Trump administration officials are making plans to order grid operators to buy electricity from struggling coal and nuclear plants in an effort to extend their life, a move that could represent an unprecedented intervention into U.S. energy markets.
The Energy Department would exercise emergency authority under a pair of federal laws to direct the operators to purchase electricity or electric generation capacity from at-risk facilities, according to a memo obtained by Bloomberg News. The agency also is making plans to establish a "Strategic Electric Generation Reserve" with the aim of promoting the national defense and maximizing domestic energy supplies.
"Federal action is necessary to stop the further premature retirements of fuel-secure generation capacity," says a 41-page draft memo circulated before a National Security Council meeting on the subject Friday.
The plan cuts to the heart of a debate over the reliability and resiliency of a rapidly evolving U.S. electricity grid. Nuclear and coal-fired power plants are struggling to compete against cheap natural gas and renewable electricity. As nuclear and coal plants are decommissioned, regulators have been grappling with how to ensure that the nation's power system can withstand extreme weather events and cyberattacks.
Although the memo describes a planned Energy Department directive, there was no indication whether President Donald Trump had signed off on the action nor when any order might be issued. The document, dated May 29 and distributed Thursday, is marked as a "draft," which is "not for further distribution," and could be used by administration officials to justify the intervention.
Trump administration officials who advocate taking action say they want to preserve nuclear and coal-fired plants that have fuel on site and provide reliable, always-on power capable of snapping back after intense storms and emergencies.
"Too many of these fuel-secure plants have retired prematurely and many more have recently announced retirement," only to be replaced by less-secure, less-resilient natural gas and renewable power sources, the memo said.
Over dozens of pages, the memo makes the case for action, arguing that the decommissioning of power plants must be managed for national security reasons and that federal intervention is necessary before the U.S. reaches a tipping point in the loss of essential, secure electric generation resources. Defense Department installations are 99 percent dependent on the commercial power grid, one reason that electric system reliability is vitally important to national defense and homeland security, the memo asserts.
For two years, the Energy Department would direct the purchase of power or electric generation capacity from a designated list of facilities "to forestall any future actions toward retirement, decommissioning or deactivation," according to the memo.
The department's intervention is meant to buy time for a two-year study of vulnerabilities in the American energy delivery system — from power plants that provide electricity to the natural gas pipelines that supply them.
The Trump administration is moving to embrace two rarely used authorities under federal law to take the action, after weighing a broad array of strategies for preserving coal and nuclear power plants.
The Energy Department would be relying partly on the Federal Power Act — the so-called Section 202 authority — that lets the administration order guaranteed profits for power plants that can store large amounts of fuel on site. And the Energy Department would be tapping the 68-year-old Defense Production Act, a Cold War-era law once invoked by President Harry Truman to help the steel industry.