American Oil and Gas Reporter - July 2018 - 25

Administration's Support
For Coal & Nuclear Generation
Continues Unabated

"We tend to forget that promises were made
to other energy industries. Ours was not an
exclusive arrangement.

"He is just not that into you."
That relationship phrase seems to describe the Trump administration's thoughts about the natural gas industry when it
comes to its ongoing efforts to keep coal-fired and nuclear generators running.
Sure, crude oil and natural gas producers stand to benefit
from a number of this administration's regulatory efforts:
rescinding Department of Interior hydraulic fracturing regulations
on federal lands and reducing overly aggressive methane
regulation instituted by the Environmental Protection Agency
at the end of the Obama administration. Natural gas producers
also were buoyed by President Trump's statements promoting
the potential of liquified natural gas to protect America's allies
from reliance on Russia.
But we tend to forget that promises were made to other
energy industries. Ours was not an exclusive arrangement.
While America's oil and gas producers perhaps should not
have been surprised, we can continue to legitimately argue
against policies to protect uneconomic coal and nuclear generators
while harming generators using natural gas and renewables.
This drumbeat of criticism is evident in this column-third installment and counting.
Last November, I wrote about the Department of Energy
asking the Federal Energy Regulatory Commission to adopt a
notice of proposed rule making that would have required
regional transmission organizations (RTOs) and independent
system operators to implement electric market pricing policies
that would have elevated the importance of facilities with onsite, 90-day fuel supplies.
When FERC did not comply, the coal industry and its
supporters persisted, urging DOE to take action under the
Federal Power Act or the Defense Production Act. They argued
that the continued operation of coal and nuclear generators was
vital to our national defense. Such tactics, and the reasons why
they are misplaced and lacking legal justification, were the
topic of May's Washington Watch.
Coal supporters continue in their mission, focused on criticizing
the reliability of the natural gas industry. DOE supported its
foregone conclusion that it needs to keep coal and nuclear plants
running with a lengthy memo to the National Security Council,
dated May 29 and reported by the media on June 1.
DOE starts from the premise that, despite the historically reliable operation of the nation's electric grid, "in light of the
current threat environment and the evolving nature of the electric
system, reliability in the conventional sense is not sufficient."
The memo quotes the North American Reliability Corporation
warning about increased reliance by the electric system on
natural gas.
The memo takes a more granular look at the grid by
referencing DOE's own study conducted by the National Energy
Technology Laboratory, which focused on operation of the
PJM Interconnection RTO, where many of the coal and nuclear
generator retirements would take place. The NETL study found

risks of higher energy costs and reliability. However, that study
relied on a metric weighted toward cost, rather than performance,
comparing electricity output during January 2018's extreme
cold with the preceding 26 days of December 2017.
PJM's increased reliance on coal occurred because of its
market pricing system, not because of reliability concerns. PJM's
own analysis finds the RTO to be both reliable and secure.
To the extent there are concerns about generator retirements
or increased reliance on any one fuel source, PJM already is addressing the long-term resilience of the grid with a study that
will establish criteria to value and price fuel security. That
study, scheduled for completion this fall, will model locational
fuel security vulnerabilities to ensure that each zone and subzone
within PJM is able to maintain reliable service during a disruptive
event that could last several days.
PJM contends, "The most effective way to address fuel security
is to define and establish fuel security criteria and then use
market forces (so) all resources compete to meet those criteria."
While cyberthreats pervade most aspects of life, there is legitimate concern that our electric grid must be protected
vigorously. However, to justify the continued reliance on coal
and nuclear generators, DOE points to natural gas pipelines as
the weak link in grid security.
The Interstate Natural Gas Association of America notes its
concern with "the Trump Administration's apparent move to
scapegoat natural gas to prop up uneconomic coal and nuclear
plants." INGAA's Don Santa states, "There is absolutely no justification for the extreme intervention in energy markets suggested
in the draft National Security Council memo. Such a move
would be bad public policy, costly to American consumers and
the economy, and legally questionable."
Meanwhile, DOE stays its course. According to Secretary
Rick Perry, there is no timeline for taking action to keep coal
and nuclear plants from retiring. With the determination demonstrated thus far by DOE and the Trump administration, this saga
will continue.
r

SUSAN GINSBERG is vice

president of crude oil and natural gas regulatory affairs for
the Independent Petroleum Association of America. She covers legislation and regulation,
focusing on the CFTC and
FERC. Her experience in natural gas regulatory affairs
spans more than three decades.
JULY 2018 25

American Oil and Gas Reporter - July 2018

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