June 7, 2018 Read More →

What Trump’s ‘unprecedented’ power plant bailout could mean for the Ohio Valley

Ohio Valley ReSource:

President Donald Trump last week told the Department of Energy to “prepare immediate steps” to stop the closures of coal and nuclear power plants in the Ohio Valley region that are no longer economical to operate.

But a number of energy analysts say the administration’s unprecedented effort to prop up struggling utilities will do little to solve their underlying problems and will likely end up costing consumers more.   

The president’s announcement Friday came the same day that a leaked draft memo was published by Bloomberg News. That memo outlines a plan by the federal government to bail out coal and nuclear plants by forcing grid operators to buy power from those struggling plants for two years.In a statement, Murray Energy President Bob Murray said federal action is “essential in order to protect the resiliency and reliability of our nation’s electric power grids.”

Cathy Kunkel, an energy analyst for the Institute for Energy Economics and Financial Analysis, an Ohio-based think tank, said the memo outlines another attempt by the administration to bail out uneconomical power plants.

“This is not the first time that FirstEnergy and Bob Murray have attempted to get the DOE to do something like this,” she said. “FERC isn’t as involved this time, but I mean fundamentally, FirstEnergy has been striving to get bailouts for coal and nuclear plants for the last several years.”

This year is on track to be one of the biggest on record for coal plant retirements. According to the U.S. Energy Information Administration, plants adding up to about 13.5 gigawatts of coal power are slated for closure.

Kunkel said it is possible, if the administration’s efforts were to go into effect quickly, that some coal plants could stay open, at least for a while.

For example, she said it’s possible that the Pleasants Power Station, a coal-fired power plant in West Virginia that is slated to close Jan. 1, 2019, may be able to continue operating under this proposal.

“If this order is implemented it will prevent the plants from closing because it’ll force PJM to buy their output,” she said.

A spokesperson for FirstEnergy, which operates the plant, said it was too soon to speculate.

However, Kunkel said, even that won’t solve the underlying problem that the Trump administration appears to be ignoring. The market has already made those old power plants obsolete. That is because electricity demand has been stagnant for more than a decade and cheaper natural gas and renewable energy are more economical fuels.

“Once that subsidy goes away, the plants won’t suddenly magically become economically viable on their own and they’ll still need continued subsidies to keep operating,” Kunkel said.

Every analyst agreed one thing that is sure to happen if DOE takes the actions outlined in the memo: All of us will see our utility bills go up.

What Trump’s “Unprecedented” Power Plant Bailout Could Mean For The Ohio Valley  

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