Trump's Crony Capitalism: Energy Division
Trump orders "immediate steps" to save money-losing coal and nuclear power plants.
Who you gonna call when your business is being outcompeted and you're going bust? The feds, of course. President Donald Trump obliged his cronies in the electric power and coal industries today by ordering the Department of Energy (DOE) to take "immediate steps" to save the companies from going bankrupt. Those immediate steps will result in consumers having to pay higher power bills.
Back in March, the bankrupt nuclear and coal-fired electric power generator FirstEnergy asked the DOE to invoke section 202(c) of the Federal Power Act and declare that an "emergency condition" exists in Midwestern electricity markets. The company claims that closing down its old and unprofitable coal-fired plants will significantly reduce the reliability to electricity supply in the region.
In fact, the only real "emergency" is that the company has been losing money. In the guise of maintaining electric power reliability, FirstEnergy wants the DOE to order all coal and nuclear generating units in the PJM Interconnection footprint—a region covering all or parts of 13 states, plus D.C.—that have at least 25 days of onsite fuel be given non-market, cost-of-service rates and also guaranteed profits for at least four years. The "onsite fuel" qualification is meant to exclude generators that burn natural gas to produce electricity. Basically, the company wants the federal government to force consumers to buy its expensive electricity, and it wants to be guaranteed a profit too. Subsidizing these coal-fired plants would also help keep Trump's coal industry pal Robert Murray, CEO of the Murray Energy Corporation, in business.
In January, the Federal Energy Regulatory Commission voted unanimously to reject an earlier DOE proposal requiring coal-fired and nuclear power plants to stockpile 90 days of fuel onsite. The requirement was artfully framed as a measure to increase power grid resilience, but it was really a stealth subsidy to the coal industry.
The folks who run the power grid at PJM Interconection don't think there's a looming supply reliability problem. "There is no need for drastic action," says a statement PJM released today. It adds:
Markets have helped to establish a reliable grid with historically low prices. 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 PJM electrical grid is more reliable than ever, with 23 percent reserve margins and billions of dollars of new investment. All of this is occurring while emissions are decreasing and wholesale prices are at historic lows for the 65 million consumers we serve. From 2008 to 2017, wholesale prices in PJM fell by more than 40 percent. Competition has required generators to operate more efficiently while also attracting new, more efficient technology, resulting in more than $1.4 billion in annual savings.
Just another depressing example of Trump invoking war emergency powers to reward corporate cronies and stick it to consumers.