In an apparent attempt to show supporters he is making good on his pledge to revive the dying coal industry, President Trump has been trying to find a way to funnel tens of billions of dollars to a small number of electric utilities to subsidize their uncompetitive nuclear and coal power plants. In February, days before the Tennessee Valley Authority (TVA) was to vote on the future of Paradise Unit 3, the president took to Twitter to encourage the TVA to save the 49-year-old coal plant, which is reportedly too expensive to keep operating. Notwithstanding the tweet, the TVA’s board voted to shut the plant down.
Coal is an important part of our electricity generation mix and @TVAnews should give serious consideration to all factors before voting to close viable power plants, like Paradise #3 in Kentucky!
— Donald J. Trump (@realDonaldTrump) February 11, 2019
And in March, the Economic Report of the President raised the prospect of an “electric generation reserve” and floated the idea that nuclear or coal-fired generation might be preferentially selected into such a reserve. But such an effort, like the bailout plan that was abandoned last fall, would be wrong in so many ways.
Market Forces Are Killing Coal
As a recent Reuters article pointed out, the president can do little to stop coal power plant retirements. In fact, notwithstanding the administration’s misguided efforts to eliminate policies like the Clean Power Plan, the number of coal plants that were retired in the past two years was higher than any two-year period in history. The bottom line is that those plants simply cannot compete. That’s just the way the market works.
Recent analysis by Lazard describes the tectonic shift taking place in the power sector as falling prices for wind, solar, and natural gas are pushing coal and nuclear generators to the brink of extinction and over. While throwing tens of billions of U.S. taxpayer dollars at a few of those old plants might stave off closure for a year or two, no amount of money is going to change the trajectory of global power markets. It would be a colossal waste of money to try.
It’s also worth pointing out the idea that somehow subsidizing coal and nuclear power plants is going to protect the grid from cyberattacks is not only wrong, but out of step with what the administration itself is saying elsewhere. In March 2018, the FBI and the Department of Homeland Security released details of what they called “a multistage intrusion campaign by Russian government cyber actors” targeting the U.S. power grid and other critical infrastructure. Just a few months ago, Energy Secretary Rick Perry told Russia’s energy minister of the U.S.’s “disappointment and concern” about Moscow’s continued attempts to hack America’s power grid. I am not aware of a single cybersecurity professional who thinks that spending billions of dollars to prop up a few coal and nuclear power plants is a rational way to defend against potential cyberattacks on the grid.
The Military Needs Reliable Power, Not Plant Bailouts
Meanwhile, it is troubling that the administration is using the need for energy resilience at military installations as a rationale for its proposed bailout. It’s true that military bases in the U.S. and the critical missions they enable—think real-time combat support to troops on the ground in places like Syria and Afghanistan—rely on the commercial electric grid. But bailing out uneconomic power plants would do nothing to improve their resilience. The overwhelming number of power outages at military bases are the result of failures in the bases’ own infrastructure. Outages that result from problems on the commercial grid, just like those that Americans occasionally experience, are almost exclusively from problems with utility transmission and distribution systems—not power plants. It would be a huge mistake to divert tens of billions of dollars to failing plants when military bases are facing a $100 billion maintenance and repair backlog, including for energy systems and electric distribution networks.
If he really wants to improve energy resilience, the president should listen to the military and his own national security appointees. Late last year, Assistant Secretary of Defense Robert McMahon issued a memo that stated, “[M]aintaining secure access to energy resources is critical to the Department of Defense (DoD) mission execution, and ensuring energy resilience at DoD installations is a top priority.” In the same memo, McMahon even urged the military services to consider modifying existing energy-efficiency contracts to add energy resilience.
McMahon was right on the mark. So was his colleague, then-Assistant Secretary of Defense Lucian Niemeyer, when he told Congress last year that DoD’s response to threats facing the grid was to “concentrate resources on projects which will enhance the resilience of our defense critical and task critical assets … includ[ing] the continued development of distributed energy sources which can be used to power critical missions regardless of the condition of the commercial grid.” Those are things like energy efficiency, battery storage, and distributed generation including renewables and microgrids—next-generation technologies that could actually help meet the challenge.
It would set a dangerous precedent for the president to use national security as a rationale to direct billions of dollars to prop up failing power plants. Not only that, but a bailout would also risk long-term damage to power markets and divert resources from real threats to the grid and our military capabilities. Moving ahead with the administration’s plan would be a serious mistake that neither taxpayers, rate payers, nor the military can afford. ■
—Ray Mabus served as secretary of the U.S. Navy from 2009 to 2017, and previously served as governor of Mississippi and ambassador to Saudi Arabia.
[Updated 4/1/2019: Added details from the the Economic Report of the President.