Two Power Plays Show Leadership

October 6, 2017

After eight years of federal regulations weighing heavily on coal, we have now had eight months of reasonable federal regulatory relief. And Trump’s critics are crying foul.

In the past week, two bold attempts to bring energy policy back towards the neutral zone have been greeted with near hysteria.

First, Secretary Perry’s request that FERC issue a rule directing unregulated markets to assess a “reliability” valuation for baseload power plants drew scorn from competing fuels. A transparent sop to coal, they say. This from a renewable fuels industry kept off life support by production tax credits and mandated minimum markets.

The “Chutzpah of the Year” quote goes to the head of the wind industry association, who admonished Congress this week with this whopper: “You want to allow the markets to compete and evolve and not pick one fuel source over another.”

Some Perry critics ask: Where’s the reliability crisis to justify this request? Note the irony in this faux outrage. When climate activists get that same “where’s-the-crisis” question from skeptics of costly emission reduction regulations, they say there isn’t a crisis today but there will be one tomorrow unless we take prudent action now to prevent it.

A reasonable response. The same logic holds for measures to ensure grid reliability. It’s tomorrow’s grid that policymakers should worry about today. Now is not too late to take steps that may ensure resiliency in the face of low probability but high-impact events in future years. The unprecedented decline in baseload power generation – 66 gigawatts of coal capacity since 2010, enough to power 40 million homes – justifies this concern. (ACCCE, June 17, 2017) By 2020, an estimated 80 GW of coal will have been lost. (MJ Bradley & Assoc. Aug. 28, 2017)

Critics think the grid’s task is to hit the averages for power demand. But  the real task is to cover the peaks. That’s the goal of the secretary’s action. If we can justify a “renewable standard” for the most populous states in the country, why not a “reliability standard” for the 60,000 MW in the industrial Midwest?

The secretary is acting like a  cabinet official by proposing a solution to a potential problem. Anyone remember the 2014 Polar Vortex? That winter, fewer than a dozen coal-based power plants, all slated for eventual retirement thanks to the Mercury and Air Toxics rule, prevented serious power failures from freezing parts of the Southeastern U.S.

The second policy correction comes from  Administrator Pruitt’s anticipated repeal of the Clean Power Plan (CPP). Here again, hardly a draconian action that merits the hysterical response from the Green Left – especially if as reported the administrator decides to substitute a more effective measure.

That won’t be hard. The CPP is almost a parody of government inefficiency. It imposed costs that far exceeded any benefits, usurped traditional States’ authority, was opposed by more than half of them and was stayed by the Supreme Court. If NASA had this record of incompetence Bangladesh would have beat us to a Mars landing.

One of the great underreported stories you won’t find in the libraries filled with CPP reportage is the benefit of this unlawful subterfuge. The actual greenhouse gas reduction achieved: 0.016° F.

The costs were far easier to find – substantial job losses throughout the power supply chain, higher wholesale power costs nationwide with a dozen or more coal reliant states hit especially hard. (For further suggestion of the CPP’s likely economic impact, see the attached table based on EIA coal data for ten States.)

A recent report this year by IHS Markit concluded that the nation’s grid-based power supply portfolio “is becoming less cost-effective, less reliable and less resilient.” The North American Electric Reliability Corp. observed in May that “premature retirements of fuel secure baseload generating stations reduces resilience to fuel supply disruptions.”

Everyone should take a deep breath. The administration is responsibly reacting to this phenomenon. We call it leadership.