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Close Coal? Increase both Rates and Risks

 

 

 

 

By Frank Clemente and Fred Palmer; Coal is the Cornerstone LLC

 

Frank Clemente

 

Fred Palmer 

 

October 7, 2025 - The adverse consequences of closing coal power plants are not only domestic but international as well. The energy world is abuzz with how much electricity data centers will need. While the US dithers about where to find power to support them, China, its chief economic competitor, is building a reliable and inexpensive energy system anchored by highly efficient Supercritical coal plants with ever decreasing emissions. China is openly seeking to become the dominant leader in Artificial Intelligence and is constructing the energy infrastructure to do so. Many states in the US are telling data center planners to “ Bring your own electricity because the grid cannot meet your needs”. The US has the lead in AI now but in coming years where do you think power hungry data centers will be built?

 

 

Thus, reality in five easy quotations:

 

(1) Demand: “EIA Forecasts record-breaking electricity usage in the coming years…The US is on the verge of unprecedented electricity consumption…The proliferation of AI technologies is reshaping the energy landscape.” Energy, Oil & Gas Magazine 

 

(2) Reliability: “Additional coal-fired generator retirements… have caused a sharp decline in anticipated resources … new generation is insufficient to make up for generator retirements and load growth”. National Electric Reliability Council 

(3) “Prices: “Retail electricity prices have increased faster than the rate of inflation since 2022, and we expect them to continue increasing... Parts of the country with relatively high electricity prices may experience greater price increases than those with relatively low electricity prices.” US Department of Energy  

(4) 2025 Polar Vortex: “Coal-fired power plants dramatically increased their output…  wind and solar underperformed (and) natural gas prices spiked from under $2/MMBtu in November to nearly $30/MMBtu…. coal’s stable fuel cost around $2.50/MMBtu…. without coal-fired generation, prices could have soared to over $400-$650/MWh” Energy Ventures Analysis 

 

(5) Trump - $625 million for coal: “These funds will help keep our nation’s coal plants operating and will be vital to keeping electricity prices low and the lights on without interruption”. U.S. Secretary of Energy Chris Wright. 

 

 

Unfortunately, misguided energy policies have already done significant damage to America’s power system and Trump’s tenure ends in 39 months. For over a decade the United States has cavalierly closed productive coal power stations with very little concern about electric rates and reliability. The chickens are now coming home to roost.

 

Regulators, utilities, politicians and activists like the Sierra Club argued that replacing more than 300 efficiently operating coal plants with unreliable wind and solar or the fuel with the most volatile prices of all – natural gas - would reduce rates and maintain reliability.  Well, they were wrong, and consumers are starting to pay the price throughout the nation.  Rising electric rates have become the bane of millions of families and businesses in dozens of states and the worst is yet to come. Some examples:

 

New England: (15 million people in 6 states) is the poster child for energy policies which raise rates while reducing reliability. The region steadily and prematurely shuttered its coal plants over the last decade and now has not a single unit operating. Of the 8 contiguous US states with the highest electric rates, 6 are in New England.

 

Massachusetts and Connecticut are 2 and 3. Through June of this year, the natural gas price for electricity in New England was $7.23, more than 70% higher than the national average. In terms of reliability, wind and solar are repeatedly MIA during cold spells and natural gas is diverted away from power plants to residential heating. Outdated oil plants must often be brought back into service and in a previous Polar Vortex, utilities were forced to burn jet fuel.

 

 

Mid-Atlantic: (65 million people in 13 states): Utilities in the  PJM Interconnection are sleepwalking down a dark path of worrisome reliability and exploding costs. Jason Stanek, Director of Government Services at PJM, has stated at least 60% of planned coal retirements are due to politics and only 8% are the result of economics.  New Jersey totally eliminated its coal plants, Maryland is almost there and Pennsylvania is following the same track. Consequently, the PJM system is facing unheard of capacity cost increases, At the June capacity auction prices hit a cap of $329 /MW- up 22% from a year ago. Without the cap, costs would have reached $389/MW-day, leading to a 26% increase in cost.

 

 

 

Mid -Continent: - (45 million people in 15 states plus Manitoba): Consider Michigan, a key state in the MISO Power Market- Governor Whitmer wants to continue to close coal plants despite rising rates and decreasing reliability.  Over the last 5 years Michigan has closed more than one third of its coal capacity and is now fighting President Trump’s Executive Order to keep the 1,420 MW J.H. Campbell Plant in West Olive operating. All this in the context that Michigan families already pay 17% more for electricity than the national average and a proposed rate hike from Consumers Energy would increase household  bills by another 13%— the steepest rise in decades. Attempts to control electricity prices in Michigan have gone out the window as Consumers, (the owner of Campbell) is one of the groups seeking to close the plant despite reliability warnings from MISO system operators. The monies available from Federal subsidies and the “Inflation Reduction Act” are apparently more enticing than keeping rates low and reliability high.

 

 

The extent of adverse impacts of closing coal plants prematurely can be seen in a quick trip across the Nation: (1) Florida reduced its coal capacity by 50% in the past 5 years and now families pay 35 % more than the national average for natural gas . Moreover, Florida’s largest power company is proposing a nearly $10 billion rate increase: “ the largest utility hike in U.S. history” CBS News, (2) Illinois reduced coal capacity by 37% in the last five years. Illinois’ rates for families are the third highest in the 12 state North Central region and the large rate increases from Commonwealth Edison this summer and are expected to add about  about 10 to 15 percent per household," CBS News,  And, (3)  California, the epitome of expensive energy closed its coal plants and families pay over 90% more than the national average. Amazingly, in October another 13% rate increase hit Southern California Edison families. Enough said.

 

 

Finally, the implications of closing coal are but only domestic and global as well. The energy world is abuzz with how much electricity data centers will need. While the US dithers about where to find power to support them and other forms electrification, China, its chief economic competitor, is building a reliable and inexpensive energy system anchored by highly efficient Supercritical coal plants with ever decreasing emissions. China is openly seeking to become the dominant leader in Artificial Intelligence and is constructing the energy infrastructure to do so. Many states in the US are telling data center planners to “ Bring your own electricity because the grid cannot meet your needs”. The US has the lead in AI now but in the coming years where do you think those data centers will be built?.

 

Note: Coal is the Cornerstone seeks to give a voice to supporters of coal in its many dimensions and contributions. But we need help and ask like-minded individuals and companies supporting coal to make a financial contribution to the effort. Visit us and donate at http://www.coaliscornerstone.com. Access to all of our previous articles is available on this site. 

 

 

 

Frank Clemente PhD. specializes in research on the socioeconomic impact of energy policy and is the author of The Global Value of Coal, published by the International Energy Agency (2012). Professor Clemente has served on the faculty of the University of Kentucky, University of Wisconsin and Penn State. He has extensive experience in speaking, writing and presenting data on the value of coal to the United States and the world. All opinions expressed here are presented independently from any university with which he has been affiliated.

 

Fred Palmer Esq. served as CEO of Western Fuels before he joined Peabody Energy as Senior Vice President for Government Affairs. Palmer was Chair of the World Coal Association Board and a member of the National Coal Council. He received the American Institute of Mining, Metallurgical and Petroleum Engineers Award for “Distinguished Achievement in Coal Technology”.  He also received a Statement of Appreciation from the National Coal Council in 2015 with a plaque for “Guidance since 1990.