Energy

Trump Considers Using Executive Authority to Subsidize Coal Plants

SK Ashby
Written by SK Ashby

Energy Secretary Rick Perry has been unable to convince federal energy regulators that they should raise electricity rates to subsidize ancient coal-fired power plants that are due for retirement. Perry has also reportedly considered using the power of his office to raise rates and implement subsidizes, but the fact that he hasn't done so yet suggests he doesn't believe he has the legal authority to do it.

Now, we are not currently at war with a major power, but Trump is considering using war-time powers to subsidize coal-fired power plants.

From Bloomberg:

Under the approach, the administration would invoke sweeping authority in the 68-year-old Defense Production Act, which allows the president to effectively nationalize private industry to ensure the U.S. has resources that could be needed amid a war or after a disaster.

Administration officials are researching the law that [President Truman] invoked on behalf of steel [during the Korean War] as a possible alternative. The statute classifies energy as a "strategic and critical material" and gives the president wide latitude to protect providers, including by ordering businesses to accept contracts for materials and services. It was previously invoked in 2001 to keep natural gas flowing to California utilities to avoid electrical blackouts.

This power has been used in the past, but there is no emergency today. There are no blackouts. We are not at war with North Korea, or at least not yet.

In fact, the Federal Energy Regulatory Commission (FERC) rejected Energy Secretary Rick Perry's proposal because there are no current threats to the grid and Perry could not provide an example of any imminent threats.

If the White House ultimately goes through with this plan, I assume it will be challenged in court by numerous parties. Environmentalists, states, alternative energy producers, utilities, and even rivals in the fossil fuel industry may challenge it in court if Trump's order is tailored to benefit only one coal company. In this case, that company would be FirstEnergy, the largest customer of Murray Energy CEO Bob Murray.

Although such an order would be a gross distortion of the free market by executive authority, I do not expect congressional Republicans would lift a finger to stop it even if they would otherwise scream bloody murder if a Democratic president did the same thing.