On June 1 President Trump ordered the US Department of Energy (DOE) to “prepare immediate steps” to keep money-losing coal and nuclear power plants running, soon after the Trump administration floated a plan to force utilities to buy from these plants. Although Trump ordered DOE to estimate the cost of the bailout, this has not happened, and the DOE even failed to show up at a July 17 utility commissioners meeting called to discuss costs, claiming “weather problems in New York” and “scheduling conflicts”. Apparently the DOE still doesn’t have a clue about (or doesn’t want us to know) how much these subsidies will cost us.
Others have stepped in to fill the gap. On July 19, economists from the Brattle Group published a report "The Cost of Preventing Baseload Retirements: A Preliminary Examination of the DOE Memorandum” which analyzes several scenarios under the DOE’s sketchy draft plan. The Brattle study was funded by a raft of non-coal and non-nuclear energy advocates including Advanced Energy Economy, the American Petroleum Institute, the Electric Power Supply Association, and the Natural Gas Supply Association.
In the Brattle scenario that best matches a September 2017 DOE notice of proposed rulemaking, federal regulations would essentially force ratepayers to cover sunk costs in coal and nuclear, as opposed to merely throwing coal and nuclear a lifeline to keep them going. Under this scenario, Brattle economists estimated a total cost of between $20 and $35 billion per year for the entire US. Since the US has 126.2 million households (2017 Census Bureau estimate), this works out to about $160 to $275 per year for an average household. In June 12 testimony before the Senate Energy and Natural Resources Committee, Federal Energy Regulatory Commission (FERC) member Richard Glick, a Democrat, went further, saying the cost could be as high as $65 billion per year for the US, or about $500 per year for an average household. Not all the cost would show up directly in your electric bill: some would appear as higher prices for other products and services, as manufacturers and other companies would raise their prices due to their increased electricity costs.
These estimates contrast sharply with an October 2017 estimate from a pro-coal group, which was $1 to $4 billion per year for the US. The earlier estimate was based on an earlier DOE proposal that has since been rejected. On July 9 the American Coalition for Clean Coal Electricity issued a press release saying “$4 billion per year doesn’t seem like an unreasonable guess” and this guess has been picked up in the press as the current pro-coal estimate.
The Trump administration has widely publicized a false assertion that its coal and nuclear plan is needed for energy reliability, and the administration may use a bogus national-security argument to justify federal subsidies of coal and nuclear power. However, PJM Interconnection, which operates the US’s largest electricity market, has a reserve margin this summer of 32.8%, over double its requirement, and even the pro-coal American Coalition for Clean Coal Electricity concedes that US power reliability standards are already being met.
Nuclear power has long relied on government subsidies. Will Trump and the Republicans now subsidize coal more too, by funneling ratepayer money to coal-state political supporters? The recently-announced surprise early resignation of Robert Powelson, a Republican FERC member who opposed coal and nuclear subsidies, is not a good sign for ratepayers or for the environment.