The Trump administration said it does not intend to pick winners and losers in the generation mix, but U.S. Environmental Protection Agency Administrator Scott Pruitt does believe that utilities and power companies need to plan for resiliency and fuel diversity — and that means ensuring an adequate supply of coal-fired generation.
Pruitt took questions from members of the Kentucky Farm Bureau on Oct. 9 while on a swing through the state with U.S. Senate Majority Leader and Kentuckian Mitch McConnell. The topics included the Clean Power Plan, Clean Water Rule, renewable fuel standard, renewable energy policies and the coal industry in general.
"We need to ensure that whatever decisions we make from an energy policy perspective, that fuel diversity in the generation of electricity is maintained. That we see coal as a healthy percentage of the power generation mix," Pruitt said.
Pruitt later cited the planned withdrawal of the Clean Power Plan; work to replace the Clean Water Rule, more commonly referred to as Waters of the U.S., or WOTUS; and other deregulatory actions as proof that the Trump administration is cutting red tape. He specifically criticized the Clean Power Plan for valuing renewable generation over fossil fuel-fired generators such as coal, and said, "It's really not the job of the EPA to use regulatory authority to pick winners and losers."
Energy Secretary Rick Perry on Sept. 29 asked the Federal Energy Regulatory Commission to fast-track a new rule requiring operators of organized markets to "ensure that certain reliability and resiliency attributes of electric generation resources are fully valued."
The proposal has drawn criticism from a wide range of energy industry groups and FERC Commissioner Robert Powelson, who vowed to safeguard competitive wholesale electricity markets. A state regulator also said the proposal would "go against the grain of nearly two decades of bipartisan consensus that we want generators to compete against one another around price."
While Pruitt did not specifically speak to the DOE proposal, he did report that he has been working closely with Perry to ensure the power grid remains stable amid economic growth in the coming years.
"We're not going to use our authority and power to try to influence the decisions. We're simply going to do our jobs, stay within the lane, and make sure that the utility companies and power generation facilities, rural co-ops ... are making decisions based on ... what's right for the consumer and what provides the most stability and confidence going forward," Pruitt said.
"We need to focus on resiliency, stability, fuel diversity in the generation of electricity," Pruitt added. That means using coal, which has fallen into disfavor for use as a generation fuel. The EPA chief warned that a further drive away from coal generation is "going to create real issues for us."
Perry's proposal is widely seen as propping up the ailing coal and nuclear industries, which have struggled amid lower natural gas prices and the falling cost of renewable generation such as wind and solar. Both wind and solar technologies are supported by state and federal policies, which provide incentives to build renewables. The federal tax credits include the production tax credit for wind and investment tax credit for solar, both of which are phasing down over the next few years.
Renewable energy industry stakeholders have worried that a Republican effort to reform the tax code could include a faster phase-out of the tax credits, despite a 2015 deal with lawmakers that set out a glide path to phasing out the credits.
Pruitt said it is time to do away with the federal and state policies that support the wind generation industry.
"I would do away with these incentives that we give to the wind industry. I'd let them stand on their own and compete against coal and natural gas and other sources and let utility companies make real-time market decisions on those kinds of things as opposed to being propped up through tax incentives and other types of credits that occur both at the federal and state level," Pruitt said.
The EPA chief also urged a cautionary approach to integrating renewables into the generation mix.
"Can renewables play in the mix? Absolutely. Is it wise to be wholly dependent on renewables? No. Are they more costly? Yes," Pruitt said.