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04 June 2018, 09:54 | Dale Webster
Report: Department of Energy recommends bail out of failing coal plants
President Trump's mandate would force the DOE to implement two emergency-only provisions-the Federal Power Act and the Defense Production Act-to once again attempt to bail out coal-fired and nuclear power plants.
A statement from White House press secretary Sarah Sanders did not say specifically what steps the administration would take but said that "keeping America's energy grid and infrastructure strong and secure protects our national security, public safety, and economy from intentional attacks and natural disasters".
U.S. President Donald Trump on Friday directed Energy Secretary Rick Perry to take emergency steps to keep at-risk coal and nuclear plants running, the White House announced. The other authority is a Cold War-era rule known as the Defense Production Act, which allows the federal government to order power plants to stay open based on national security concerns, typically during wartime.
"In particular, 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 support the nation's defense facilities, critical energy infrastructure, and other critical infrastructure".
The EIA also reports that almost all power plants that retired between 2008 and 2017 were fossil fuel plants and that most plants that plan to close before 2020 use coal or natural gas.
A "Strategic Electric Generation Reserve" would also be created under the order "to promote the national defense and maximize domestic energy supplies", the draft memo said. This intervention would last for two years, allowing time for a federal study of vulnerabilities in the USA energy delivery and grid system.
"I applaud President Trump's administration for its serious consideration as to the national security implications of the energy grid crisis, particularly the importance of eastern coal".
"Once a nuclear power plant closes, it begins decommissioning and will not be reopened". U.S. Defense Department installations are 99 percent dependent on the commercial power grid, one reason that electric system reliability is vitally important to national defense and homeland security, the memo asserts.
Since campaigning for the White House, Trump has vowed to revive the ailing USA coal industry. "Above all, the subsidy would be a major victory for First Energy as it negotiates with bondholders over the value of coal and nuclear plants owned by its bankrupt First Energy Solutions subsidiary".
"However, since grid operators, industry experts and utilities have repeatedly and forcefully stated that there is no energy shortage and there is no evidence of an emergency, Trump's scheme today is not just unnecessary - it is likely illegal", the Sierra Club claims.
According to another energy association, Advanced Energy Economy (AEE), the plan is "an exercise in crony capitalism taken exclusively for the benefit of a bankrupt power plant owner and its coal supplier", says Malcolm Woolf, AEE's senior vice president of policy. Abusing this authority to bail out uneconomic power plants for such an extended time makes no sense, especially when most regions of the country are awash with excess electricity.
But federal energy regulators have rejected that argument and turned down a proposal late a year ago from Perry to subsidize nuclear and coal plants for providing "resilience" to the grid. One independent group that manages the electricity grid that serves more than 65 million people said that it could be bad for consumers if the federal government intervenes in the market.
"Orderly power plant retirements do not constitute an emergency for our electric grid", said Amy Farrell, vice president of the American Wind Energy Association.
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