As Trump reconsiders climate change, utilities stick to pre-election energy strategies

Nov. 30, 2016

Source: Electric Utility Consultants, Inc. (EUCI)

Despite pledges by President-elect Donald Trump to radically alter the nation’s energy policies, utilities say they are sticking with long-term strategies to comply with federal regulations on carbon emissions, as well as diversify their energy portfolios to include more wind and solar.

Tennessee Valley Authority CEO Bill Johnson says that his company will continue moving toward meeting carbon reduction goals stipulated in the Clean Power Plan proposed by President Obama’s Environmental Protection Agency last year, even though Trump has repeatedly vowed to do away with the regulations if elected and reinvest in the nation’s coal industry.

“We have been following a path that is consistent with the direction of the Clean Power Plan, but we’ve been following it based on what’s the best for our customers, and they happen to line up,” Johnson told analysts and reporters on a recent conference call. “We really have been following the plan that says if we modernize the fleet as we diversify, what is the best economic and rate path to follow? And that’s really what we will continue to do in every decision we make.”

Since shocking the country with his surprise election victory over Democratic presidential nominee Hillary Clinton November 8, Trump has had to confront the policy ramifications of many of his most controversial claims, including comments he made in 2012 that man-made climate change was an elaborate hoax perpetrated by the Chinese to reduce the competitiveness of American manufacturing. In an interview with the New York Times last week, Trump admitted that there is “some connectivity” between human activity and a warming climate, and that he was going to “take a look at” the Paris Climate Agreement, which he had previously vowed to pull U.S. involvement.

The comments exemplify the limited influence Trump’s policies, whatever they turn out to be, will likely have on the U.S. utility industry’s push to create a cleaner energy mix. Many of the trends of the last half decade, including the accelerated adoption of renewables and gas-fired generation, have been instigated by market forces as opposed to government policy. According to Bloomberg, wind farms can be built for $22 per megawatt-hour, as compared to $52 for natural gas and $65 for coal.

Indeed, major utilities including Duke Energy, NextEra Energy, and others have already invested billions in zero or low-carbon energy projects, and therefore plan to move forward with long-term plans to generate electricity from cleaner and more economic alternatives to coal-fired generation.

“We said before the election that whoever is elected president, we would be continuing our efforts to go to a low-carbon fleet and also pursue renewables,” said Tom Williams, a spokesman for Duke Energy, the second-largest U.S. utility owner, according to Bloomberg.

Still, Trump’s policy directives will have some influence. His pledge to repeal the Clean Power Plan, for example, will likely guide the timing if not the content of utilities’ migration to low-carbon energy sources. He can also advocate for doing away with two federal tax subsidies, the investment tax credit and the production tax credit, which are essential to keeping wind and solar investments affordable.

For now though, utilities say their long-term plans to adopt wind and solar are staying put.