UPDATE: No National Security Emergency to Justify Trump’s Coal, Nuke Bailout
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UPDATE - June 13, 2018: At a Senate committee hearing on Tuesday, members of the Federal Energy Regulatory Commission said President Donald Trump’s order to bail out coal and nuclear generators could unravel wholesale power markets.
All five FERC members – of whom four are Trump appointees – said there is no national security emergency in wholesale power markets that justifies immediate federal intervention.
The CEO of Exelon, the nation’s largest nuclear operator, told Utility Dive last week that there is no power market emergency to justify a bailout and pushed the Department of Energy to release more information on security threats.
The story
- The Trump administration intends to revive a Cold War-era statute to bail out struggling coal and nuclear plants. President Donald Trump has also directed Energy Secretary Rick Perry to exercise emergency authority under national security laws to direct grid operators to buy electricity from ailing coal and nuclear facilities.
- The Defense Production Act effectively allows the president to nationalize private industry to ensure the United States has the resources it needs during a war or after a natural disaster.
- Senator Joe Manchin (D-WV) sent Trump a letter last month urging him to take the drastic measures, arguing that the plant closures would lead to power shortages.
- Electric utility FirstEnergy set off the initial alarm when it asked for a grid emergency declaration, along with guarantees for its coal and nuclear plants under the Act.
- Grid operators say their power mix is not at risk, at least in the near term.
Why it matters
- Utility Dive says these measures “would constitute an unprecedented federal intervention in electricity markets.”
- Coal plants have been struggling in the wake of the United States’ natural gas boom, while nuclear plants have been plagued by massive cost overruns. These underlying dynamics do not appear poised to shift anytime soon.
- In 2017, Energy Secretary Rick Perry proposed a rule at the Federal Energy Regulatory Commission that would have subsidized coal and nuclear plants, based on Perry’s argument that they improve grid resilience. However, a think-tank analysis found that the vast majority of recent major electricity disturbances stemmed from Hurricane Sandy and other severe weather events. FERC agreed, denying Perry’s proposal.
- Free-market groups oppose using the Act now, saying it is meant strictly for imminent national security threats, not for “economic emergencies at one or two companies.”
- In a related twist, another recent report found that closing the struggling nuclear plants would shift energy production back to fossil fuels, adding to regional air pollution and “reversing the emissions benefits of 25 years of renewable investments.” The report was prepared by an independent think-tank, and commissioned by a nuclear industry coalition.
- The American Petroleum Institute opposes the bailout, in a possible indication that it believes natural gas and oil will replace lost coal and nuclear capacity.
What do you think?
Should the president use the Defense Production Act to protect economically struggling coal and nuclear plants from closure? Should the president allow natural attrition of economically non-viable technologies, and allow other energy sources to take their place? Hit Take Action to tell your reps what you think, and share in the comments below.
—Sara E. Murphy
(Photo Credit: Greg Goebel via Flickr / Creative Commons)
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