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Trump's Order: Keep Old Nuke, Coal Plants Open

 

 

June 2, 2018 - President Donald Trump on Friday ordered Energy Secretary Rick Perry to halt the shutdown of ailing coal and nuclear power plants that he said were needed to maintain the nation's energy mix, grid resilience and national security.


"Unfortunately, impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation's energy mix and impacting the resilience of our power grid," the White House said in a statement.


The Trump administration has been preparing to invoke emergency powers granted under Cold War-era legislation to order regional grid operators to buy electricity from ailing coal and nuclear power plants. There have been meetings this week at the Cabinet deputies' level and at the National Security Council.


One likely plan, laid out in a 41-page draft memorandum posted online by Bloomberg News and Utility Dive, would favor certain power plants in the name of national security. Those plants are owned by some of the president's political allies in the coal industry.


According to the draft memo, the Energy Department would exercise its emergency authority to order grid operators to give preference to plants "that have a secure on-site fuel supply" and which "are essential to support the Nation's defense facilities, critical energy infrastructure, and other critical infrastructure." Only coal and nuclear plants regularly keep fuel on-site.


The Energy Department would also establish a "Strategic Electric Generation Reserve." The memo added that "federal action is necessary to stop the further premature retirements of fuel-secure generation capacity." The emergency rules would be a "prudent stopgap measure" that would last two years while the Energy Department did further study.


Trump administration officials have already spent a year contemplating action. After the Energy Department conducted a study of grid reliability last year, Perry proposed a rule that would have compensated coal and nuclear plants for their ability to store several months' worth of fuel on-site. Federal regulators shot down the idea in January.


The Energy Department action described in the memo, if ordered, would represent an unprecedented intervention into U.S. energy markets.


The plan would exempt power plants from obeying a host of environmental laws and spend billions of dollars to keep coal-fired plants open.


"President Trump believes in total energy independence and dominance, and that keeping America's energy grid and infrastructure strong and secure protects our national security, public safety and economy from intentional attacks and natural disasters," the White House said.


The idea of declaring an emergency under the Defense Production Act of 1950 (used by President Harry Truman for the steel industry) and Section 202 of the Federal Power Act has been promoted by the chief executives of the coal mining firm Murray Energy and Ohio utility First Energy, both of which have contributed heavily to President Trump's political activities.


Robert Murray presented a proposal to Perry in March 2017, the month Perry took office. And on April 2, 2018, First Energy appealed for emergency help after a subsidiary containing ailing power plants filed for bankruptcy protection.


"We support all efforts to ensure the security of our nation's electric power supply, which is critical to the reliability of our electric power grids, to low-cost electricity and to our national defense," Murray said Friday in a statement.


In a recent appearance at a Washington Post event, Federal Energy Regulatory Commission Chairman Kevin McIntyre said that using the emergency powers was "perhaps not the most obvious fit."


He said using that section of the Federal Power Act "tees off the concept of continuance of a war in which the United States is involved as being kind of the baseline circumstance that would justify a DOE order to certain types of facilities to either begin operating or continue operation."


Environmental groups, natural gas producers, and Republicans and Democrats who have pushed for greater competition in electricity markets all condemned the latest signal that the administration might be moving closer to imposing the Energy Department's plan.


They noted that the coal and nuclear power plants that would benefit have failed to compete against natural gas, solar and wind. Many of the plants have operated far longer than anticipated when they were built.


"Uneconomic, dirty coal plants retiring does not represent a national security risk," Environmental Defense Fund director of federal energy policy and senior attorney Michael Panfil wrote on his blog. "If Trump chooses to bail out these failing coal plants, he'll be forcing Americans to pay for dirty energy that pollutes our environment and makes people sick."


"If [Department of Energy] proceeds as the memo suggests, a selection of coal and nuclear plants, ostensibly those at risk of retirement, would receive subsidized payments ... under a stitched-together 'Frankenstein's monster' of federal authorities," said a commentary by Height Analytics, a consulting firm. "Above all, the subsidy would be a major victory for First Energy as it negotiates with bondholders over the value of coal and nuclear plants owned by its bankrupt First Energy Solutions subsidiary."


First Energy's top lobbyist last year was Jeff Miller, who was campaign manager for the presidential campaign of Perry, now energy secretary. Trump attended a private dinner with Miller and a handful of political advisers in early April.


"Unprecedented government intervention in the energy markets to support high-cost generation will hurt customers by taking more money out of their pockets rather than letting people keep more of what they earn," said Todd Snitchler of the American Petroleum Institute, the top lobbying group for the oil and gas industry.


"Orderly power plant retirements do not constitute an emergency for our electric grid," said Amy Farrell, vice president of the American Wind Energy Association. Farrell called the draft plan "a misapplication of emergency powers" and said "there's certainly no credible justification to force American taxpayers to bail out uneconomic power plants."


A major electric grid operator, PJM Interconnection, said in a statement that the power system is more reliable than ever, and federal intervention isn't needed.

 

"There is no need for any such drastic action," the company said. "Any federal intervention in the market to order customers to buy electricity from specific power plants would be damaging to the markets and therefore costly to consumers." 

 

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