Cold snap arrives at key moment for coal, nuclear power

The coal and nuclear industries are pointing to the cold snap sweeping the eastern United States as Exhibit A for why the federal government should help their power plants.

Those industries and their allies hope that the record-setting winter weather will give a boost to a proposal from Energy Secretary Rick Perry that would require electric grid operators to pay higher prices to coal and nuclear plants. 

Prior to the cold snap, Perry and other supporters of the idea had cited the 2014 polar vortex as a key argument for propping up unprofitable plants that are under pressure to close. At that time, power grids in the Northeast were strained due to plants unexpectedly closing and natural gas prices spiking, lead to some power outages. 

Despite that freeze four years ago, Perry’s proposal is facing considerable opposition.

{mosads}Natural gas and renewable energy companies, conservative think tanks, environmentalists and others argue that Perry’s proposal is a solution in search of a problem aimed only at boosting the fortunes of coal and nuclear power.

But with the Federal Energy Regulatory Commission (FERC) due to make a decision on Perry’s plan next week, the chill is coming over the eastern part of the country at just the right time. 

The nation’s nuclear plants have mostly been running reliably, and many utilities are running coal plants that they usually keep offline. The Pilgrim Nuclear Power Station went offline Thursday due to a transmission line that stopped working, which owner Entergy Corp. emphasized was not a problem with the plant itself. 

“As the last expert tut-tutted the secretary, an historic deep freeze grips the Eastern half of the country from Nebraska to New England, giving new credence to Perry’s cautious assessment of the grid’s ability to withstand disruptive events,” the National Mining Association wrote in a post on its Count on Coal blog, referring disparagingly to experts who said Perry’s proposal is unnecessary. 

“Attention FERC commissioners: coal shines when temperatures plunge,” the group said, dubbing the cold snap “Polar Vortex 2.0.”

“The grid’s experience is that pipelines max out, coal piles can freeze, other forms of generation are much more weather-vulnerable than nuclear. Nuclear does not shut down because of cold,” Nuclear Energy Institute spokesman Matt Wald told The Hill.

“In cold weather you really want to have a good amount of nuclear on the grid.”

Perry labels his plan a Grid Resiliency proposal. Supporters of the initiative say that with coal and nuclear plants closing due to cheap competitors and regulations, the electric grid is threatened, particularly when demand peaks at times like extreme weather.

Under the plan proposed in September, some independent organizations that operate electric grids would have to pay coal and nuclear plants for their costs plus a reasonable profit, even if competing sources like wind or gas would be cheaper. 

The beneficiaries of that plan say the current cold snap vindicates them. 

“The extreme cold illustrates the importance of having a diverse generation portfolio, and the vulnerabilities that could come if we relied on any one type of fuel source too heavily,” said Jennifer Young, spokeswoman for FirstEnergy Corp. The company operates power plants, including many coal and nuclear plants, in the mid-Atlantic, and stands to be a key beneficiary of the Perry proposal if it is enacted. 

“This is exactly why we need a rule to ensure that these units stay in operation,” she said. “Absent these plants that have secure fuel supplies and can operate in all weather, we could be looking at a condition where there was a shortage of fuel for one reason or another.”

Murray Energy Corp., one of the most outspoken supporters of the plan, also stands to benefit. The coal-mining giant supplies many mid-Atlantic plants, including those run by FirstEnergy.

“There is absolutely no doubt that the current extremely cold weather has further demonstrated the need for the Department of Energy’s Grid Resiliency Pricing Rule,” said spokesman Gary Broadbent. 

“Indeed, if it were not for the electricity generated by our Nation’s coal-fired power plants, and nuclear plants, we would be experiencing massive brownouts and blackouts in this country.” 

But opponents of the plan say the cold snap shows the opposite: that the current market structures for electric grids operate effectively and can respond to potential disruptions.

“The markets are functioning appropriately. We’re not seeing significant interruptions,” said Todd Snitchler, head of market development at the American Petroleum Institute, which also represents gas interests.

“We’re not really seeing any concerns surrounding grid resiliency or reliability, which is exactly why we said that there’s no need for this [notice of proposed rulemaking] to go forward,” he said. “We’re getting the outcomes that virtually everyone wants anyway, which is safe, reliable and affordable power being delivered to everyone who needs it.” 

John Moore, director of the Sustainable FERC Project at the Natural Resources Defense Council, said grid operators are showing that they learned the right lessons from the polar vortex. 

“Grid operators learned a lot from the 2014 polar vortex, and they implemented some commonsense solutions to winterize the plants a little better than they had been,” he said.

Moore said if there’s any takeaway from this cold snap, it’s that the grid needs more power sources and electricity storage options. 

“We just need more power from all sources to meet higher demand.”

Kit Konolige, an electricity market analyst at Bloomberg Intelligence, said that the data is showing that the markets are working so far.

“So far, I haven’t seen any reports that there have been an unusual number of plant outages,” he said. 

But what that means is up for interpretation, Konolige said. 

“The industry’s going to continue to say that they’re just hanging on financially, and they’re going to close if you don’t help them,” he said.