Feb 04, 2014 - 2:00pm

Why War on Coal Puts a Big Chill on Electrical Grid


Senior Editor, Digital Content

Flickr_PowerLines_Cold_800px.png

Power lines in the cold and snow.
Power lines in the cold and snow.

The recent polar vortex--a dramatic term for “It’s really cold”--shows why federal regulations targeting coal threaten the electrical grid.

E&E News reported that the cold snap put a tremendous strain on the electricity grid and resulted in a price spike on the electricity spot market covering the Mid-Atlantic and parts of the Midwest:

Energy markets were roiled yesterday when the cost of producing electricity in the gas-rich Midwest and mid-Atlantic soared above $1,000 per megawatt-hour for the first time as arctic temperatures squeezed the East Coast.

In an effort to keep power plants online, PJM also took the rare step of allowing market participants to sell electricity for more than $1,000 per MWh and surpass a "cap."

To put this price in context, according to the Energy Information Administration, the average wholesale price in the PJM region last year was $42 per megawatt-hour.

The price spike was due to strong demand for natural gas that's used for both heating and electricity production.

Wait, aren't we swimming in natural gas? Yes, we have a lot of natural gas, but the infrastructure hasn’t been built to move it from where it’s produced to where it’s consumed. Why? The permitting process to build new infrastructure is a mess, and it takes time to build pipelines.

The E&E News story went on to observe that this situation reflects “a larger national reliance on gas for power generation that runs up against peak heating demand for homes and businesses during winter months.”

Greater use of natural gas is partly due to increased supply making it more competitive. However, federal regulators have written anti-coal regulations like Utility MACT and EPA’s proposed greenhouse gas rules that have shut down coal-fired plants and made it impossible to build new ones, thereby forcing natural gas generation to take up the slack.

The result is less energy diversity and an electrical grid more vulnerable to price spikes during extreme temperatures.

John Pippy, PA Coal Alliance CEO, said it well in a statement about the price spike

The problem is, there wasn’t enough reasonably priced power available during this extreme cold snap, and that’s due in part to federal emission regulations that have forced the premature closing of coal-fired power plants.

Unfortunately the situation will get worse.

AEP generates electricity in the region, and company CEO, Nicholas Akins told shareholders on a conference call last week that 89% of his company’s coal-fired plants scheduled to be shut down in 2015 were running during the cold snap. Many of those plants will shut down by next year because of EPA regulations. Akins advised that policymakers “carefully plan and design this social safety net we call the electric grid to meet extreme requirements.”

There are real world consequences for attempting to squeeze an abundant energy source—coal—out of America’s energy mix. This is where federal regulators’ fantasies run into reality.  “Energy diversity” is more than a buzzword. It means whether reliable and affordable electricity is available to keep the lights on, and families warm, during the next polar vortex.

Photographer: Ben Freeman on Flickr. Cropped and licensed under a Creative Commons Attribution-NonCommercial 2.0 Generic license.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.