Department of Energy recommends bail out of failing coal plants

Cristina Cross
June 3, 2018

Trump administration officials are making plans to order grid operators to buy electricity from struggling coal and nuclear plants in an effort to extend their life, a move that could represent an unprecedented intervention into US energy markets.

As part of the plan, the U.S. Department of Energy (DOE) could exercise emergency authority under national security laws to direct the operators to buy electricity from coal and nuclear facilities, according to a memo reviewed by Reuters. There have been meetings this week at the cabinet deputies' level and at the National Security Council. Farrell called the draft plan "a misapplication of emergency powers" and said, "There's certainly no credible justification to force American taxpayers to bailout uneconomic power plants". Those plants are owned by some of the president's political allies in the coal industry.

The White House-sponsored DoE memo reportedly states that "too many of these fuel-secure plants have retired prematurely and many more have recently announced retirement", while declaring that the replacement of coal and nuclear plants by natural gas and renewable power in the U.S. is not secure.

The agency also is making plans to establish a "Strategic Electric Generation Reserve" with the aim of promoting the national defense and maximizing domestic energy supplies.

"Too many of these fuel-secure plants have retired prematurely and many more have recently announced retirement", the 41-page memo reads. The emergency rules would be a "prudent stopgap measure" that would last two years while the Energy Department did further study. Under a 2010 agreement, Portland General Electric plans to shut Oregon's only coal-fired power plant in Boardman in 2020. More than a dozen are expected to close this year, after a record high of 15 shuttered in 2015.

"There has been no change in our plan to cease coal-fired operations in 2020", PGE spokesman Steve Corson said Friday afternoon.

Robert Murray presented a proposal to Perry in March 2017, the month Perry took office.

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But federal energy regulators have rejected that argument and turned down a proposal late previous year from Perry to subsidize nuclear and coal plants for providing "resilience" to the grid.

In a recent appearance at a Washington Post event, FERC chairman Kevin McIntyre said that using the emergency powers was "perhaps not the most obvious fit".

"Litigation would begin nearly immediately", she said.

A draft memo urges federal action to "stop the further premature retirements of fuel-secure generation" from coal and nuclear plants that have struggled to compete with natural gas and renewable energy sources such as wind and solar power. Numerous plants have operated far longer than anticipated when they were built. The federal government has a lot of assets in the Pacific Northwest.

That did not stop the coal industry from making new requests for help from the administration. Miller is a lobbyist for FirstEnergy Solutions, a bankrupt power company that relies on coal and nuclear energy to produce electricity.

Among those arguing for federal action is Jeff Miller, a well-connected GOP fundraiser who has served as an adviser to Perry and other Republicans and ran Perry's unsuccessful presidential campaign in 2016.

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