Trump May Not Bail Out Struggling Nuclear Plants
Despite campaign promises to breathe life back into the dying coal industry, the Trump administration may not oblige an energy company’s request for intervention in order to save several of its coal and nuclear plant facilities.
A subsidiary of FirstEnergy Corp., an Ohio-based utility company, is under bankruptcy protection and seeking help from the federal government to keep several of its plants in the Midwest from shutting down.
More specifically, FirstEnergy is calling on Energy Secretary Rick Perry to execute a rarely-used emergency order to force the country’s largest grid operator to accept its electricity, regardless of the market implications. FirstEnergy warns it will be forced to shut several of its plants in Ohio and Pennsylvania down if no action is taken, leaving thousands of employees at risk of unemployment.
The request, however, could be too big an ask for even the most ardent supporters of traditional energy sources. Critics point to poor business decisions that led FirstEnergy into the financially precarious situation that it’s in, and argue that closures of the plants are not as serious as the company is making them out to be.
“Nothing we have seen suggests there is any kind of emergency from these units retiring,” senior vice president of PJM Interconnection Vincent Duane said in a March 29 Reuters report.
PJM is the 13-state power market operator FirstEnergy is asking accept its electricity. If the Trump administration were to force PJM’s hand in taking FirstEnergy’s coal-produced power over that of natural gas and oil competitors, the result would likely be higher costs for energy consumers.
FirstEnergy’s woes highlights the rough terrain the coal industry faces with the proliferation of natural gas.
The advent of hydraulic fracturing and other technologies has made oil and natural gas production cheaper and more abundant, leaving coal as a more inefficient power source. Natural gas accounted for 32 percent of the United States’ electricity generation in 2017, skyrocketing from 17 percent near the turn of the century. At the same time frame, coal fell from 50 percent to 30.
The Ohio-based company chose to double-down on coal when it purchased Allegheny Energy Inc. in 2010, right as fracking was driving the natural gas industry into overdrive. Other companies, unlike FirstEnergy, have diversified their portfolio to include more gas and renewables. .
“FirstEnergy doesn’t want to evolve,” stated Abraham Silverman, who serves as vice president of regulatory affairs at NRG Energy Inc., in an April 9 Wall Street Journal report. “They’d rather go to the regulators and ask for a bailout.”
Granting FirstEnergy’s request ultimately rests with Secretary Perry and the Trump administration. While he didn’t offer a final decision, Perry did not sound very receptive to the emergency option when speaking Monday at the Bloomberg New Energy Finance Future of Energy Summit.
“The [emergency request] may not be the way that we decide that is the most appropriate, the most efficient way to address it,” he stated, also adding that the Department of Energy is considering other options.
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