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Trump administration plan to prop up coal and nuclear markets rejected by regulators

Trump administration plan to prop up coal and nuclear markets rejected by regulators
Energy Secretary Rick Perry's plan to boost the coal and nuclear industries was rejected by the Federal Energy Regulatory Commission on Monday. (Susan Walsh / Associated Press)

A Trump administration plan to force utilities to purchase more coal and nuclear power was rejected Monday by federal regulators, undermining the president's energy agenda and his promise to revive the coal industry.

The five-member Federal Energy Regulatory Commission, which is dominated by Trump appointees, unanimously rejected the proposal. Its members were not persuaded by arguments from Energy Secretary Rick Perry that solar, wind and other forms of renewable power were destabilizing the nation's power grid and needed to be backstopped with more coal and nuclear power at a considerable cost to consumers.

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The contentious plan to prop up the coal and nuclear markets has been atop Perry's agenda for months. The secretary had warned the proliferation of what he characterizes as less reliable renewables is undermining national security by destabilizing the grid. The market forces that are precipitating the closure of coal and nuclear plants, Perry argued to the commission, needed to be confronted with government intervention that would keep the fossil fuel plants online.

But the commission reached the same conclusion as many independent energy experts who reviewed the Trump administration proposal, finding no justification for what could amount to multibillion-dollar price supports for the struggling coal and nuclear industries. The commissioners wrote in their decision that the considerable evidence provided by grid operators does "not point to any past or planned generator retirements that may be a threat to grid resilience."

They concluded that Perry's plan to force ratepayers to pay coal and nuclear generators a premium for their energy to keep them from closing would amount to the government unjustifiably choosing winners and losers in the marketplace. "The record … does not demonstrate that such an outcome would be just and reasonable," the commission decision said.

Although the commission has vowed to continue studying the grid resiliency issues Perry raised, its action underscores the challenge the Trump administration faces in its bid to revive struggling sectors of the U.S. energy economy. Perry's proposal laid out in stark relief the lengths the federal government would have to go to keep coal competitive.

Although Trump had long argued that coal would flourish in the absence of Obama-era climate action and other environmental regulations, the Department of Energy plan was an acknowledgment that propping up the industry would require its own extraordinary government intervention and come at a hefty taxpayer cost.

The lone Democrat Trump appointed to the commission, Richard Glick, characterized the proposal as a "multibillion-dollar bailout targeted at coal and nuclear."

"There is no evidence in the record to suggest that temporarily delaying the retirement of uncompetitive coal and nuclear generators would meaningfully improve the resilience of the grid," Glick wrote in an addendum to the opinion.

There was irony in Perry's approach, as the secretary has longed railed against government supports for renewable energy. But he had argued forcefully that the grid was showing signs of strain after the polar vortex and various hurricanes and superstorms that had hit the country — and that committing ratepayers to bankrolling coal and nuclear power was the appropriate response.

"Much more needs to be done to preserve these fuel-secure generation resources that have the essential reliability and resiliency to keep the lights on for all Americans in times of crisis," Perry wrote the commission in making his case for the plan. The Department of Energy's own findings, however, had highlighted shortcomings with Perry's approach, raising questions about whether coal and nuclear could actually deliver the superior reliability that Perry claimed.

The Perry proposal had little support outside the industries that would have benefited from it. Even the American Petroleum Institute, usually a reliable Perry ally, opposed it. The blueprint was met with deep skepticism by independent energy experts, who had warned it would impede economic growth and distort the power market. Environmentalists and green energy advocates fought it bitterly.

The ranking Democrat on the House Energy and Commerce Committee, Rep. Frank Pallone Jr. of New Jersey, said the Trump administration plan was a "sham made evident this week as the grid performed well under the stress of severe cold weather throughout large portions of the country."

Follow me: @evanhalper

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