More than once during the Energy Summit in Billings on May 30 & 31, it was mentioned that the federal government is looking at Colstrip in light of the importance of Plants 3 & 4 to national security. Then on June 1, from US Energy Secretary Rick Perry issued a press release that stirs more uncertainty about the fate of Montana’s two most important coal-fired electric plants. What it proposes hints at longer term operation, but details were minimal.
At the direction of President Donald Trump the Energy Department is preparing to take “immediate steps” to bolster coal-fire and nuclear power plants, the press release announced. President Trump believes that keeping America's energy grid secure "protects our national security, public safety and economy from intentional attacks and natural disasters.”
Impending retirements of "fuel-secure" power plants that rely on coal and nuclear power are harming the nation's power grid and reducing its resilience.
The Trump administration plans to order operators of the nation's power grid to buy electricity from coal and nuclear plants to keep them open. The plan would direct grid operators to buy power from coal and nuclear plants for two years to ensure grid reliability, "promote the national defense and maximize domestic energy supplies."
The federal action is being urged to "stop the further premature retirements of fuel-secure generation" from coal and nuclear plants that have struggled to compete with natural gas and renewable energy sources such as wind and solar power.
The plan would exempt power plants from obeying a host of environmental laws and having to spend billions of dollars to keep coal-fired plants open.
Opponents of the plan say that it marks “unprecedented government intervention in energy markets,” even though many at the Energy Summit in Billings said it is government intervention through regulations and the “War on Coal,” that helped to undermine the economic viability of coal-fired electric plants.
In fact, when asked what would most benefit his industry, a coal company spokesman said “an even playing field.” He pointed to the heavy subsidies that support wind and solar energy development, which help to edge out fossil fuels in the market.
According to the Energy Information Administration (EIA) and the University of Texas, from 2010 through 2013, federal renewable energy subsidies increased by 54 percent, from $8.6 billion to $13.2 billion, despite the fact that total federal energy subsidies declined by 23 percent, from $38 billion to $29 billion. The declines were in the areas of conservation and incentives for biofuels.
Opponents to the President’s plan, are lining up from every direction, including other fossil fuel resources, such as oil and gas. Todd Snitchler of the American Petroleum Institute, said, “Unprecedented government intervention in the energy markets to support high-cost generation will hurt customers by taking more money out of their pockets rather than letting people keep more of what they earn."
"Orderly power plant retirements do not constitute an emergency for our electric grid," said Amy Farrell, vice president of the American Wind Energy Association. Farrell called the draft plan "a misapplication of emergency powers" and said, "There's certainly no credible justification to force American taxpayers to bailout uneconomic power plants."
And, indeed, “orderly” retirements of plants, driven by an unfettered markets is part of a natural evolution of markets, but there has been little “natural” about the forces that have buffeted coal over the last decade. Given the uncertainties created by government meddling in the market, investors want little to do with risking capital to realign coal to better compete in the market. So it would seem, the benefits of a strong, viable energy grid that serves to protect the country that was a byproduct of private sector investment, must now default to government, to be supported by taxpayers.
Robert Murray, chairman and CEO of Murray Energy Corp., the nation's largest privately owned coal company, cheered the White House announcement.
Murray has been seeking emergency action to boost his industry since last year and has met with Trump to argue that federal help was needed to avert thousands of layoffs and maintain the reliability of the electric grid up and down the East Coast.
"We support all efforts to ensure the security of our nation's electric power supply, which is critical to the reliability of our electric power grids, to low-cost electricity and to our national defense," Murray said.
The draft plan calls for the Energy Department to exercise emergency authority under a pair of federal laws typically reserved for wars or natural disasters. The plan calls for Perry to use the Federal Power Act and the Defense Production Act to temporarily delay retirements of coal and nuclear plants.
"This prudent stop-gap measure" will allow coal and nuclear plants to remain open as the department takes further steps to secure the grid, the memo said.
Whatever the future holds for Colstrip Plants, it will be important to Montana. Most Montanans probably do not realize how important Colstrip is to the state was a worry expressed by several presenters at the Energy Summit. Senator Steve Daines, who organized the summit, pointed out that Colstrip Plants 1, 2, 3 & 4 ‘is equivalent to the entire agriculture tax base.
In the week following the Energy Summit, during a Senate Energy and Natural Resources Committee hearing, Daines pressed the Federal Energy Regulatory Commission (FERC) Commissioner Neil Chatterjee on the importance of the Colstrip Power Plant to Montana and grid reliability.
FERC is an independent agency that regulates the movement of natural gas, oil, and electricity between states. FERC also oversees regulation for natural gas and hydropower projects.
Daines said that Colstrip is critical to ensuring Montanans have access to reliable, affordable energy. It generates enough power for 1.5 million homes. The power plant is a major source of revenue, generating $104 million in state and local taxes. Colstrip is also a major source of good-paying jobs for Montanans. The power plant employs 350 highly-paid workers and Rosebud Mine employs 380 workers and supports 3,700 jobs across the statewide.
Commissioner Chatterjee said that FERC will look at plants like Colstrip and “make a determination based on significance to the region and if there would be threats to reliability in the event that the plant shutdown.”