Energy Environment

Energy Regulators Tell Congress There’s No Need for Trump’s Bailout

Written by SK Ashby

All five members of the Federal Energy Regulatory Commission (FERC) appeared in front of the Senate Energy and Natural Resources Committee this afternoon where they made it clear that there's no substantive reason to subsidize nuclear or coal-fired power plants that are due for retirement.

Trump has ordered Energy Secretary Rick Perry to come up with a plan to bail out the industry for security reasons but the commissioners say there is no threat to the grid.

The Republican chairman of the Federal Energy Regulatory Commission told Congress on Tuesday that "there is no immediate calamity or threat" to the nation's bulk power system. He added that existing power sources are sufficient to satisfy the nation's energy needs.

Four other commissioners from both parties agreed there is no immediate threat to the grid. The comments contradict a recent White House directive ordering action to keep coal-fired and nuclear power plants open as a matter of national and economic security.

The five commissioners including three Republicans and two Democrats unanimously rejected this proposal when Rick Perry originally brought it to them last year and now they're rejecting it again for the same reasons. There is no threat to the grid and intervening in the energy market to favor a particular source of generation is not their mission.

Commissioner Richard Glick told the Senate committee that Trump's bailout would inevitably raise electricity rates and could increase the cost of electricity by $65 billion per year. It's not clear how he came up with that number, but I'll certainly share that here when more detail is available.

What we do know for sure is that Trump's bailout and the resulting increase in generation rates would come out of the pockets of average Americans in the form of higher power bills.

The money has to come from somewhere and the only way the government can appropriate it is by raising rates on all customers and using the revenue to subsidize the power plants that are due for retirement. The only alternative is for Congress to appropriate the money and there's no way that's going to happen.

When you consider the full implications, it seems virtually guaranteed that everyone from states to industry rivals and environmentalists will line up to challenge this in court when or if it happens.