Trump's Doomsday Scenarios for Power Grid Undercut by His Agency

(Bloomberg) -- Energy Secretary Rick Perry has invoked doomsday scenarios to argue that the shuttering of nuclear and coal-fired power plants will put the U.S. power grid at risk, leaving elderly Texans without air conditioning and New York’s financial center vulnerable to a crippling blackouts.

“I do not want to get a phone call from someone whose grandmother has died in their home because the electricity went off in August where our days are 105 to 110 degrees,” Perry told House lawmakers earlier this year.

There’s just one problem: Independent researchers and the department’s own data say the problem doesn’t exist.

The Trump administration argues that the retirement of coal and nuclear power plants is harming the dependability of the U.S. power grid. That’s got them considering taking drastic steps -- potentially within weeks -- such as declaring a national emergency so they can guarantee profits for coal and nuclear plants, or invoking a Cold War-era law to order utilities to use coal and nuclear power.

But the Energy Department itself found in a report last summer that the grid had become more reliable over the past 15 years despite a wave of coal- and nuclear-fueled power plants retiring due to competition from cheaper natural gas and an expanding use of wind and solar power that isn’t produced around the clock. A second report issued in October by the Rhodium Group, an independent research provider, analyzed Energy data to show that the vast majority of power outages were due to storms, not fuel supply problems or power plants that can’t keep up with demand.

“The dark scary picture for the grid is just complete nonsense,” said Robbie Orvis, an energy policy expert with San Francisco-based Energy Innovation, a non-profit thinktank that supports policies to reduce greenhouse gases. “Claims about how losing all this generation would cause all this doom and gloom are not just grounded in reality.”

Trump's Doomsday Scenarios for Power Grid Undercut by His Agency

The Trump administration says that it needs to ensure the electric grid will be secure and reliable in the long term as aging coal and nuclear power plants are retired. Members of the National Security Council are convinced that something must be done, a senior Energy Department official, speaking on the condition of anonymity, said in an interview.

Coal-fired generation capacity is projected to decline by 65 gigawatts from 2018 to 2030, according to the U.S. Energy Information Administration. Nationwide, two dozen nuclear plants -- representing nearly 33 gigawatts -- are either scheduled to close or probably won’t make money through 2021, according to Bloomberg New Energy Finance.

“Critics are quick to declare that the grid is reliable, but when it comes to resilience, most people agree that the question is not if we have a problem, it is when,” Shaylyn Hynes, an Energy Department spokeswoman, said in a statement, adding that the Obama administration also studied the problem.“This significant issue has been reviewed for years, it is time to take action.”

The issue illustrates the struggle the Trump administration is facing to keep unprofitable coal and nuclear plants online in the face of competition from cheap natural gas, flat electricity demand and rapidly declining renewable energy costs. Trump, who campaigned on saving coal, has implored Perry to act, but the Energy secretary’s options are limited.

The Federal Energy Regulatory Commission already rejected a proposal by Perry to subsidize struggling coal and nuclear plants in the name of keeping power grids dependable earlier this year. Cost estimates for the proposal reached the hundreds of billions.

A subsidiary of power generator FirstEnergy Corp., backed by its coal supplier Murray Energy Corp., has asked the administration to use emergency authority under the Federal Power Act. And the administration is considering invoking the Defense Production Act, a Cold War-Era to order utilities to ink purchase commitments for coal and nuclear power or invest in the facilities that generate it.

"We stand by our March 29 application to Secretary Perry, in which we argued that the premature retirement of our plants and others like them do indeed pose a threat to the reliability, fuel diversity and resilience of the regional grid," Thomas Mulligan, a spokesman for FirstEnergy Solutions, which filed for bankruptcy March 31, said in an email.

Critics say it’s a solution in search of a problem.

“It is easier to justify extreme action to protect uneconomic power plants if you can point to an emergency and you can point to an imminent threat,” said Alison Silverstein, an independent energy consultant who helped write the Energy Department’s first grid study. “I don’t think you should be worried about the state of the power grid and we have pretty strong documentation to support that.”

Grid operators such as PJM Interconnection LLC, which manages the grid from Chicago to Washington, agree. It issued an analysis in April that said the grid wouldn’t suffer without FirstEnergy’s nuclear plants.

Ernest Moniz, President Barack Obama’s Energy Secretary, also says he’s seen no evidence to support the notion the grid isn’t already reliable and resilient. But like Perry, he thinks something should be done to save U.S. nuclear plants from retirement because of the carbon-free electricity they provide.

“That’s the only argument that I can see today for thinking about some additional policy moves in the electricity sector,” he said in an interview.

©2018 Bloomberg L.P.