President Trump’s plan to save uneconomic coal and nuclear plants is showing signs of being relegated to a backburner priority, especially in the wake of conservative, free-market groups lashing back against it, say industry sources.
“Last I heard this week the bailout push is on the backburner,” Devin Hartman, the former head of electricity policy at the free-market R-Street Institute, told the Washington Examiner. “The [White House] has pumped the breaks on it as conservative groups have come to strongly oppose it.”
Hartman is the incoming president and CEO of the Electricity Consumers Resource Council, representing large industry electricity users, which is part of an industry coalition that opposes the Trump grid plan to essentially provide subsidies to coal-fired and nuclear power plants.
Other industry sources have said recently that the White House has also been struggling with the legal justification for the plan, as well as questioning whether there is a real need for the plan to make the grid more resilient.
The White House did not return emails to respond to the idea of the grid plan being on hiatus.
Secretary of Energy Rick Perry told a roundtable of reporters last month that his agency has completed all its work on the plan, and that it was now up to the White House to make a decision.
A sign that the plan may be slipping from the agenda came when President Trump visited West Virginia at the end of September.
Previously, while in the Mountaineer State in August, he had made reference to a “military plan” that he planned to roll out to save coal plants, calling coal an “indestructible” resource when compared to other energy resources. “We are working now on a military plan that's going to be something very special" for coal, Trump said while addressing a rally in August.
But when he arrived in West Virginia last weekend, there was no reference to anything close to a military plan. He instead made references to supporting transmission lines and coal exports. There had been speculation that he would roll out the coal plan while in West Virginia.
Katie Tubb, energy and environmental analyst at the conservative Heritage Foundation, said that she tends to think that the administration may be dragging its feet for some reason, because it has been all summer and there is still nothing, yet.
The Heritage Foundation has been publicly opposed to any plan that looks to subsidize coal and nuclear plants.
Heritage has opposed the plan from the time Secretary Perry first proposed it last fall, Tubb said. The Perry plan was rejected unanimously by the Federal Energy Regulatory Commission.
Heritage is “very much opposed to … subsidizing coal and nuclear,” said Tubb. She added that Heritage also opposes subsidies for wind and solar. The conservative group just believes “there is no national security concern” the administration is attempting to address, and that it is wrong to interfere in energy markets to prop up a non-competitive energy source.
Nevertheless, coal power plant advocates remain optimistic. “Everything we are hearing matches up with the President and Secretary Perry’s own public comments that this is undergoing an extensive National Security Council review,” Michelle Bloodworth, president and CEO of the American Coalition for Clean Coal Electricity, said in an email to the Washington Examiner.
“Secretary Perry was just quoted this week highlighting his ‘healthy concern’ over the vulnerabilities to the grid from cyberattacks and his goal to make sure that the ‘grid is resilient and it’s reliable,” she said. “This is public affirmation of what we have been arguing and helps to highlight to us that they are doing the reviews necessary to comply with President Trump’s Executive Order in June which launched us down this path.”
Nevertheless, the questions over the White House plan are also coming at a time when FERC is mulling changes to multi-state grid rules that could present challenges for the administration in implementing it.
FERC, the nation’s independent grid regulator, opened a special hearing on how PJM Interconnection, the nation’s largest grid operator, can deal with both state and federal subsidies when considering how electricity resources are priced.
Industry officials say, depending on what FERC decides, it would pose challenges to any plan the White House may put forward.
“The subsidy issue had been focused on state actions, because that was really the only thing before us to deal with,” said Nancy Bagot, senior vice president for regulatory policy at the Electric Power Supply Association. But now with the prospect of federal action, the debate over how to treat subsidies has shifted to include subsidies from Washington, she explained.
Bagot’s group also opposes the Trump bailout idea. But her group represents power plant owners that are paid to keep their plants at the ready in case of a spike in demand or emergency. Subsidies distort the prices those power plants receive from PJM, making it harder to economically justify their continued operation.
PJM is proposing a way to balance out the cost of subsidies by limiting their price distorting-effects. The same should apply to a federal subsidy.
“Federal subsidies should be subject to the same mitigation that the state subsidies are, because it’s causing the same distortion in the market,” said Bagot.