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 that “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.
“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 S. 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 the Ohio utility FirstEnergy, both of whom have contributed heavily to Trump’s political activities.
Robert Murray presented a proposal to Energy Secretary Rick Perry in March 2017, the month Perry took office. And on April 2 of this year, FirstEnergy appealed for emergency help after a subsidiary operating ailing power plants filed for bankruptcy protection.
The Federal Energy Regulatory Commission, an independent agency, unanimously rejected an earlier proposal by the Energy Department that would have favored coal and nuclear plants.
In a recent appearance at a Washington Post Live event, FERC 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,” Michael Panfil, director of federal energy policy and senior attorney with the Environmental Defense Fund, 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.”
Katie Bays of Height Capital Markets, an investment research firm, wrote in a commentary: “If DOE 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. Above all, the subsidy would be a major victory for FirstEnergy as it negotiates with bondholders over the value of coal and nuclear plants owned by its bankrupt FirstEnergy Solutions subsidiary.”
FirstEnergy’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.