Energy Secretary Rick Perry had been in office less than four weeks when he took a meeting from a coal magnate who had an urgent request.
Robert E. Murray, founder of Murray Energy and a major Trump supporter, presented a four-page “action plan” to rescue the coal industry. The plan said that commissioners at three independent regulatory agencies “must be replaced,” Environmental Protection Agency staff slashed, and safety and pollution rules “overturn[ed],” according to photos and documents seen by The Washington Post.
Murray’s plan lamented that under former president Barack Obama, environmental regulators had written rules with “38 times the words in our Holy Bible.”
The March 29 meeting was part of an aggressive lobbying campaign to make sure that President Trump would deliver on his campaign promise to prop up the coal industry and tear down its regulatory foes. And a central aim of Murray’s lobbying was to get the new administration to change the rules of the electricity grid to help a floundering utility, FirstEnergy, that was one of the chief buyers of coal from Murray Energy’s mines.
Eight months later, Perry is pushing a plan that would deliver new subsidies to a handful of coal and nuclear companies and keep open decrepit half-century old plants just as Murray had hoped — all in the name of improving the reliability and security of the electrical grid.
It’s not unprecedented for industry executives or environmental groups to lobby new administrations. In 2001, then-Vice President Richard B. Cheney and his aides held at least 40 meetings, mostly with fossil-fuel-producing industries, in drawing up an energy plan.
But the Perry plan has roused overwhelming bipartisan opposition because it would help a small number of firms at the expense of millions of consumers.
“You can wrap this Christmas present in whatever paper you want, but it’s still cash for cronies,” Nora Brownell, a consultant and former Federal Energy Regulatory Commission member appointed by President George W. Bush.
Perry has also put unusual pressure on FERC, an independent federal agency that regulates the interstate transmission of electricity. Perry has pressed it to sign off on the changes by Dec. 11. That’s an unusually fast turnaround time, especially since two commissioners were confirmed only on Nov. 2. The commission on Thursday asked for a 30-day extension.
Citing the need for reliability and resilience on the grid in case of a terrorist attack or extreme weather, Perry’s proposal would reward coal and nuclear power plants in the Midwest and Northeast that keep 90-day fuel supplies on hand. Murray said in an interview “you can’t store wind at a power plant. You can’t store sunshine. You can’t even store natural gas.”
However, critics say batteries can store renewables and that coal and nuclear do not safeguard the grid. During the January 2014 polar vortex, coal piles froze outside generation facilities, while frozen pipes, valves and other equipment contributed to power failures.
The Rhodium Group, a research firm, said in an independent study that “of all the major power disruptions nationwide over the past five years, only 0.00007 percent were due to fuel supply problems. The vast majority were the result of severe weather knocking down power lines.”
Sometimes it doesn’t even take severe weather. On Aug. 14, 2003, some overgrown trees in Ohio brushed against a high-voltage line, which shut down. An emergency alarm failed. Three other lines sagged into trees and switched off. Soon failures cascaded throughout eight northeastern states and southeastern Canada. The culprit: FirstEnergy.
By helping the least competitive players, the Perry plan would raise rates and add billions of dollars to consumers’ electric bills, say a variety consultants and an independent oversight group.
The money would go to a handful of companies like Ohio-based FirstEnergy, which owns a fleet of aging coal plants and nuclear reactors, and Murray Energy, the coal-mining company founded by Murray. Murray had held a fundraiser for Trump last year and his political action committee donated $100,000 to the Trump campaign.
Opposition to Perry’s plan spans an unusually broad spectrum: five former FERC chairmen, key utilities, wind power developers, natural gas producers and even the American Petroleum Institute, which represents giant oil firms. Big companies have weighed in against it, too, including Microsoft, Walmart, General Electric and Apple. And even though four of the five FERC commissioners have been named by Trump, some of them have voiced qualms.
“The secretary’s proposal seems to me to be unsupported by facts of any kind,” Alison Silverstein, a consultant who spent years on the FERC staff, said in an interview.
Murray has denied playing a role in the design of the Energy Department’s push for regulatory relief to coal and nuclear plants.
“I didn’t have any involvement,” Murray told reporters last month. “This was done by the Trump administration. I had nothing to do with it.”
But Murray, who told the Pittsburgh Business Times that Trump’s election was “a blessed development,” began drafting recommendations immediately after Trump’s election. And in an interview with The Post, he said that “I think we’ve pointed out the urgency of the problem.”
He had administration contacts like Andrew R. Wheeler, former chief of staff at the Senate Environment and Public Works Committee, who had lobbied for Murray Energy, lobbying records show. Murray paid Wheeler’s firm $225,000 this year through Oct. 21. Wheeler was a member of Trump’s transition team and in October was nominated to be deputy administrator of the Environmental Protection Agency.
On Aug. 4, Murray wrote to White House special assistant John D. McEntee III saying that he had “personally” met with Trump in Youngstown, Ohio, nine days earlier and that he and FirstEnergy chief executive Charles E. Jones had met with Trump briefly on Aug. 3 in Huntington, W.Va. In the letter, first published by the Associated Press, Murray recounted that Trump had said “tell [National Economic Council director Gary] Cohn to do whatever these two want him to do.”
Murray wanted the administration to invoke emergency powers, normally limited to wartime or blackouts, to keep a debt-laden unit of FirstEnergy from going bankrupt. The failure of FirstEnergy would force Murray Energy, its key source of coal, to declare bankruptcy, too, he added. He forecast “disastrous consequences for President Trump, our electric power grid reliability, and tens of thousands of coal miners . . . if this is not immediately done.”
Sources in and close to the White House said Trump’s former campaign manager Corey Lewandowski spoke to the president about FirstEnergy’s plight and invoking emergency powers. Politico first reported Lewandowski’s role.
On Aug. 18, Murray’s chief financial officer Robert D. Moore wrote to Perry warning that a Murray Energy bankruptcy would imperil $2.7 billion in secured debt and nearly $7 billion in unfunded mineworker pensions.
But Murray was satisfied with the plan Perry put forward in September. He told E&E News “now we have another approach that’s in use to get to the same point.”
Now Murray says that his company would survive a FirstEnergy bankruptcy. “We can offset the loss of their business with exports,” he said in an interview. “This is not a bailout. We are cheaper.”
Under Perry’s plan, FERC would order the regional transmission authority to give extra credit to companies with 90 days of fuel supplies on site.
Two analyses — one by clean-energy research firm Energy Innovation Policy & Technology and one by the Sierra Club — show that 80 percent or more of the benefits would go to just five coal plant owners and five nuclear generators. The coal owners include FirstEnergy, NRG, Dynegy Energy, American Electric Power and Talen Energy. The biggest nuclear beneficiary would be Exelon, followed by PSEG, FirstEnergy and NextEra.
Dynegy and NRG have condemned Perry’s plan.
But Murray and FirstEnergy’s Jones have applauded it. Jones said it would correct “faulty market conditions.” The U.S. Chamber of Commerce and an industry group, the Nuclear Energy Institute, backed it.
FirstEnergy prodded dozens of firms, unions, local governments and schools to send FERC supportive comments with very similar language. The Cleveland Plain Dealer reported that FirstEnergy inadvertently filed on behalf of others, including the United Way of Jefferson County, before withdrawing them.
“Just like everybody who weighs in on these things, we talk to people who support us and who are affected by this plan,” FirstEnergy spokeswoman Jennifer Young said in an interview. “When they ask if they can help, we definitely encourage them to share their comments with FERC as well.”
Morning Analytics, an independent market monitor, said the Perry proposal would create “an unworkable hybrid of competitive markets and cost of service regulation,” and that consumers’ costs would soar by $18 billion to $288 billion over 10 years.
A study by ICF, a consulting firm, said ratepayers would pay an extra $800 million to $3.8 billion a year through 2030.
The Perry plan would also delay the retirement of about 25 gigawatts of coal-fired capacity and 20 gigawatts of nuclear capacity, according to a study by the independent nonprofit group Resources for the Future. Over 25 years, the emissions from those coal plants would cause 27,000 premature deaths, the study said.
“Most of the plants that have retired were old, smaller, inefficient and high-cost,” Silverstein said. “These plants did not have the flexibility and cost profiles to compete in a fast-moving grid and were old enough to merit retirement.”
Brushing aside critics who say the plan would amount to new subsidies for coal and nuclear, Perry said that the nation has a long history of subsidies. “I don’t think that you have this perfect free-market world, and, I mean, we subsidize a lot of different energy sources,” he said at an Oct. 12 House hearing.
“I think you take cost into account, but when it comes to — you know, what’s the cost of freedom?” Perry added. “What does it cost to build a system to keep America free?”
What will FERC do? One of the four commissioners appointed by Trump, Robert F. Powelson, in a speech in October praised competitive markets, saying “the moment we put our thumbs on the scale is the moment we bastardize the process.” Two others are Democrats: Cheryl LaFleur, appointed by Obama, and Richard Glick, by Trump.
FERC Commissioner Neil Chatterjee, a Kentucky Republican and former aide to Senate Majority Leader Mitch McConnell (R-Ky.), favored an “interim lifeline” in a Nov. 9 Bloomberg News television interview. However, he said at an S&P Global Platts Energy forum that “I don’t know that we can get everybody in the lifeboat.”
Kevin McIntyre, head of Jones Day’s energy regulation practice, confirmed Nov. 2, was sworn in as the new FERC chair on Thursday.
Meanwhile, FirstEnergy is working on a strategic plan. It would close four of its oldest coal plants while selling some natural gas plants. The utility has put its least competitive plants in a subsidiary called FirstEnergy Solutions. The subsidiary’s debt is selling for less than 50 cents on the dollar.
“It is too early to say what will happen if [Perry’s plan] is not approved,” Young said. “There are a lot of things under review.”