As a policy matter it’s not about affordability as such. If you increase exports at some point the commodity’s price is set globally, like oil, and not domestically. This means much higher prices and greater price volatility for consumers.

The one positive element here is the large amounts of new renewable generation to be built, mostly wind/some solar, and that these new resources will displace some fossil fuel usage.

We don’t disagre. As someone who was fired at a Wall St firm over Enron many moons ago, my point here is that the present cases show abuse of SPV leverage and Moody’s called them on it. Lease accounting has lots of abuse potential.To me that’s the story.

I get the temptation to demonize SPVs as a former bond analyst.
But right now this is merely aggressive accounting. What made Enron unique was widespread fraud (Fastow et al) and a major accounting firm (Andersen) willing to facilitate it.

With apologies to Dr Hirschman

Agree. It’s the gas well head freeze offs. It’s always the unwinterized well heads. Not to mention the occasional frozen coal pile.

Excellent article, thanks, but he was really being extremely nice to fossil fuel interests whose power plants, especially gas, have performed rather poorly under extreme winter conditions. The exact opposite of reliability.

The Dunkelflaute in Europe is a real thing.

I don’t think the nukebros even know what hit them. Renewables will destroy them. France is now cycling it’s nukes, at great expense, due to all the renewable energy in Europe.

The simple answer is that electricity will have to be “priced” as a public good not a consumer good. If the utility was municipally owned they would simply build the capacity they needed and finance it all with lo cost debt.

This actually hurts the natural gas industry. If coal is “clean” too, that undercuts one of the key selling points for gas, that it’s cheaper and “cleaner”. Also, coal plants operate better in winter which could matter more in the future.

utilities have a financing disadvantage here if they use their conventional 50/50 equity debt capital structure. These new low risk assets should be financed like leveraged leasing companies with mabe 15% equity.

We don’t disagree. Just recalling that by vigorously opposing the war and Lyndon Johnson he helped Nixon appear as the peace candidate and we know how that worked out.

Well in that case there’s no Nixon Presidency either after he disrupted the Chicago Democratic Nat’l Convention in ‘68 and made the party look terrible.

Several major nyc architectural firms made presentations to the board on how they would repurpose the five story (!) barn as a museum.

The regulators can’t help a monopoly utility facing price competition from cheaper renewables. Their tools are inadequate to the purpose. (And the capital structure models they’re using are wildly inappropriate.)But you were right before. There will be bankruptcies.

All the regulators can do practically speaking is raise or lower rates. By raising utility rates in this case they further hurt the competitive position of legacy utilities and hasten the minimum scale issue. Said differently they can only make the death spiral worse, not better.

Good point. But you’re forgetting the critical role of the bond markets/rating agencie in heavily leveraged companies. Once the bond raters acknowledge meaningful financial erosion and threaten downgrades regulators understand that as a vote of no confidence.

I think yours is an underappreciated idea. The holy grail for batteries is really long duration storage at scale to smooth out seasonal variations in power usage. But right now we can, with relative ease, repurpose base load coal or gas for that.

There was a previous effort years ago to relocate the Old Chatham museum to the large Shaker barn at the Mount Lebanon site. fyi

Old Chatham, NY got it. I used to be on their board.

Which Shaker museum?

I agree. Those plants are older and no one wants to make the necessary capital improvements for life extension. But my point is simply that they operate better than gas in winter extreme weather.

The coal piles can freeze, the Mississippi R. can freeze so the coal barges for Ohio get stuck, but on balance, coal fired power plants are more reliable in winter because their fuel infrastructure is less finicky. That’s the argument.

All true. But one thing folks have missed is that due to well head freeze offs etc, coal plants are probably more reliable overall in bad winters than gas. They can store their fuel on site.

We have two competing fossil fuel infrastructures, coal and gas. Which one will have a minimum scale problem first as renewables continue to dispace them?

I disagree. Equity implies ownership and control. That proprietary capital doesn’t hire management or the board. That is more akin to accumulated retained earnings of the business.

Fwiw, when I wrote that I was thinking of entities like TVA which have zero equity, are 100% debt financed, and their debt cost is almost identical to that of the federal government, so 4% cost for 10 year debt for example.

This is fine but if you’re moving in this direction I suggest go all the way, eliminate 100% of the equity in the capital structure, just like in public power entities. That’s where the real savings are if you’re rejiggering the capital structure.

My personal fave today was China retooling their coal plants to cycle more and make way for cheaper renewables. If the same thing begins to happen here, both coal and gas power plants quickly become under utilized assets.