June 1, 2018 Read More →

Trump Administration Considers Market Interventions to Stop Retirements of Coal and Nuclear Plants

Bloomberg:

Trump administration officials are making plans to order grid operators to buy electricity from struggling coal and nuclear plants in an effort to extend their life, a move that could represent an unprecedented intervention into U.S. energy markets.

The Energy Department would exercise emergency authority under a pair of federal laws to direct the operators to purchase electricity or electric generation capacity from at-risk facilities, according to a memo obtained by Bloomberg News. The agency also is making plans to establish a “Strategic Electric Generation Reserve” with the aim of promoting the national defense and maximizing domestic energy supplies.

“Federal action is necessary to stop the further premature retirements of fuel-secure generation capacity,” says a 41-page draft memo circulated before a National Security Council meeting on the subject Friday.

Although the memo describes a planned Energy Department directive, there was no indication whether President Donald Trump had signed off on the action nor when any order might be issued. The document, dated May 29 and distributed Thursday, is marked as a “draft,” which is “not for further distribution,” and could be used by administration officials to justify the intervention.

Over dozens of pages, the memo makes the case for action, arguing that the decommissioning of power plants must be managed for national security reasons and that federal intervention is necessary before the U.S. reaches a tipping point in the loss of essential, secure electric generation resources. 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.

For two years, the Energy Department would direct the purchase of power or electric generation capacity from a designated list of facilities “to forestall any future actions toward retirement, decommissioning or deactivation,” according to the memo. The proposed Energy Department directive also would tell some of those facilities to continue generating and delivering electric power according to their existing or recent contracts with utilities. The department’s intervention is meant to buy time for a two-year study of vulnerabilities in the American energy delivery system — from power plants that provide electricity to the natural gas pipelines that supply them. According to the memo, the planned action is a “prudent stop-gap measure” while the department addresses the nation’s “grid security challenges.”

More: Trump Prepares Lifeline for Money-Losing Coal Power Plants

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