“It is not about coal. This decision is about economics,” TVA chief executive William D. Johnson said. “It’s about keeping rates as low as feasible.”
The sole vote in favor of propping up Paradise 3 came from Trump appointee Kenneth Allen, who earlier had been the chief operating officer at Armstrong Coal and president of Bluegrass Coal, both mining companies.
TVA is a federally owned corporation but receives no taxpayer funding. While its directors are appointed to five-year terms by the president, it functions as an independent agency. Two of its nine seats are currently vacant.
Trump, who vowed during his campaign to help the coal industry, set up a clash with the TVA with his call to keep open the Paradise 3 unit, which buys much of its coal from a mining company chaired by Robert E. Murray, one of the president’s major donors and supporters. Murray said in a statement that he was “extremely disappointed in the TVA decision.”
In a tweet Monday night, Trump said: “Coal is an important part of our electricity generation mix and @TVAnews should give serious consideration to all factors before voting to close viable power plants, like Paradise #3 in Kentucky!”
The same day, Senate Majority Leader Mitch McConnell (R-Ky.) released a video urging TVA to keep the plant open. He said Paradise 3 was “too important to shutter especially for the hundreds of jobs it supports directly and indirectly.” He said the vote should wait until the TVA board was at full strength.
But even if two new board members had voted in favor of keeping the plants open, it would not have been enough to alter the outcome.
The board decided that it would be too costly to sustain the 49-year-old plant, which operated only intermittently last year because it was no longer needed to supply uninterrupted power known as baseload. The plant will close by December 2020.
At one time, coal mines in Muhlenberg County were among the nation’s biggest, and they prompted the singer John Prine to write a 1971 song called “Paradise.”
The board also voted to close a 52-year-old coal unit at Bull Run near Oak Ridge, Tenn., by December 2023.
John M. Thomas III, TVA chief financial officer, said that closing the two plants would save ratepayers $320 million without affecting the reliability and resilience of the agency’s fleet. He said that the coal plants weren’t designed to be turned on and off, and that the TVA had been “running them at times when they are not economical.”
Moreover, both plants would require about $1.3 billion in capital investments.
Thomas said that even after closing the plants, coal would account for 17 percent of the TVA’s power generation in 2028.
The coal industry has been hammered by its inability to compete with cheap natural gas and renewable energy. Two other coal units, Paradise 1 and 2, on the same site in Muhlenberg County, were replaced with natural gas generation in the spring of 2017. The Paradise Unit 3 employs about 140 people.
Murray, founder of Murray Energy and a leading donor to Trump’s 2016 presidential campaign, has been pressing the president to help prop up coal-fired plants since the beginning of the administration. Murray Energy gave $100,000 to the Trump campaign, $300,000 to the inaugural committee and $1 million to America First Action, a political action committee for the president.
In Energy Secretary Rick Perry’s first month in office, Murray presented a four-page “action plan” to rescue the coal industry. The plan said that commissioners at three independent regulatory agencies “must be replaced,” Environmental Protection Agency staff slashed, and safety and pollution rules “overturn[ed].”
As recently as 2013, Murray Energy was delivering nearly 100,000 tons of coal a month to the Paradise coal plant. Murray said in an email that the company has 690 employees “in the vicinity of the plant.”
Since November 2013 and including Thursday’s decision, the TVA board has now approved the retirement of 18 coal-fired electric power units at five plants, according to its filing with the Securities and Exchange Commission.
Mary Anne Hitt, director of the Sierra Club’s campaign to close coal plants nationwide, said in a statement that “once again, Trump’s cynical efforts to bail out millionaire coal executives have been overcome by the reality that coal plants can no longer compete with cleaner, cheaper energy sources.”
A TVA reply to public comments estimated that closing the plants would reduce TVA’s overall carbon dioxide emissions by 4.4 percent.
TVA serves about 10 million customers in seven states and helps manage the Tennessee River system.