was the sole dissenting vote on the TVA board.

“I’m concerned about our portfolio, long term economic impacts, impacts on the community,” Allen said during the meeting. "We’ve even heard from the president on this matter. I’m not completely comfortable with the recommendation.”

Kentucky Senator Mitch McConnell and Governor Matt Bevin also weighed in this week, urging the TVA to keep the plant open. Bevin said in a tweet Thursday that he was “deeply disappointed” by the vote, which would have a negative impact on the local community.

The White House declined to comment on the decision. However, in an unrelated development, the Interior Department on Thursday approved two coal projects in Utah, declaring that “the war on coal is over.”

Kentucky was the fifth-largest U.S. coal producer in 2017, the last year for which annual data is available, according to the Energy Information Administration. Only Pennsylvania has more coal mines than Kentucky, which relies on coal for 79 percent of its power.

Paradise 3 in Muhlenberg County gets the bulk of its coal from Kentucky mines operated by Murray Energy Corp., which donated $1 million to a political action committee backing Trump’s agenda last year. Murray, the company’s chief executive officer, has pushed the Trump administration in the past to support other plants operated by his customers.

“We are extremely disappointed in the TVA Board decision,” Robert Murray said in an email. After noting the company has 690 employees “in the vicinity of” the Paradise plant, he said, “up to seven thousand five-hundred (7,500) jobs in West Kentucky” could be impacted.

The decision was applauded by environmental groups. “TVA made the right decision,” Mary Ann Hitt, senior director of the Sierra Club’s Beyond Coal campaign, said in a statement. “The board ignored the political games, followed their statutory mission and were guided by the facts laid out by their own experts.”

Trump's Love for Coal Not Enough to Save Money-Losing Plant

Paradise 3 has about 140 workers, according to TVA Public Information Officer Jim Hopson. When the authority has decided to shutter facilities in the past, it typically took one to three years. The board also voted unanimously to close the Bull Run coal plant in Tennessee, which got its fuel from 12 mines in 2017, according to the Energy Information Administration. The biggest supplier was Alliance Resource Partners LP.

“Continued operation will impose significant costs to our customers that can be entirely avoided,” Johnson said. “When we run the units, which is infrequently, at least half the time they’re out of the money.”

The TVA shut two units at its Paradise power plant in 2017, after 54 years of operation, replacing them with natural gas fired generation. The third, with a capacity of 1,150 megawatts, began operating in 1970, according to its website.

©2019 Bloomberg L.P.

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