Electric Power: A Cautionary Tale

Former FERC Chairman James Hoecker’s recent Railway Age article “The Electric System Today: Basics for Railroaders” was excellent, and made a very useful case for increasing electrification, especially by railroads. However, as an attorney who has spent his 47-year career representing utilities and their trade associations, and railroad shippers and shipper groups, in rail-related matters before the ICC, STB and clients elsewhere (Including at FERC and in the appellate courts), and who also has been involved with the nuclear industry, I offer some additional thoughts that provide more of the story and also perhaps a cautionary tale about becoming too dependent on any one form of energy, including electricity.

Dr. Hoecker, who as counsel to the Rail Electrification Council obviously has a perspective favoring a transition to electricity as the source of energy for railroads and others, acknowledged that increasing electrification of industrial sectors would require a substantial expansion of the electricity grid, but that doing so is “easy to say.” Indeed, it is. Not only is it hard to get permits and licenses to build and operate new power plants, but, as Dr. Hoecker acknowledged, building new or upgraded transmission lines can take a decade if intrastate, substantially more if interstate.

Yet, there are increasing pressures and subsidies to convert the automobile and trucking sectors to electric vehicles (EVs), which can be problematic if the grid is not capable of supporting the increased demand for electricity. This already happened in California, which advised its citizens not to charge EVs during a period of high demand for electricity. Yet, California has enacted legislation to ban the sale of new gasoline-powered vehicles by 2035, and to increasingly require trucks used in port areas to be EVs. Railroads, which operate 24/7, would not have the option of postponing charging locomotives for many hours, or days, if their locomotives are fully electrified.

Moreover, states such as California are rapidly closing their electricity generating stations that use fossil fuels, and even their nuclear plants. As long as electricity generators use substantial amounts of coal—which still provided on average more than 20% of electricity in the U.S. in 2022, and much higher percentages in some regions—railroad transportation will be vital to maintain grid reliability, because railroads transport much of the coal used to generate electricity.

California recently decided to seek permission to extend the arbitrarily set closing date of its one remaining nuclear plant, Diablo Canyon, from 2025 until 2030, but the state has a policy against allowing new nuclear plants to be built. This presents a real problem for meeting electricity demand in California, because substituted forms of generation may increasingly have to come from out-of-state, to a greater extent than has already been the case. California has been importing substantial amounts of electricity from coal-fired plants in Utah. Yet, those sources, if mostly renewable, may not be sufficient to maintain a reliable electricity grid, unlike nuclear and hydroelectric generators.

Recently, construction began on a long-distance transmission line from Wyoming to Nevada to connect to existing lines into California, to bring more wind-generated electricity there. But wind and solar are by definition intermittent, and the grid requires reliable, 24/7 generation to meet load and to maintain reliability. Given the widespread closures of coal-fired plants, the resistance to new natural gas-fired plants in some areas, and even resistance to re-licensing some hydroelectric facilities, new nuclear plants, which promise to be even safer and possibly more cost-effective because of advanced technologies and modular construction that will allow plants of differing sizes depending on need, are increasingly seen as an essential part of the zero-emission electricity grid of tomorrow, in addition to wind, solar, and hydro. Diversity in generation has always been viewed as a necessity for reliability.

Railroads, along with trucks and other forms of surface transportation, thus have choices to make, if they move away from diesel as a nearly universal fuel to reduce emissions (and ostensibly, to reduce dependence on fossil fuels). While there are increasing calls to switch to non-fossil transportation fuels, such as hydrogen, hydrogen takes energy to produce. Liquified natural gas (LNG) is an option, but that also requires energy to produce, transport and liquify. (Hydrogen and LNG, along with diesel, which can be produced from biological sources, can at least be stored for use when deliveries are interrupted.) Electricity storage, in the form of batteries, is coming, but that will require major investments, and the technology is still in development for large-scale applications (not to mention the need to site and permit such facilities). We can hope that technology will continue to improve, but hope is not a strategy for providing essential electricity.

We just returned from a week on St. Barth’s, a high-end Caribbean Island with only one power plant. The plant had a fire just before we arrived, which reduced its capacity by about 40%. As a result, we experienced rolling blackouts on some days. Those were for a few hours, and thus generally manageable for us, but the 2021 rolling blackouts in Texas over a period of days in winter contributed to around 200 deaths. Summertime blackouts have similarly caused loss of lives in recent decades. Grid reliability can thus be a life and death issue.

In the end, railroads and other forms of transportation, as well as other major users of energy, must consider not only costs and benefits of electrification, as Dr. Hoecker’s piece discussed, but also the vulnerability that they would face if they became solely reliant on electricity to power their fleets. This will be especially so without sources of electricity generation spread throughout the system to preserve its reliability in some areas, even if the grid goes down in other areas. Texas is reconsidering its ever-increasing reliance on wind-generated electricity. Will California and other states do the same, without providing for reliable sources of generation such as hydro, natural gas-fired, coal-fired, and nuclear plants, to back up wind and solar generation?

Michael McBride is a partner at Van Ness Feldman LLP. The views expressed are his own.