Coal, Nuclear Bailout Will Make Americans Less Rich

It’s easy to take the flicker of a light bulb for granted. But keeping the lights on and the cell phones charging requires a smorgasbord of energy choices coordinated around a stable grid. This abundant availability of cheap power sources, however, is only part of the equation. Without a dynamic market with clear rules of the game, generating electricity would be more expensive, less clean, and less secure. That’s why, when certain energy sources begin to fade in popularity and usage, it’s important to allow other technologies to serve consumers.

Unfortunately, the Trump Administration has taken several actions to prop up uneconomic power plants at the expense of consumers, taxpayers, and all other energy sources that provide affordable and reliable power. In June, the president suggested that the closure of coal and nuclear power plants represented a national security threat to the country. President Trump ordered Department of Energy (DOE) Secretary Rick Perry to take “immediate steps” to stop these closures. Since then, numerous national security experts and former officials have strongly questioned whether any proposal to bail out power plants would help the security of our nation.

Any negligible security gain would not be worth opening the door to unnecessary taxpayer subsidies and painful rate hikes for consumers nationwide. Bailing out coal and nuclear operations will only make America less competitive on the global stage without protecting the grid against real threats such as cybersecurity lapses. In contrast, allowing outmoded energy facilities to exit the market clears the way for more reliable and affordable electricity.

The fact is America has been moving toward a more diverse energy resource mix for at least a decade. Ten years ago, nearly half of U.S. electricity was produced by a single resource: coal. Today, coal and natural gas each supply about one third of our electricity, nuclear one fifth, and hydro and non-hydro renewables another one fifth. Greater fuel diversity gives us more ways to meet our energy needs while maintaining, if not improving, reliability. This trend is unlikely to change, with falling prices for natural gas, wind, solar, storage, energy efficiency, and other advanced energy resources.

Rather than celebrating market forces that are pushing out old and inefficient power plants, the president seems to want to “do something” to save them. But what would federal action entail? Billions in dollars of subsidies to uneconomic units.

According to a Brattle Group analysis released in July, the cost of the administration’s proposal would exceed $34 billion in direct payments to uneconomic power plants. To put this in perspective, a two-year expanded bailout program will cost more than the entire DOE budget for fiscal year 2018. What’s worse, these power plants may receive payments without ever producing one electron.

In place of this no-win proposition, the administration and Congress should support markets that allow for energy resources to compete based on price and performance. Technology-neutral markets force companies to compete to provide the best service at the lowest possible cost. In other words, our lights stay on and our utility bills stay low, a win for grid reliability and American consumers.

Before pursuing plans to bail out uneconomic power plants, the federal government ought to take a step back and consider the impact on the energy industry and its hundreds of millions of consumers. Electricity can only remain clean, cheap, and bountiful if the federal government lets markets work efficiently. Keeping the cell phones and fitness trackers charged needn’t require cost hikes. Putting taxpayers and consumers on the line for companies that can no longer compete in the market is simply the wrong approach.

Ross Marchand is Director of Policy for the Taxpayers Protection Alliance and Dylan Reed is Head of Congressional Affairs for Advanced Energy Economy.