Washington, D.C.

Trump orders a lifeline for struggling coal and nuclear plants

Many of the proposals involve drastic government intervention in U.S. energy markets
Energy Secretary Rick Perry attends a Senate hearing on infrastructure policy, on Capitol Hill in Washington, March 14, 2018.
Energy Secretary Rick Perry attends a Senate hearing on infrastructure policy, on Capitol Hill in Washington, March 14, 2018.

WASHINGTON — President Donald Trump has ordered Energy Secretary Rick Perry to “prepare immediate steps” to stop the closure of unprofitable coal and nuclear plants around the country, Sarah Huckabee Sanders, the White House press secretary, said Friday.

It remains to be seen what actions Perry will recommend, but many of the proposals being floated within the Trump administration, according to a leaked internal memo, would involve drastic government intervention in U.S. energy markets.

Under one proposal outlined in the memo, which was reported by Bloomberg, the Department of Energy would order grid operators to buy electricity from struggling coal and nuclear plants for two years, using emergency authority that is normally reserved for exceptional crises like natural disasters.

That idea triggered immediate blowback from a broad alliance of energy companies, consumer groups and environmentalists. On Friday, oil and gas companies joined with wind and solar organizations in a joint statement condemning the plan, saying that it was “legally indefensible” and would force consumers to pay more for electricity.

In her statement, Sanders said that the ongoing retirement of coal and nuclear plants, which are being pushed out of competitive electricity markets by a glut of natural gas and renewable power, were “leading to a rapid depletion of a critical part of our nation’s energy mix, and impacting the resilience of our power grid.”

Grid operators disputed that. PJM Interconnection, which runs the Mid-Atlantic electric grid serving more than 65 million people, said in a statement that its grid was “more reliable than ever,” and that any federal intervention “would be damaging to the markets and therefore costly to consumers” by raising electricity prices.

Trump, who campaigned on a pledge to revive the coal industry, has so far struggled to fulfill his promise. According to data from the Sierra Club, at least 25 coal plants have shut down since he took office, largely squeezed out by competition from natural gas, wind and solar power.

In September, in an attempt to stave off those powerful market trends, Perry asked the Federal Energy Regulatory Commission, which oversees regional electricity markets, to consider guaranteeing financial returns for any power plant that could stockpile 90 days’ worth of fuel on-site, which could include many coal and nuclear plants. He argued that the loss of such plants would threaten “reliability and resiliency of our nation’s grid.”

But in January, the commission unanimously rejected Perry’s request, saying that the nation’s grids currently had plenty of spare electric capacity on hand, even with the loss of coal and nuclear units in recent years, and that grid operators had sufficient tools to keep the lights on.

That hasn’t stopped the Trump administration from exploring other options. In April, FirstEnergy Solutions, an Ohio-based utility, announced that it would file for bankruptcy, threatening the future of three nuclear plants and two coal plants in Ohio and Pennsylvania.

The company had earlier sent a letter to Perry asking him to save the country’s coal and nuclear plants by invoking Section 202(c) of the Federal Power Act, under which the Energy Department can order certain power facilities to stay open in a crisis, such as a hurricane.

A few days later, Trump mentioned the idea in public, telling coal miners at a rally in West Virginia: “Nine of your people just came up to me outside. ‘Could you talk about 202?’ We’ll be looking at that 202. You know what a 202 is? We’re trying.”

The administration has also discussed invoking the Defense Production Act of 1950, which allows the federal government to intervene in private industry in the name of national security. (Harry S. Truman used the law to impose price controls on the steel industry during the Korean War.)

But legal experts say that neither law was designed to provide unprofitable industries with extended financial support.

“The idea of superseding the market for a full two years and directing that purchases be made from specific plants is well beyond any existing use of these statutory powers,” said Joel B. Eisen, a professor of law at the University of Richmond in Virginia.

If the Trump administration were to invoke these two statutes, the move would almost certainly be challenged in federal court by natural gas and renewable energy companies, which could stand to lose market share.

Depending on what the Trump administration decides, an intervention to prop up unprofitable coal and nuclear plants could cost consumers between $311 million to $11.8 billion per year, according to a preliminary estimate by Robbie Orvis, director of energy policy design at Energy Innovation.

Some analysts have asserted that there is an environmental case for keeping the nation’s ailing nuclear plants open, since, if they closed, their carbon-free electricity would most likely be replaced by natural gas and emissions would rise. A few states, including New York and New Jersey, have offered subsidies to their struggling nuclear plants in the name of fighting climate change.

There is no environmental argument for keeping open coal plants, which are the most carbon-intensive form of power.

The leaked memo circulating within the White House does not mention climate change. Instead, it says that the loss of both coal and nuclear plants could threaten national security, given that Defense Department installations are 99 percent dependent on the grid.

Among other things, the report asserts that natural gas pipelines are vulnerable to cyberattacks and that coal and nuclear plants are essential during extreme weather because they can keep large amounts of fuel on hand.

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