Tuesday, June 12, 2018

AEP CEO on Money-Losing Coal Units: 'We'll Shut 'Em Down'

American Electric Power Co. service trucks. (Credit: AEP) Click to Enlarge.
Any federal plan to forestall the closure of struggling coal and nuclear power plants to stabilize the electric grid should be reviewed by utilities so customers are protected from rising costs, said Nick Akins, CEO of American Electric Power Co.

Akins was referring to a controversial proposal under development by the Trump administration to protect and pay electric generating units that play a role in national security, such as supplying a military base.

"Everyone wants resiliency and reliability of the grid," Akins, 57, said in an interview last week in San Diego during the annual meeting of the Edison Electric Institute.

"The question becomes how do you do it?  How do you do it within the market framework or outside the market framework?  And who does it apply to?" he said of the draft plan sketched out with the help of the Department of Energy ahead of a National Security Council meeting on June 1.

Increasing cyberthreats against U.S. energy infrastructure is the central justification laid out in the broad policy proposal.  It cites authority under the Federal Power Act and the Defense Production Act, a Korean War-era law designed to enable swift emergency action in response to national security crises.  The plan to guarantee business for money-losing coal and nuclear power plants both challenges the authority of the independent Federal Energy Regulatory Commission, responsible for safeguarding the nation's power supply, and does an end-run around privately run regional grid operators.

Akins noted that under the previous White House administration, the EPA's Clean Power Plan designed to ratchet down carbon emissions was attacked by Republicans for favoring carbon-free generation over fossil fuels.  The major talking point:  The federal government shouldn't be picking winners and losers.

"When you're retiring that much coal and that much nuclear at one time, that is a cause for concern," Akins said, expressing some sympathy for Energy Secretary Rick Perry's desire to design a policy in response to baseload power plant retirements.  "[But], once again, you get into winners and losers as a result.  It's going to be a challenging process to get through to find something that's completely fair to everyone."

This year is on track to be another big year for coal plant retirements.  Roughly 13.5 gigawatts of coal capacity is slated for closure, according to U.S. Energy Information Administration figures.  That equals the 13.5 GW of coal retired in 2016 and runs second to the 19.5 GW of coal-fired power retired in 2015.  Nuclear is on a less-dramatic but steady decline.  EIA expect the nuclear share of the U.S. electricity mix to decline from 20 percent in 2016 to 11 percent in 2050 as nuclear plants age out and are replaced by natural gas and renewable power, according to a recent analysis.

Read more at AEP CEO on Money-Losing Coal Units:  'We'll Shut 'Em Down'

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