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.
“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.
Trump administration officials have contemplated action for more than a year. After the Energy Department conducted a reliability study last year, Energy Secretary Rick Perry proposed a rule that would have compensated coal and nuclear plants for their ability to store months’ worth of fuel on site. Federal regulators shot down the idea in January.
That didn’t quell requests for help. A FirstEnergy Corp. subsidiary requested immediate intervention from Perry’s agency in late March. That plea followed the Akron, Ohio-based company’s announcement to shut three nuclear power plants that feed the grid operated by PJM Interconnection LLC, the largest in the country. FirstEnergy Solutions filed for bankruptcy within days of its emergency request.
Invoking national security concerns could bolster the Trump administration’s case in any legal challenges over the intervention, said Ari Peskoe, director of the Electricity Law Initiative at Harvard University.
“It’s going to be tough to get a court to question DOE’s factual finding — particularly if it relates to national defense,” Peskoe said in an interview. Tapping two statutes simultaneously also could give the administration more “legal room,” Peskoe said.
The government last invoked the Defense Production Act to address the California energy crisis in early 2001, ordering natural gas sellers to prioritize contracts to sell supplies to utility Pacific Gas and Electric Co.