The WasteWatcher: The Staff Blog of Citizens Against Government Waste

DOE Prepares Bailout for Unprofitable Power Plants

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


The Federal Energy Regulatory Commission (FERC) has said that the country has ample power to supply market needs. FERC intervened and stopped an attempt by the Department of Energy (DOE) to pick winners and losers in the energy market when it unanimously rejected DOE’s proposal to bailout nuclear and coal.

Now DOE is attempting to meddle in the energy marketplace yet again. DOE has made the unfounded claim that closing both coal and nuclear power plants threatens national security. A 40-page memo from the Trump administration to the National Security Council has laid out a strategy on how to reinforce this claim.

The memo asserts that U.S. military instillations are 99 percent dependent on the commercial power grid, and therefore reliability of the electric system is vitally important to national defense. It argues (without evidence) that the decommissioning of power plants must be overseen by the federal government to ensure the U.S. doesn’t reach a tipping point in the loss of vital and secure energy resources.

The memo lays out a plan where DOE would direct the purchase of power from a designated list of facilities over the next two years “to forestall any future action toward retirement, decommissioning or deactivation.”

In a 2015 piece of highway legislation known as the FAST Act, Congress directed the DOE to identify critical energy infrastructure which the agency is currently performing; however, the process is scheduled to take two years. Hence the memo suggests that DOE use the Federal Power Act and the Defense Protection Act from 1950 to require the plants to keep operating.

This is the most recent attempt by the administration to force power companies to keep operating insolvent and unprofitable plants that are losing money due to the rise of cheaper energy sources like natural gas. And despite the administration’s claims, it is completely unnecessary.

"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," said the PJM Interconnection in a statement, which operates the nation's largest power grid and stretches from the Midwest to the Atlantic Coast. "There is no need for any such drastic action."

FERC Chairman Kevin McIntyre has also questioned the memo’s use of section 202(c) of the Federal Power Act to keep the plants operating as that legislation requires an “ongoing emergency” in order to be enacted of which there is currently none.

The existing energy market is already suffering from oppressive energy regulations and subsidies to both fossil fuels and green energy. But the solution to fixing the energy market is to get rid of the subsidies already in place. The government should not be adding newer ones to distort the playing field even more.

The administration should be focused on creating a free energy market.

More than 50 percent, 268 coal-fired power plants have shut down or announced plans to retire over the last seven years. In the meantime, energy costs have tumbled as natural gas has overtaken coal as the biggest source of electricity.

Uneconomic and bankrupt energy plants retiring does not represent a security risk, and DOE’s continuing push to bailout failing plants by subsidizing more expensive forms of energy will not somehow prevent power outages.

 

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