- - Monday, March 18, 2019

After signals that a potential coal bailout was off the table, a tweet from President Trump has put coal back in the spotlight.

On Feb. 11, the president tweeted at the Tennessee Valley Authority (TVA) to preserve ” an important part of our electricity generation mix ” by avoiding the closure of the Paradise Unit 3 coal plant in Kentucky. The utility’s review showed the plant, like many of America’s older coal plants, had become too expensive to operate and competed poorly with options like natural gas.

Fortunately, the TVA Board didn’t wilt under the pressure of the president’s social media appeal and continue the administration’s attempts to prop-up uncompetitive coal and nuclear plants. Rather, the board made a practical decision.

“It is not about coal,” explained TVA CEO Bill Johnson. “This decision is about economics.”

On the surface, it should come as no surprise that the president weighed on the closure of another coal plant. After all, he campaigned on a pledge to save coal and considers these stakeholders as some of his closest allies. But the president’s explicit protestations over the closure of the Paradise Unit 3 reeks of political pay for play. Just consider that Bob Murray, a Trump insider, owns the company that supplies coal to TVA’s Paradise Unit 3.



Politics aside, to justify propping up coal and nuclear, the administration and a host of special interest allies have taken to incorrectly disparaging natural gas as a fuel resource. Last May, President Trump’s Energy Department released a coal and nuclear bailout proposal, falsely alleging natural gas pipelines are comparatively ill-equipped to address cybersecurity threats. If successful, this false narrative could have serious implications for the future of American energy. Policymakers must know the facts.

Natural gas in past years has taken clear control from coal and nuclear power as America’s predominant energy source. This has been driven heavily by a windfall of new U.S. natural gas reserves and environmental factors that favor natural gas over dirtier coal.

This has rendered other fuel sources less desirable, with federal, independent, energy analytical organizations like the Energy Information Administration recently concluded that coal and nuclear plants are uncompetitive vis—vis natural gas. With capital investment in natural gas estimated at $1.9 trillion over the next two decades, the role of natural gas as America’s go-to fuel isn’t going away.

Given this reality, it’s no wonder those seeking bailouts of coal and nuclear would resort to uninformed claims about natural gas. For example, while a recent op-ed by Southern Methodist University’s Bernard Weinstein insists that natural gas is unable to deliver the “just in time” energy so vital in extreme weather, the facts paint an entirely different picture. The cold snap that recently enveloped the East Coast and Midwest actually went a long way toward proving natural gas’ preparedness for severe weather.

A preliminary report, for example, by PJM Interconnection, the grid operator responsible for much of the affected region, says “overall generation performance through the period was good.” In fact, coal plants experienced just as many challenges delivering electricity to customers as natural gas, with 7,739 megawatts of coal-fired generation capacity offline on Jan. 30 compared to 5,192 megawatts from natural gas. Reports were that natural gas plants “were prepared for extreme cold” and that “prices did not skyrocket out of control,” providing real-life contradictions to claims about natural gas.

There are good reasons for this. The natural gas industry has invested heavily in infrastructure needed to sustain supply and cope with extreme weather. In fact, investments in increased storage capabilities are expected to exceed $80 billion annually. The result is that, despite criticisms about fuel storage, analysis shows that winter reserve margins meet or exceed what is expected, including in the PJM, NPCC-New York and New England regions hit hard by a drastic winter. And with the Energy Information Administration expecting dry natural-gas production to climb to another high of 89.6 billion cubic feet a day next year, experts now predict natural gas to go from under-stored to oversupplied by the summer.

In the face of these facts, four energy companies have signed a letter to PJM Interconnection claiming the marketplace does not properly value coal and nuclear energy. They want new “pricing mechanisms” that prop up failing coal and nuclear plants.

Policymakers should see these pricing mechanisms simply as taxpayer-funded bailouts and these artificial price mechanisms will translate directly to consumer’s bills. They also should recognize that a competitive energy market has already succeeded in providing affordable, reliable and safe electricity, and it’s doing this increasingly with natural gas.

Let’s hope the energy sector does not continue to be unnecessarily politicized in a misguided attempt to save coal and nuclear. Let’s also hope that such politicization doesn’t keep weaving a false narrative about natural gas. The stakes are simply too high for consumers and the economy. The history of U.S. energy policy-making shows clearly that playing politics in choosing energy sources rarely makes good energy policy. That holds true on both sides of the aisle.

• Guy F. Caruso is a former head of the U.S. Energy Information Administration.

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