Top energy regulator points to problematic wartime language in Trump’s coal bailout plan

Source: By Mark Hand, ThinkProgress • Posted: Wednesday, June 6, 2018

President Donald Trump holds up a "Trump Digs Coal" sign as he arrives to speak during rally in Huntington, West Virginia. CREDIT: SAUL LOEB/AFP/Getty Images
President Donald Trump holds up a “Trump Digs Coal” sign as he arrives to speak during rally in Huntington, West Virginia. CREDIT: SAUL LOEB/AFP/Getty Images

There’s no doubt emergency conditions exist that could easily be used to justify greater government intervention in the U.S. electric power industry. The planet is warming at a rapid pace and the government could take more urgent steps to prevent the conditions from growing even more dire.

But when President Donald Trump ordered Energy Secretary Rick Perry last Friday to take “immediate steps” to address an emergency, he was not referring to climate change or public health. The president had another emergency in mind — one that is greatly harming the bottom lines of his fossil fuel benefactors.

Trump’s order, which directed the Department of Energy (DOE) to find ways to force Americans to buy power from failing coal and nuclear plants, is another plot twist in a year-long narrative — fabricated by the White House — about a national security crisis on the horizon.

Most industry officials still don’t believe the closing of older coal and nuclear power plants is creating conditions for a national emergency. The nation’s top energy regulator also is concerned by the Trump administration’s use of wartime language in its bid to bail out these two sectors.

Kevin McIntyre, chairman of the Federal Energy Regulatory Commission (FERC), told reporters on Tuesday that he has not been briefed by DOE about Trump’s planned action. FERC had no idea the directive was coming Friday, an agency official told RTO Insider.

In January, FERC — which oversees the U.S. grid — threw a monkey wrench into Trump’s plans by unanimously rejecting a very similar plan by Perry that would have raised consumer energy bills in order to bail out coal and nuclear power plants.

However, from oil companies to renewables, environmental groups and the Heritage Foundation, wide-scale opposition to Trump’s proposed bailout of coal and nuclear isn’t standing in the way of the administration moving forward with its unprecedented plan.

Speaking at the 2018 Energy Information Administration (EIA) Energy Conference in Washington, D.C., on Tuesday, Mark Menezes, under secretary of energy at the Department of Energy, proclaimed “America’s energy renaissance is the greatest boon to our foreign policy since the collapse of the Berlin Wall, the collapse of the Iron Curtain, and the demise of the Soviet Union.”

This “sunny forecast,” Menezes told the audience, could change if policymakers do not address the decline of coal and nuclear plants. “In order to achieve permanent energy security, we must not only produce ample energy, we must ensure a resilient and secure energy system,” he said.

Referring to coal and nuclear generation, Menezes said the electric power grid’s most secure fuels are retiring “at an alarming rate that if unchecked will threaten our ability to recover from intentional attacks and natural disasters.”

As Trump’s point person at the conference for propping up coal and nuclear plants, Menezes told the audience that the president “rightly views grid resilience as a national security issue and has directed Secretary Perry to prepare steps to stop the loss of these critical resources.”

Trump plan to bail out coal industry punishes red states the most

Along with exploring how the Federal Power Act could be used to subsidize coal and nuclear plants, Perry will look into whether a Korean War-era law would serve as a tool for propping up the nation’s coal and nuclear plants.

The Defense Production Act of 1950 allows a president to nationalize private industry to ensure the U.S. has resources that could be needed in time of a war or after a disaster — two situations that are not happening right now. President Harry Truman used the law in late 1950 to cap the price of steel as part of a war mobilization effort against Korea.

FERC’s McIntyre, who gave a keynote speech at the EIA conference on Tuesday, told reporters after his talk that he found certain language in the Defense Production Act problematic if it were used to benefit coal and nuclear plants.

“The opening phrase uses something along the lines of ‘in a time of continuing war,’” noted McIntyre, who was appointed chairman of the agency by Trump. “It has the feel of a kind of wartime emergency.”

A likely plan to be reviewed by Perry, laid out in a 41-page draft memorandum, would favor certain power plants in the name of national security. Those plants are owned or supplied with fuel by some of the president’s political supporters in the coal industry, Bloomberg News reported last week.

The Federal Power Act and the Defense Production Act are not geared to responding to the financial condition of a particular generating sector, according to Kim Smaczniak, an attorney with Earthjustice.

UPDATED: Trump orders Department of Energy to look into propping up failing coal plants

“No matter which statute you’re looking at, the portrayal of the current circumstances of these plants as an emergency is one that is wrong,” Smaczinak said in an interview with ThinkProgress. “There’s nothing about these plants that’s particularly needed in order to ensure the reliable functioning of the bulk power system. There are plenty of other plants that are capable and other resources that are capable of serving the energy needs of the bulk power system.”

The Defense Production Act is meant to be used when there’s a scarcity of materials needed for national defense. The idea that electric power supply is a scarce commodity today is “pretty absurd,” she said, given high reserve margins in the PJM Interconnection and other regions of the country.

A top official at PJM, which operates the power grid for 65 million people in 13 states from Illinois to Virginia, said Monday at the EIA conference that Trump’s order “complicates” the functioning of competitive power markets that produce low costs for consumers.

Craig Glazer, vice president of federal government policy of PJM, said Trump’s call to save coal and nuclear plants worsens the “headache” of recent federal and state efforts to subsidize energy sources. Speaking at the conference, Glazer said: “The actions of President Trump and Energy Secretary Perry complicates this issue even more.”