Exclusive: Coal and nuclear firms seek billions in new tax credits - Axios
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Exclusive: Coal and nuclear firms seek billions in new tax credits

Illustration: Rebecca Zisser / Axios

Two separate lobbying pushes are underway urging Congress to create new multi-billion dollar tax credits benefiting virtually all coal and nuclear power plants across the United States. The price tags: up to $65 billion for coal and $4.8 billion for nuclear.

My thought bubble: The efforts show the aggressive lengths companies are going trying to survive in a hyper-competitive electricity market while also seeking to take advantage of President Trump's vows to boost coal and nuclear power, which has Republican backing in Congress. The tax credit proposals, which have not been publicly disclosed, face skepticism from others in the coal and nuclear industries and are sure to face criticism that they're handouts to legacy energy sources.

Companies and groups involved in the separate efforts, including coal-heavy utility American Electric Power, coal trade group American Coalition for Clean Coal Electricity and nuclear utility Exelon, are working to persuade senators to introduce proposals in the coming weeks that are separate from the broader tax overhaul.

No senator has signaled public support to either effort, according to executives involved and inquiries made to numerous offices. Both measures face long odds, though the coal push is the tougher ask given its bigger price tag and nuclear power's bipartisan backing. The companies are pushing for the proposals to be included as part of any broader tax-credit extension legislation Congress could take up before the end of the year or, more likely, next year.

Executives involved acknowledge their uphill battles.

  • On coal: "Frankly, this is a novel idea to people who are used to nuclear tax credits and renewable tax credits," said Paul Bailey, CEO of the coal group. "They're used to all kinds of tax incentives and credits, but this is the first time anyone has thought about one for the existing coal fleet like this."
  • On nuclear: "I think we recognize the challenges that we face," said David Brown, a lobbyist with Exelon, the U.S.'s largest nuclear operator. "But we also recognize that this is a technology that enjoys bipartisan support and we're going to continue to educate policymakers and encourage them to support it."

The tax proposals are different from a Trump administration effort to overhaul electricity market rules benefiting a smaller number of coal and nuclear plants. That effort, underway at the Federal Energy Regulatory Commission, is seeking to ensure the electric grid remains resilient. Coal and nuclear provide continuous electricity and can store fuel on site, unlike most other electricity sources.

The big picture: Trump is presiding over an arranged marriage between two industries previously at odds. Nuclear power is America's biggest carbon-free electricity source, and coal is the dirtiest of any electric fuel. They're now finding themselves awkwardly aligned, with Republicans running government and both industries struggling to remain economically viable as cheap natural gas, solar and wind grab bigger pieces of the electric pie. They're not collaborating on their lobbying pushes. Each side was either unaware or nominally aware that the other is pushing a tax credit.

The gritty details about each tax credit, according to numerous industry officials either backing each proposal or aware of them.

On coal:

  • Pushed by American Electric Power, coal producers Peabody Energy and Arch Coal and the American Coalition for Clean Coal Electricity, a coalition of coal producers and coal-dependent utilities.
  • Would cost between $6 billion and $6.5 billion a year and last 10 years. That's a little less than the annual combined average cost of wind and solar tax credits extended in 2015, Bailey said.
  • All coal plants that comply with major Clean Air Act regulations would qualify, which is most if not all coal plants operating today that aren't already scheduled to shut down.
  • Bailey said this tax credit is necessary because whatever FERC may do would apply to about 40,000 megawatts of coal. The U.S. coal fleet is six times that. "This tax idea is designed to help the entire coal fleet, and not conflict with what FERC is doing," Bailey said.
  • Would allow coal plant operators to recoup half of their fixed operation and maintenance expenses up to a limit of $26 per kilowatt of installed capacity.
  • A spokeswoman for AEP said the credit "would be an interim solution" as the FERC process unfolds. Requests for comment to Arch Coal were not returned. Peabody deferred to the trade group.

On nuclear:

  • Brown, the Exelon lobbyist, says other companies are likely to come out in support of its proposal soon.
  • Early internal estimates of the cost are between $1 billion and $1.2 billion a year.
  • It would be a 30% investment tax credit for capital expenditures at existing nuclear units that would run for four years.
  • Exelon floated a similar version of this tax credit last year, but the issue wasn't as ripe then as it is today, Brown said, thanks in part to Trump's elevation of the issue.
  • Brown said this proposal is necessary because whatever FERC may end up doing would take at least three years. "We see this investment tax credit as a bridge," Brown said.
  • This measure may help Exelon reverse its decision to prematurely close its nuclear plant Three Mile Island in Pennsylvania if other action, such as at FERC, is also taken, Brown said.
What's ahead: Even skeptical officials in the same industry say these proposals face a fighting chance in the longer term given the unpredictable nature of Washington these days.
"This year it's going to be hard to add tax benefits outside tax reform just because there is a cost to anything you do," said an industry official not involved but aware of both efforts. "But I think anything is in play down the road."
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Ascension and Providence St. Joseph Health are in discussions to merge, which would create the largest hospital system in the U.S., the Wall Street Journal reports citing people familiar with the merger talks. The combined system would have 191 hospitals, numerous clinics and roughly $45 billion in annual revenue.

Why it matters: Although the Ascension-Providence deal is not guaranteed, it shows how health care has turned into the Wild West for mega-mergers. CVS Health is buying Aetna, Catholic Health Initiatives and Dignity Health are merging, and Advocate Health Care and Aurora Health Care are combining, among other deals. Yet, research shows mergers don't lower health care costs or improve care for patients.

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With President Trump's announcement on Jerusalem lighting up the Middle East, Vice President Mike Pence embarks Saturday on his first trip to Israel since taking national office.

The vice president will be gone for a week, with stops in Egypt and Germany:

  • Pence takes off from Washington, lands in Tel Aviv and goes straight to Jerusalem for a bilateral meeting with Israeli President Benjamin Netanyahu.
  • Pence then will light a menorah at the Western Wall.
  • An aide said that Pence's message in Israel will be that Trump, as he said in his speech recognizing Jerusalem as the capital, is committed to working for peace between Israelis and Palestinians.
  • Pence will use his meetings with leaders in the region to reaffirm the administration's commitment to work with partners throughout the Middle East and to "defeat radicalism."
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  • Pence will then fly to Cairo for a bilat with President Abdel Fattah el-Sisi. The two will discuss security and joint efforts to fight ISIS.
  • Pence will visit the pyramids and will talk with media with the ancient wonders as a backdrop.
  • Pence will fly home through Ramstein Air Base in Germany, and will do a meet-and-greet with troops.

The takeaway: A key theme for Pence's remarks and interviews will be U.S. efforts to stop persecution of Christians and other religious minorities in the region.

Go deeper: Palestinians won't meet with Pence.

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  • Why this matters: Winfree's departure is part of what we've been forecasting will be a wave of White House staff departures after year one of the Trump presidency. His last day in the White House will be Friday.

Winfree, a respected policy wonk with strong ties to the conservative movement, is the second senior official to announce a departure in three days. Deputy National Security Adviser Dina Powell told colleagues she's leaving to return to her family in New York.

What Winfree has been telling friends and colleagues:

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The bottom line: "The focus that’s occurring on sexual criminal conduct coming out of the Hollywood celebrities and members of Congress may be a watershed moment,” NYPD Deputy Chief Michael Osgood told the Journal. He says more sensitive and open-ended questioning techniques may lead to breakthroughs in cold cases that have been abandoned for years.

The backdrop: Police tactics in dealing with victims of sexual assault have long been controversial, with critics saying harsh questioning puts undue scrutiny on victims and pushes them to silence. These critcisms were thrown into the spotlight when ProPublica, in conjunction with the Marshall Project, published "An Unbelievable Story of Rape" — an investigative project which showed how a police department in Washington state coerced a woman into retracting a rape allegation.

NYPD detectives in the Special Victims division received training in Forensic Experiential Trauma Interview (FETI) techniques this year. The methods include asking victims of sexual assault open-ended questions such as, "Tell me about your experience," instead of specifics about the perpetrators appearance and the time and place of the incident.

How it works: Such specific details are "stored in the prefrontal cortex of the brain, which shuts down during traumatic events. In FETI training, the detectives are instructed to ask broad questions that tap into a victim’s primitive brain, which maintains sensory information of those events. Channeling this part of the brain can result in a more substantial narrative," per Osgood.

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"The Vice President very much looks forward to traveling to the region to meet with Prime Minister Netanyahu and President el-Sisi. It’s unfortunate that the Palestinian Authority is walking away again from an opportunity to discuss the future of the region, but the Administration remains undeterred in its efforts to help achieve peace between Israelis and Palestinians and our peace team remains hard at work putting together a plan."
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The big picture: Per the CDC's research, the state of young adult mental health in the U.S. is only worsening, with the suicide rate among teenage girls reaching a 40-year high in 2015. Here's a look at the numbers that tell the story of this crisis.

The numbers:

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Bitcoin as bubble: "This blogger remains convinced it is a bubble. Indeed its exponential rise only reinforces the argument. The beauty of bitcoin is that its intrinsic value is impossible to determine and that makes any value plausible to true believers. This is not the same as saying there is no merit in electronic currencies or blockchain technology; of course there is. But the range of prices which can be found on cryptocompare shows this is a narrow, illiquid market."

Go deeper: Read the whole article for an excellent Monty Python reference.

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The big picture: A survey commissioned by the Globe found that 54% of African-Americans feel Boston isn't welcoming to people of color, the highest of the cities surveyed. That percentage is 34% for Chicago and 28% for New York. Atlanta fares best, at 16%.

Boston

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New York

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Washington, D.C.

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Philadelphia

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Chicago

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  • 33 neighborhoods have visible black middle class populations

Atlanta

  • 33% of residents are black; 49% are white
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Dallas

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Houston

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  • 57 neighborhoods have visible black middle class populations

Miami

  • 20% of residents are black, 33% are white
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  • 38 neighborhoods have visible black middle class populations

Los Angeles

  • 6% of residents are black; 31% are white
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Charlotte

  • 35% of residents are black, 45% are white
  • 38% of African-Americans believe the city is unwelcoming to people of color

San Francisco

  • 6% of residents are black, 54% are white
  • 34% of African-Americans believe the city is unwelcoming to people of color
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Go Deeper: The full piece from the Globe is well worth the click.

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