OPINION: Trump’s DOE Claims To Protect The Grid; It’s Really Protecting Coal And Nuclear

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Steven Titch Associate Fellow, R Street Institute
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Power companies are closing aging, expensive coal and nuclear plants and turning to facilities that use more affordable natural gas brought on by the fracking boom.

In early September, Akron, Ohio-based FirstEnergy Corp. said it plans to shut down its remaining four coal-fired generation in Ohio and Pennsylvania within four years. This comes after its announcement last March that it would be closing three nuclear plants in the same two states.

Earlier this year, Vistra Energy Corp. closed three coal-powered plants in Texas and recently announced plans to close another coal plant in Schuylkill County, Pennsylvania.

There’s every reason to cheer. For environmentalists, it means a shift to cleaner burning fossil fuel. For free-market economists, it validates the idea that when left alone, classic market mechanisms — price, supply and demand — can work toward the common good.

Unfortunately, President Donald Trump, who in the past has embraced the virtues of market economics, is pushing for bailouts of coal and nuclear plants. Indeed, FirstEnergy’s plant closures, not scheduled until 2022, may be a veiled attempt to encourage assistance.

Not only does this subsidy plan go against the principles of Trump’s own Republican party; it’s been roundly rejected by the Federal Energy Regulatory Commission (FERC), of which three of four commissioners are Trump appointees.

Now Trump has called on Department of Energy Secretary Rick Perry to invoke “national security concerns” as the rationale to dredge up a Cold War era clause in the Federal Power Act. DoE suggests the wave of coal and nuclear plant shutdowns create a “serious threat to the stability” of the U.S. electricity grid.

The solution is to force retail power companies to buy capacity from failing coal and nuclear plants, a demand that would add $11 billion a year to consumer energy costs, according to an analysis by the Energy Innovation and the Climate Policy Initiative.

Sensing this argument wouldn’t be enough, in a leaked memo to Congress, the White House claimed the country’s gas pipeline infrastructure was not sufficiently hardened against cyberattack. Subsidies to coal and nuclear plants, therefore, are necessary to safeguard electricity delivery in case of sudden loss of gas pipeline capacity.

This is fearmongering at its worst, for DoE’s claims about the degree of pipeline vulnerability are not true.

In response, the Partnership For Clean Affordable Energy points out that more than 50 energy companies, including a number of the nation’s largest natural gas pipeline operators, participate in the Oil and Natural Gas Information Sharing and Analysis Center. Created in 2014, this data hub shares and analyzes threat information and intelligence and uses it to stage real-world attack-and-response simulations.

Public sector initiatives include clearinghouses run by the Transportation Security Administration and the National Institute of Standards and Technology on threat assessments, best practices and cybersecurity guidelines for pipelines.

DoE itself is investing in new research and development projects to address cybersecurity issues in the energy generation sector, including four that will help buttress the energy grid against cyber attacks. These facts make the dread tone of its memo all the more bewildering.

Moreover, the government should be careful about funding unilateral cyberdefense initiatives to industry subgroups such as coal and nuclear plants. Their vulnerabilities and security requirements are not much different from plants that use natural gas.

Coal plant supply chains largely rely on rail lines, which are no less vulnerable to cyber or physical attack. Just as in other industries, standardization, best practices and a shared knowledge base create a sound foundation for cybersecurity. The more participants on the same page, the more robust the defense.

Subsidies, on the other hand, distort such decision-making. Put them in place and their recipients — in this case, the coal and nuclear plants — will be incented to maximize the value of their handouts, even if they run counter to the larger cooperative interest of the industry and consumers.

The Trump administration knows cybersecurity is a hotbutton word. If you want to get attention, shout national security and public safety. But used here it’s just a bailout by another name.

At the end of the day, coalburning plants both pollute the air and increase carbon emissions. Just as it’s unwise policy to subsidize cleaner energy technologies before they are economically viable, it’s equally unwise to subsidize energy resources that the marketplace is rejecting. Consumers prefer less expensive, cleaner energy. Let market mechanisms work to meet that demand.

Steven Titch is an independent policy analyst based in Houston, Texas. He is a policy advisor for The Heartland Institute and has work published by The R Street Institute and The Reason Foundation.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.