Report: Claims that preserving coal plants will cost $6B based on unlikely assumptions

By Tate Miller
The Center Square

A new report released Tuesday by America’s Power challenges environmental organization-sponsored claims circulating that say the Trump administration’s decision to preserve coal power plants will cost ratepayers $3 billion to $6 billion more a year.

America’s Power is a “national trade organization whose sole mission is to advocate at the federal and state levels on behalf of the U.S. coal fleet and its supply chain,” according to its website.

As stated by America’s Power, consulting firm Grid Strategies released a report sponsored by four environmental organizations that claimed recent “orders issued by the Department of Energy (DOE) to keep fossil power plants operating for reliability purposes instead of retiring could cost $3 billion per year and perhaps as much as $6 billion per year by the end of 2028.”

The Grid Strategies report came to such conclusions by a series of extreme and unlikely assumptions, America’s Power said.

For instance, it was assumed that all the 54 fossil power plants that have announced intentions of retiring by 2028 – called “possible retirements” – would in fact retire.

Additionally, it was assumed that 36 fossil power plants that are 60 years old – called “speculative retirements” – would retire in 2028.

Both these “possible” and “speculative” retirements representing almost 66,400 megawatts were assumed to be soon receiving 202(c) orders from the Department of Energy that would extend for a year, bringing Grid Strategies’ report to the estimated cost of $3 billion to $6 billion a year.

A 202(c) order is a temporary order “that require[s] power plants that are needed during an ‘emergency’ to operate until the emergency ends,” according to America’s Power.

America’s Power said in its report that it “seems unlikely” that every possible and speculative retirement “will actually happen within the next three years and that every retiring plant will receive a 202(c) order directing it to continue operating for one year.”

Twenty-five out of the 27 times 202(c) orders have been in effect since 2000 have been for 90 days or less, America’s Power said.

“There are a couple of reasons to be a little skeptical about the large number of retirements assumed by Grid Strategies,” the report said.

“One is that load growth and other factors are driving utilities to reassess their plans to retire fossil power plants,” the report said. “For example, utilities have already deferred the retirement of almost 29,000 MW of coal-fired generation for a number of reasons, including concerns about load growth and reliability.”

Matt Kandrach from Consumer Action for a Strong Economy (CASE) said in a statement after the report’s release that the U.S. needs coal to avoid an energy shortage.

“It’s the height of lunacy when a highly available and affordable energy resource like coal is attacked by the same radical environmental groups who gladly support trillions of dollars in green energy mandates. We’re concerned that the North American Electricity Reliability Corporation – the nation’s reliability watchdog – warned recently that more than half the nation faces the risk of blackouts in the next decade from higher demand. That would be a disaster of astronomical costs to American businesses and consumers that President Trump is helping prevent by strengthening and stabilizing America’s energy resources.”

Another reason to be skeptical of 90 assumed retirements according to America’s Power is that the EPA “is rewriting or repealing a number of regulations that were expected to cause more fossil power plant retirements.”

America’s Power used different “just as plausible” assumptions such as “only half of the possible and speculative retirements actually occur,” “only half of these retirements receive DOE orders,” and “the orders extend for 90 days, not one year,” and came up with different results.

The estimate per year falls between $195 million and $370 million using these assumptions.

For reference, “customer expenditures nationally for electricity total close to $500 billion per year,” according to America’s Power.

“Obviously, no one knows for sure what will happen over the next three years or what the cost of DOE orders might be if they are needed to maintain reliability,” America’s Power’s report said.

The report additionally stated that “one of the main reasons” for the North American Electric Reliability Corporation’s warning that more than half the nation is possibly headed for “inadequate electricity supplies” is due to “the retirement of fossil power plants.”