Energy Secretary Rick Perry said Monday that issuing an emergency declaration may not be a suitable way to shore up struggling U.S. coal and nuclear plants.
“My job is to find solutions to challenges that face us,” said Perry, speaking at the Bloomberg New Energy Finance Summit in New York. "The 202(c) may not be the way that we decide is the most appropriate — the most efficient way to address this.”
“It is not the only play,” he said.
FirstEnergy asked the DOE last month to provide financial support for its power plants under the rarely used authority under Section 202(c) of the Federal Power Act, which allows the government to intervene in energy markets to address electricity reliability emergencies.
The Trump administration denied a similar request last year from coal mining company Murray Energy, which serves FirstEnergy’s coal power plants, although it appeared to conflict with President Trump’s stated aim to revive the U.S. coal industry. At the time, DOE press secretary Shaylyn Hynes said, “The White House and the Department of Energy are in agreement that the evidence does not warrant the use of this emergency authority.”
Last month, a DOE deputy said the agency would "never use" emergency order to stave off issue for uneconomic generators.
FirstEnergy’s emergency request came hours after the utility warned the Federal Energy Regulatory Commission (FERC) that it plans to shutter three nuclear power plants in the next three years. The utility has called on elected officials in Ohio and Pennsylvania to consider policy solutions that would save these facilities.
A day later, the utility filed for bankruptcy protection for its competitive power generation company, FirstEnergy Solutions, as well as for subsidiaries FirstEnergy Generation and FirstEnergy Nuclear Operating Company.
The Trump administration sought to mandate higher payments for coal and nuclear plants last year through a notice of proposed rulemaking, citing the need to ensure grid “reliability and resilience.” The Federal Energy Regulatory Commission rejected the controversial proposal in January, however. FERC is now exploring questions related to grid resilience and the U.S. energy mix in a new proceeding with broad stakeholder participation.
Recent proposals to bail out uneconomic coal and nuclear plants have been met with strong opposition from grid experts, free-market advocates, environmentalists and energy resource competitors, including renewable energy and natural gas groups. At the BNEF Summit, former FERC commissioner Nora Mead Brownell had harsh words for FirstEnergy’s appeal to the DOE.
“I think it’s a tragedy for a capitalist society,” she said. “I think it’s a tragedy for energy markets, and it’s a real tragedy for ratepayers, who by the way have paid for these plants over the course of their lifetime, and again for stranded costs.”
DOE’s authority under Section 202(c) takes effect in the event of war or a massive resource shortage, neither of which has been demonstrated, according to Mead Brownell. If the administration agrees to bailout FirstEnergy, “it will be a political decision and it will be challenged in court,” she said.
While Perry expressed hesitancy to back FirstEnergy’s Section 202(c) request on Monday, he underscored that maintaining a diverse energy portfolio — which includes coal and nuclear — is a national security priority for the Trump administration, echoing comments he made at last year's BNEF Summit.
The secretary described an energy emergency as flipping the light switch and getting no response. To prevent that type of emergency, “I don’t think you have an alternative other than to say, ‘We’re going to have an all-of-the-above energy policy,’” he said.
“We’re going to have nuclear plants, we’re going to have coal plants, we’re going to have gas plants, we’re going to have renewables, we’re going to have hydro,” Perry said. “We’re going to have an all-of-the-above energy policy in this country so we know that no matter what we get faced with, we’re going to have as many resources available as we can to feed that grid, so that when the demand is put on it, it’s there to meet it.”
How the administration plans to execute on that strategy — specifically the coal and nuclear piece — is currently unclear.
Perry said he’s an ardent free-market advocate, but called it “nonsense” to say there’s a free market in the power generation business, indicating that the DOE is still looking for ways to prop up certain energy resources.
“Five years down the road, if we continued on the previous administration’s goal to put coal out of business, to basically remove nuclear plants from our grid, and the electricity goes out and the guy that was sitting in my seat shrugs and goes ‘Eh,’” said Perry. “That is not acceptable. Sorry.”