Trump plan would bail out coal and nuclear power plants based on national security

FAN Editor

The Trump administration is reportedly preparing a plan to keep ailing coal and nuclear plants online by turning to rarely-used federal powers, arguing the facilities are critical to national security.

The administration on Thursday circulated a draft proposal that would force electric grid operators to buy power from plants that have become uncompetitive and are at risk of closing, according to Bloomberg News, which obtained a copy of the 41-page document.

The unprecedented move essentially amounts to a second attempt to bail out coal and nuclear power plants. Secretary of Energy Rick Perry proposed a rule last year that would require regional markets to compensate coal and nuclear plants for the reliability they provide to the grid. However, a bipartisan group of five regulators unanimously rejected that plan.

The Trump administration is now turning to a familiar strategy: pushing through a policy on the basis of national security. The White House has also invoked that argument to justify slapping tariffs on foreign steel and aluminum and proposing duties on imported automobiles, including against key allies Canada, Mexico and Europe.

The plan is to tap Section 202 of the Federal Power Act, which gives the secretary of Energy the authority to keep plants running in times of war or emergency, Bloomberg reports. The department will also cite the Defense Production Act, which gives the president wide-ranging power to “influence domestic industry in the interest of national defense,” according to the Congressional Research Service.

The scheme would be in place for two years “to forestall any future actions toward retirement, decommissioning or deactivation” until a study on the U.S. grid’s reliability concludes.

The Energy Department did not immediately respond to a request from CNBC for comment and confirmation of the report.

The notion that the United States is in the midst of an electric power emergency is at odds with a grid reliability report produced by the Energy Department last year. The agency concluded, “reliability is adequate today despite the retirement of 11 percent of the generating capacity available in 2002, as significant additions from natural gas, wind, and solar have come online since then.”

The draft proposal, which is scheduled to be discussed on Friday during a National Security Council meeting, says “Federal action is necessary to stop the further premature retirements of fuel-secure generation capacity,” Bloomberg reports. The plan authors argue that the federal government must manage the decommissioning of power plants and warns the nation could lose essential power generation, noting the Department of Defense installations are almost entirely dependent on the commercial power grid.

Coal and nuclear power plants are retiring ahead of schedule, primarily due to competition from natural gas-fired facilities and renewable solar and wind farms.

Reviving the coal industry was a core promise President Donald Trump made to voters, but the long-term trend of coal plant retirements has continued under his watch. Since Trump was elected, 36 coal plants have retired and 30 have announced they will close, according to a count kept by the environmental group Sierra Club.

Getting the U.S. nuclear power industry back on track has also become a priority for Perry. Here, there are also challenges. Two dozen plants that together generate 33 gigawatts of energy across the United States have plans to shutter or will not make money through 2021, according to Bloomberg New Energy Finance.

Several states have recently passed subsidies to keep nuclear power plants online because they produce power without creating climate-warming emissions.

If implemented, the administration’s proposal would bolster Trump’s energy industry allies like Robert Murray, the chairman and CEO of coal miner Murray Energy, who asked Perry to invoke emergency powers to keep coal plants from shuttering.

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