As West Virginians continue to see their utility bills rise, the regional electric grid serving the state is among those warning that attempts by President Donald Trump’s administration to keep coal and nuclear power plants from closing will lead to higher electricity prices.
Trump has ordered the U.S. Department of Energy to stop unprofitable coal and nuclear power plants from closing due to what his administration says are concerns for national security and grid reliability. An internal White House memo outlined a plan to keep the plants alive, Bloomberg News reported. The department would direct grid operators to purchase power or generating capacity “from a designated list of facilities” for two years to put impending closures on pause, according to the report.
Gov. Jim Justice and West Virginia’s congressional delegation have lauded the move, making similar arguments relating to energy security.
“The security of our homeland is inextricably tied to the security of our energy supply,” said Sen. Joe Manchin, D-W.Va., in a statement. “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 the PJM Interconnection, which operates the electric grid serving West Virginia and others, said earlier this month that there “is no immediate threat to system reliability.”
That conclusion isn’t anything new. A U.S. Department of Energy report released in August stated that grid “reliability is adequate today despite the retirement of 11 percent of the generating capacity available in 2002, as significant additions from natural gas, wind, and solar have come online since then.”
PJM also said a marketplace with limited government interference “has led to historically low prices.”
“Any federal intervention in the market to order customers to buy electricity from specific power plants would be damaging to the markets and therefore costly to consumers,” it said.
Jacqueline Roberts, director of the state Public Service Commission’s Consumer Advocate Division, said “someone has to pay for the subsidies, and that includes [West Virginia] ratepayers.”
There are still plenty of questions industry players have for the White House. Roberts said that “no one knows the subsidy mechanism yet” that will be pursued. Cathy Kunkel, a Charleston resident and analyst for the Institute for Energy Economics and Financial Analysis, agreed, saying “the devil is in the details” on how the plants will be kept alive.
“I’m not sure how you would effectively design a program like this,” Kunkel said. “Would there be a set price floor for coal-fired power plants? Would [grid operators] be buying a certain amount of their generation?”
West Virginia is home to 10 active coal-fired power plants, according to the U.S. Energy Information Administration, and coal-fired plants accounted for 94 percent of the state’s net electricity generation in 2016. But coal-fired power plants are shutting down across the country as natural gas and renewable energy sources increase their share of the marketplace. The Department of Energy report said the natural gas boom has been the “biggest contributor” to the coal industry’s decline.
White House orders to purchase costlier coal and nuclear power on a large scale “would definitely drive [customer] rates up by definition,” according to Kunkel.
But the plan has to get off the ground first. Last year, U.S. Energy Secretary Rick Perry proposed to the Federal Energy Regulatory Commission a method to subsidize struggling power plants. FERC eventually rejected that proposal, saying keeping the plants open wouldn’t do much to improve grid resiliency.
On this attempt, according to the internal memo, the department would use emergency authority measures to enforce the order.
James Van Nostrand, director of the Center for Energy and Sustainable Development at the West Virginia University College of Law, said he’d be surprised if the Trump administration’s method of enforcement could withstand legal scrutiny from the natural gas and renewable energy industries.
“It’s more creative, I guess, but what is the problem you’re trying to fix? Bailing out the coal and nuclear industries?” he said. “Those are emergency powers, and there is no factual basis for there being an emergency.”
“It is an inappropriate use of the federal government’s emergency powers that is even more egregious when even the regional power grid authorities at PJM say there is no emergency,” said Dena E. Wiggins, president and CEO of the Natural Gas Supply Association, in a statement.
Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, said if the Trump plan manages to be implemented, it would benefit the state’s coal industry and keep at-risk coal-fired power plants open, saving area jobs and tax revenue. But as far as grid reliability concerns go, Burd said the natural gas industry is more than prepared to keep the lights on as coal and nuclear plants are set to shutter.
“There are ample supplies of natural gas in this region to supply all current and future power production needs,” Burd said. “There’s just a tremendous amount of natural gas being produced.”
If the order was successful, it would “give new life” to some coal-fired plants, Van Nostrand said. But which of the closing coal and nuclear plants the Trump administration wants to stay open still isn’t clear.
One of West Virginia’s plants — the coal-fired Pleasants Power Station at Willow Island, owned by FirstEnergy — is slated to close at the start of 2019 if no buyer is found to continue its operations.
FirstEnergy, which operates several coal-fired plants in West Virginia and has subsidiaries providing electricity to much of the state, attempted to transfer the plant to its West Virginia-based subsidiaries. Opponents of the $195 million deal warned it would raise electric bills for West Virginians. Federal regulators rejected the deal earlier this year.
FirstEnergy is in strong support of the Trump administration’s directive and has pushed heavily for federal intervention in the past year as several of its plants flounder financially.
“I continue to believe that baseload coal and nuclear plants help maintain electric system resiliency and national security while also playing an irreplaceable role in the regional economy,” FirstEnergy President Charles E. Jones said in a statement.
A FirstEnergy spokeswoman said since the company hasn’t yet seen official plans or details from the White House, she “can’t speculate on how any action from Washington might impact” the Pleasants Power Station.
Mon Power, a subsidiary of FirstEnergy, cost its ratepayers more than $160 million by purchasing the coal-fired Harrison power plant in Haywood, Harrison County, from FirstEnergy, according to an analysis from the Institute for Energy Economics and Financial Analysis.
“West Virginia customers are already paying for the cost of coal plants,” Kunkel said.
FirstEnergy also has a coal-fired plant in Maidsville, while Appalachian Power, another major utility in the state, has coal-fired plants in Winfield, Moundsville and New Haven.