By Kennedy Maize
In his first seven months in office, Energy Secretary Chris Wright has been betting on the weather using other people’s money without their consent. And losing.
Last week (Aug. 20), Wright doubled down, ordering a Midwestern coal-fired power plant that he forced Consumers Energy to keep running in May on a speculative bet that it would be needed to keep the grid from collapsing to stay closed for another 90 days.
If he continues, regardless of whether he wins or loses, it could cost his selected electricity customers in the upper Midwest and the Mid-Atlantic. According to the utility and its independent system operator, the Midcontinent Independent System Operator (MISO), the May order could cost customers in the upper portion of the system, including Michigan, in the range of $100 million.In a filing at the Securities and Exchange Commission, the company said it spent $29 million in the first month of the shutdown.
Double that for the next 90 days. Wright has suggested that he may continue slapping on consecutive 90-day orders to keep the unwanted and unneeded plant in service indefinitely to on the backs of customers in Michigan and part of MISO.
The plant’s owners opposed Wright’s order, as they had lined up adequate resources in advance of the planned closure at the end of May. The company, the state utility regulators, and MISO opposed the shutdown.
Michigan Attorney General Dana Nessel has sued DOE in the U.S. Court of Appeals for the D.C. Circuit, charging that Wright’s order is “an unlawful abuse of the Department’s emergency authority.” Nessel noted that until Wright’s unbidden order, DOE had used its emergency authority “for real emergencies like natural disasters and extreme weather and has typically acted at the behest of grid operators or governmental bodies.”
A coalition of environmental groups led by the Sierra Club and Earth Justice, the national environmental law firm, is also suing DOE in the D.C. appeals court. That suit cites the elderly plant’s “inability to reliably operate even in normal circumstances, let alone an emergency. Because the Campbell Plant is at the end of its useful life and Consumers has substantially reduced capital and major maintenance investments over the past few years in anticipation of retirement, the plant would require tremendous maintenance and investment to function consistently.”
In his news release announcing the second order to keep the plant afloat, Wright made claims that are untrue and misleading. He stated that the 1,420-MW coal-fired J.H. Campbell plant “has proven critical to MISO’s operations, operating regularly during periods of high energy demand and low levels of intermittent energy production.”
That’s false. The vintage 1962 plant, the last coal plant in the utility’s generating system, was not critical during the 90-day order. The MISO system faced no serious problems between May and the end of August.
MISO has all the authority it needs to order plants to keep running in emergency situations without intervention from Washington. At the time of Wright’s order, the chairman of the Michigan Public Service Commission, said, “We currently produce more energy in Michigan than needed. As a result, there is no existing energy emergency in either Michigan or MISO.”
In a truly just world, DOE would have to pay for consequences of its order. In this world of the Federal Power Act, the electric consumers must pay, with the allocations among them determined at the Federal Energy Regulatory Commission.
On August 15, FERC issued a notational order calling for MISO customers from the upper region, including Consumers Energy customers, to pay the cost of keeping the plant running. Consumers Energy must come back to FERC with a detailed plan for cost recovery.
Not long after ordering the Michigan coal plant to continue operating in May, Wright ordered Constellation Energy in the PJM regional transmission organization to keep two gas-fired generators the company planned to close available. The 380-MW units at the Eddystone plant south of Philadelphia are used as peaking units as PJM practices economic dispatch. PJM also experienced no problems during the 90-day order, which expires on Thursday (Aug 28). It is likely that Wright will double down on Eddystone as well.
In July, DOE released a report saying the U.S. faces a grid reliability crisis. The report found that without “decisive intervention, the Nation’s power grid will be unable to meet projected demand for manufacturing, re-industrialization, and data centers driving artificial intelligence (AI) innovation.”
While DOE says the report played no role in its April orders, critics argue that the two events are related and that the report is seriously flawed. Attorneys general from nine states — Arizona, Colorado, Connecticut, Illinois, Maryland, Michigan, Minnesota, New York, and Washington (all with Democratic governors) — on Aug. 6 challenged the report at DOE, arguing that it provides a reason for the federal government to bigfoot states, as it “unlawfully intrudes on the states’ authority to regulate generation resources within their borders.”
The AGs write, “Resource adequacy is an integral part of prudent, least-cost, utility planning in every state and region of the country. DOE plays no role in the complex proceedings to determine either reserve margins or specific resource adequacy conclusions.”
Three renewable energy trade groups — American Clean Power Association, Advanced Energy United, and American Council on Renewable Energy – separately filed a rehearing request. They argue that the DOE report is, in reality, a formal “protocol” that will govern and misdirect “resource adequacy” procedures and requirements in years ahead.
They assert that the DOE approach “fails to take account of (or simply mischaracterizes) major developments that will affect resource adequacy in the next half-decade and beyond, primarily the pace of new resource development, the retirement of existing resources, and the well-established regulatory and market mechanisms that connect these threads.”
Independent experts criticized the DOE report. Wilson Ricks of Princeton’s ZERO Lab, an energy modeling expert, told Canary Media that the report under-estimates new generation coming in the years ahead and “aggressively downplays the potential for new wind, solar, batteries, and gas to ensure reliability….The report’s scenarios seem designed around worst-case assumptions.”
Whatever happens on the ground in the weeks and months ahead in Wright’s electricity casino, it’s likely that FERC and the courts are going to be closely involved.ad
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