Bogus. Arbitrary. Capricious.
Add to that, stupid, unproductive, and dangerous.
That’s the best summary I can come up with for the widely-reported White House plan to order the Department of Energy to slam uneconomic coal and nuclear plants into the heretofore competitive wholesale electric markets. Bloomberg and other news outlets are reporting, based on a draft memo from the White House to DOE, that the administration will use Section 202(C) of the Federal Power Act and the 1950 Defense Production Act to force competitive electric markets to dispatch coal and nuclear plants that can’t compete ahead of competitive natural gas and renewable electric generation.
The rationale is “national security,” which is quickly becoming the Trump administration’s universal solvent to overcome any reasonable objections to its policy objectives across the board, including trade and energy. The May 29 draft White House memo resurrects a “resilience” argument that the administration tried earlier to convince the Federal Energy Regulatory Commission to trash competitive wholesale markets in favor of coal and nuclear and failed, despite a Republican majority on the FERC. The commission unanimously rejected resilience claim.
The draft White House memo to the National Security Council says that “resources that have a secure on-site fuel supply, including nuclear and coal-fired power plants, as well as oil-fired and dual-fuel units with adequate storage, are essential to the support the Nation’s defense facilities, critical energy infrastructure, and other critical infrastructure.” That’s close to a mirror of what the DOE’s failed petition early this year to FERC argued.
Forcing over-priced nuclear and coal generation into the wholesale markets is likely to increase electricity costs to consumers, although the scale of that isn’t yet known.
The draft memo, which DOE has not yet commented on, has drawn widespread fire, particularly from environmental groups which view it as a direct assault on solar and wind power and natural gas interests. Dick Munson, the Environmental Defense Fund’s Midwest chief, said that “it’s clear Washington’s new swamp has produced a monster: A multi-billion dollar attack on American families, markets and the law. We look forward to forcefully opposing it every step of the way.”
The PJM Interconnection would be most directly affected by the Trump policy, as the most threatened utility with uncompetitive nuclear and coal units is Akron, Ohio, based FirstEnergy. PJM said, “There is no need for any such drastic action. PJM just released the results of its capacity auction, which secured reliable supplies through 2021/2022. The auction results saw an increase in the amount of coal resources that cleared the market, along with a diverse mix of natural gas generation, nuclear generation, renewable resources, demand response and energy efficiency.”
While not commenting on the draft Trump administration proposal, the Nuclear Energy Institute, the Washington lobbying group for nuclear power, took aim at the recent PJM capacity auction. NEI CEO Maria Korsnik said, “This year, more than 10,000 megawatts of nuclear power failed to clear the annual PJM capacity auction. This simple fact serves as a warning that the largest grid operator in the United States is at risk of further loss of reliable, resilient power and its largest source of clean electricity.”
Neither the American Gas Association nor the National Mining Association had any comments on the White House draft.
The Natural Resources Defense Council said, “If DOE chooses to undertake the actions outlined in the memo, it would be an insult to true national security needs, America’s electricity customers and markets, and the Federal Regulatory Energy Commission.” NRDC added, “Most critically, under the [Defense Production Act], there must be some demonstrated scarcity or national security need. Incredibly, the 40-page single-spaced leaked memo fails to identify a single valid justification under the DPA.”
Should DOE issue an order based on the White House draft memo, opponents are likely to file multiple suits aimed at overturning DOE. The Sierra Club commented, “The Defense Production Act and Section 202(c) of the Federal Power Act are meant for actual emergencies, and the court of law will make that clear in the weeks and months to come should Trump try this plan. The bottom line is that no matter what Trump does, coal and nuclear plants will continue to retire during his administration and beyond.”
— Kennedy Maize