Trump Administration Is Weighing Emergency Aid for Some Coal Plants

February 9, 2018, 6:54 pm | Admin

After failing to win a bailout for cash-strapped coal plants, some Trump administration officials are considering emergency orders that could keep at least some coal generators online, people familiar with the discussions said.

The approach would require Rick Perry to use his authority as U.S. energy secretary to spur emergency compensation for coal plants run by FirstEnergy Solutions that may be at risk of shutting, said the people, asking not to be identified because the information isn’t public. Some Energy Department officials are weighing this option after federal regulators rejected a proposal by Perry last month to pay coal plants more for their “resilience,” they said. FirstEnergy hasn’t formally requested the aid, one of the people said.

When asked to confirm the talks, agency spokeswoman Shaylyn Hynes said “that is not correct information” but declined to provide further detail. The Energy Department’s press department later posted on Twitter that sources were “misinformed” on the consideration.

The FirstEnergy Solutions plants in question were at the heart of the Trump administration’s plan to compensate nuclear and coal generators more for their power. The proposal was rejected last month by members of the Federal Energy Regulatory Commission that President Donald Trump appointed. They said it would violate U.S. law.
 
Coal mogul Bob Murray, an outspoken advocate for the bailout plan and a Trump supporter, had previously called on Perry to use his emergency authority to save the FirstEnergy Solutions plants but was shot down. He’s warned that his company, which supplies some of the units, may face default if they shut.
 
The Squeeze on Coal
 
Perry has the authority under Section 202 of the Federal Power Act to order a power plant online should he determine it’s needed in an emergency to “serve the public interest.” Regulators may then prescribe reasonable compensation to keep the plant in service. While some officials are weighing the merits of a 202 order, the Energy Department may still decide to pursue other options -- or none at all. It wasn’t immediately clear which FirstEnergy plants could benefit from the action.
 
In an interview Thursday, Energy Undersecretary Mark Menezes said the agency still expects FERC to come up with an alternative to Perry’s rejected plan. But he emphasized that the Energy Department is prepared to act alone if it doesn’t.
 
“We have authorities that we can use when the need arises,” Menezes said, when asked if the agency could take its own action to keep coal and nuclear plants from retiring. “They’re well known. And we’ll use them if we need to.”
 
FirstEnergy coal-fired plants at risk of closure include Bruce Mansfield in Shippingport, Pennsylvania, and W.H. Sammis in Stratton, Ohio. Mansfield spent much of January offline after a fire damaged the complex’s pollution-control scrubber, stack and other equipment.
 
Just last month, Murray once again called on the Energy Department to use its emergency authority to aid FirstEnergy coal plants. “The secretary can do it,” Murray said in an interview at the time. “It would be the right thing to do for America.”
 
There’s no guarantee of action. Historically such orders are issued “on a case-by-case basis and have been granted to ensure reliability, not economic viability,” said Christi Tezak, managing director of ClearView Energy Partners in Washington.
 
The step could face legal challenges.
 
“It would be an unwarranted extension of the 202 authority,” said Joel Eisen, an energy policy professor at Richmond University in Virginia.
 
Murray Energy Corp. spokesman Gary Broadbent said Thursday that he wasn’t aware of any action by the Energy Department to invoke its 202 authority but described such a move as “an excellent action” to address grid reliability. FirstEnergy spokeswoman Jennifer Young similarly said she wasn’t aware of the effort but said the company supports any measures to keep plants operating.
 
“It is not necessarily surprising if this is pursued, as 202 action was raised as a possibility last October,” Julien Dumoulin-Smith, a research analyst for Bank of America Merrill Lynch, wrote in a research note Friday. However, “we see potential weakness in DOE’s case,” given the absence of imminent reliability concerns that would justify emergency orders.
 
Last modified on February 26, 2018, 7:01 pm | 1404