Trump orders action to stem shutdowns of coal and nuclear power plants

President Trump has ordered his Energy Department secretary to take immediate action to stem power plant closures, arguing that a decline in coal and nuclear electricity is putting the nation’s security at risk.

“Impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation’s energy mix and impacting the resilience of our power grid,” White House spokeswoman Sarah Huckabee Sanders said in an emailed statement Friday. She said Trump has directed Energy Secretary Rick Perry “to prepare immediate steps to stop the loss of these resources and looks forward to his recommendations.”

Trump’s directive comes as administration officials search for ways to extend the life of money-losing coal and nuclear power plants that are at risk of closing due to competition from cheaper natural gas and renewable energy sources.

Coal producers’ stocks rose on the news, with Peabody Energy Corp. jumping as much as 6.8% to $46.23.

The National Security Council was set to meet Friday to discuss the Energy Department’s latest idea for shoring up the facilities.

Under the Energy Department strategy, outlined in a memo obtained by Bloomberg News, the administration would invoke national defense — using authority granted under a pair of federal laws — to establish a “strategic electric generation reserve” and compel grid operators to buy electricity from at-risk plants.

Administration officials are still weighing the best approach, and Sanders did not describe any specific plan Friday.

One obstacle could be the president’s own appointees. The members of the Federal Energy Regulatory Commission, most of whom were appointed by President Trump, have already thwarted one effort to bail out uneconomic power plants, killing a 2017 directive by Perry that sought to keep struggling facilities in business. Perry proposed a rule that would have compensated coal and nuclear plants for their ability to store months’ worth of fuel on site.

Now, Trump has directed Perry to take “immediate steps” to stop coal and nuclear retirements — but the latest plan, like the last, may be at the mercy of the commission’s five members.

“If they plan to recover the charges from electric customers, there doesn’t appear to be any way that they can get around having to go back through FERC to implement this,” said Alison Silverstein, an independent energy consultant who helped write a grid study for the Energy Department last year.

“Even if FERC does not have the ability to judge whether the rationale for the order is sound, it still has the responsibility and jurisdiction to review and approve the method for selecting the plants and charging the money,” she said.

The latest proposal may aim to bypass the energy commission completely. But, given the commission’s jurisdiction over U.S. electricity markets, it likely has a role in any plan that requires grid operators to make out-of-market payments to generators.

Opponents of the new proposal contend that the intervention is a solution in search of a problem and that there are other ways to back up the grid.

A major grid operator, PJM Interconnection, said in a statement that the power system is more reliable than ever and that federal intervention isn’t needed.

“There is no need for any such drastic action,” the company said. “Any federal intervention in the market to order customers to buy electricity from specific power plants would be damaging to the markets and therefore costly to consumers.”

The National Mining Assn., however, said some action is urgently needed given that 12,000 megawatts of coal-fired power are expected to retire this year.

“Without action, we may pass a reliability and resiliency crisis point of no return,” the trade group said by email. “We need a plan to preserve the reliable, affordable energy that continues to slip away each day, and it is encouraging that this administration is taking the issue seriously.”

Dlouhy writes for Bloomberg.

UPDATES:

1:30 p.m.: This article was updated with analysis on the role of the Federal Energy Regulatory Commission.

11:20 a.m.: This article was updated throughout after White House spokeswoman Sarah Huckabee Sanders said President Trump ordered his Energy secretary to take immediate action to stem power plant closures.

This article was originally published at 10:10 a.m.