DOE could use wartime law to help coal. Here’s how it works
Invoking a Korean War-era law to aid struggling coal and nuclear units would represent a dramatic expansion of the Trump administration’s campaign to rescue the industry, lobbyists and analysts said yesterday.
The Department of Energy is reportedly weighing use of the Defense Production Act of 1950 to prevent the retirement of ailing coal and nuclear units at the request of Sen. Joe Manchin (D-W.Va.). The law gives the president broad powers to require businesses to prioritize contracts for materials deemed vital to national security. Bloomberg first reported on DOE’s plan.
Speculation that the administration would turn to the law arose last week when Energy Secretary Rick Perry appeared at the Bloomberg New Energy Finance summit in New York. Perry appeared to throw cold water on a request from FirstEnergy Corp. to issue an emergency order to compensate power plants owned by the company’s bankrupt power generation unit (E&E News PM, April 9).
Then he added, “It is not the only way.”
Bloomberg reported yesterday that the administration is considering the idea. The report coincided with a letter from Manchin urging the administration to invoke the law.
DOE officials did not respond to multiple requests for comment yesterday, but industry sources familiar with the administration’s plans said the idea is being actively considered and that an interagency process is underway.
“It goes to the highest levels of government,” said one source opposed to the idea. He likened the move to something “they do in Venezuela,” adding, “It’s one thing to put a thumb on the scale. This is like putting an anvil on the scale.”
The sources stressed that no final decision had been made.
“The whole idea raises a lot more questions than it would answer,” said another industry source, who added that the concept is one of several that DOE sent to the White House for consideration to aid ailing nuclear and coal-fired power plants.
Among the questions those efforts raise: Who would pay for it? Would the federal government nationalize power plants or compel grid operators to accept their power? And would doing so require new congressionally approved authorization or spending?
“It sounds like they’re getting creative,” a source close to the administration said.
The national defense argument is just the latest in a series of efforts to rescue the faltering coal industry, one of the president’s key campaign promises that helped propel him to victories in coal-heavy states.
A proposal to pay coal and nuclear plants for storing fuel on-site was shot down by the Federal Energy Regulatory Commission.
DOE is now mulling FirstEnergy’s request to issue an emergency order under Section 202(c) of the Federal Power Act (Greenwire, March 29).
Administration officials have argued that the country is facing an emergency in its power sector. As coal and nuclear plants retire, America becomes increasingly vulnerable to extreme weather events like the polar vortex of 2014 and the deep freeze experienced by much of the country this winter, they say.
