Energy agency rejects Trump plan to prop up coal and nuclear power plants

The unexpected decision by the Republican-controlled body is a blow to the president’s high-profile mission to revive the struggling US coal industry

An independent energy agency on Monday rejected a Trump administration plan to bolster coal-fired and nuclear power plants with subsidies, dealing a blow to the president’s high-profile mission to revive the struggling coal industry.

The decision by the Republican-controlled Federal Energy Regulatory Commission (FERC) was unexpected and comes amid repeated promises by Trump to rejuvenate coal as the nation’s top power source. The industry has been besieged by multiple bankruptcies and a steady loss of market share as natural gas and renewable energy have flourished.

Energy secretary Rick Perry last year proposed fresh government support for coal-fired and nuclear power plants in an effort to slow the rate at which these units are being phased out, stating the output is needed to avoid power outages “in times of supply stress such as recent natural disasters”.

Facebook Twitter Pinterest US energy secretary Rick Perry. Photograph: Drew Angerer/Getty Images

The plan would provide a lifeline to many ageing coal and nuclear plants that would otherwise go out of business, primarily due to the abundance of cheap natural gas and the plummeting cost of renewables.

The Department of Energy has noted that 531 coal-generating units were retired between 2002 and 2016, while eight nuclear reactors have announced retirement plans in the past year.

Donald Trump has vowed to arrest this decline and end the “war” on mining communities by repealing various environmental regulations put in place during the Obama administration.

But non-partisan expert analysis published last month calculated that the plan would cost US taxpayers about $10.6bn a year. And the money would be used to prop up some of the oldest and dirtiest power plants in the country, according to the joint report by research groups Climate Policy Initiative and Energy Innovation.

And in rejecting the proposal on Monday afternoon, the FERC declared that despite claims by the administration to the contrary, there is no evidence that any past or planned retirements of coal-fired power plants pose a threat to reliability of the nation’s electricity grid.

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The administration’s plan was opposed by an unusual coalition of business and environmental groups that frequently disagree with each other. Critics said the plan would distort energy markets and raise prices for customers, especially in the northeastern and midwestern US. One called it “ludicrous” and perverse.

Energy secretary Rick Perry thanked the panel on Monday for addressing his proposal, which he said had initiated a national debate on the resiliency of the nation’s electricity system. The government has not released its own calculation of the cost of the proposal.

“What is not debatable is that a diverse fuel supply, especially with onsite fuel capability, plays an essential role in providing Americans with reliable, resilient and affordable electricity, particularly in times of weather-related stress like we are seeing now,” Perry said.

Facebook Twitter Pinterest A coal-fired power station in Bow, New Hampshire. Photograph: Jim Cole/AP

Perry was referring to his plan to compensate power plant owners that maintain a 90-day fuel supply protected against severe weather and other disruptions, a feature shared by coal and nuclear power but less apparent with renewable energy sources such as wind and solar power.

Energy providers outside of coal and nuclear have warned about interference in the free market and manufacturers with high energy needs said higher prices could be passed on to consumers.

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Tech giant Apple weighed in Monday against the proposal, saying it would inhibit innovation and competition and interfere with plans to increase use of “clean energy” such as wind and solar power.

In its decision, the five-member energy panel essentially agreed with critics who said there was no evidence of a threat to the grid’s day-to-day reliability that would justify the emergency action Perry was seeking.

An energy department report last year called reliability “adequate”, citing significant additions to the grid from natural gas, wind, and solar.

FERC said in its decision that it is launching a new process to evaluate the resilience of the nation’s electric grid.