The Trump administration’s determination that imports of steel and aluminum constitute a national security threat worthy of tight restrictions received withering criticism. Now, the Energy Department is invoking a similarly dubious national security imperative to protect coal and nuclear power plants from the market forces that are steering them toward retirement. The action is equally misguided and abusive.
According to a leaked memo obtained by Bloomberg (parts 1, 2, 3, 4), the Energy Department will soon invoke Section 202 of the Federal Power Act and the Cold-War-era Defense Production Act in order to take control of power purchase decisions for a full two years. The department claims this is the amount of time necessary to conduct new analyses of the energy sector’s resilience. After a meeting of the National Security Council last Friday, Trump has apparently set this plan in motion.
One can understand why the administration might be eager to buy time to produce new evidence, since a considerable body of existing evidence opposes the idea that there is any real problem in need of being solved here. The administration itself admits that the existing power system is “conventionally” reliable, in the sense that it delivers power when people need it with minimal failures. However, it also claims that the system lacks resilience in the face of an attack or disaster.
The fact is the United States has a robust set of institutions to evaluate the reliability and resilience of the grid. These include the Federal Energy Regulatory Commission (FERC), North American Electric Reliability Corporation, and each grid operator (e.g., PJM), which conducts technical analyses every time power plants announce retirement precisely to ensure grid reliability. If anything, the current institutional arrangement has an implicit bias toward meeting arbitrarily high reliability standards. Still, not one of these bodies sees impending coal and nuclear retirements as posing a serious problem for resilience, let alone creating an emergency. Other experts agree and any contradictory studies suffer from serious flaws.
PJM — the regional grid operator for the Mid-Atlantic region that will be most affected by anticipated coal and nuclear retirements — responded to the announcement of the new policy by insisting that “there is no immediate threat to system reliability.” PJM went on to say that drastic intervention is both unnecessary and would “be damaging to the markets and therefore costly to consumers.” A focus on resilience and the challenge of high-impact, low-frequency (HILF) events is welcome, but to invoke the (for now rather poorly defined) concept now as a basis for policy decisions is merely unsupported speculation.
In any case, if grid resilience were the real priority here, power generators would be an unlikely focus. Instead, transmission and distribution are the parts of the system that are most vulnerable. A recent report highlighted almost two dozen high-value areas to address in pursuit of system resilience and identified coal and nuclear subsidies as low value at best.
As in the case of trade, the real motivation here seems to be to dress up the administration’s favored industrial policy in the garb of a national security initiative — the better to keep Trump’s campaign promises to the coal industry. As such, this action should be understood as an egregious abuse of executive authority — all the more so because a very similar action awkwardly initiated by the Department of Energy several months ago was unanimously rejected by the five members of FERC, four of whom were Trump appointees. Secretary of Energy Rick Perry backed away from that proposal, saying that it was just a “conversation starter.” Unfortunately, it is now clear that the administration is continuing that “conversation” by digging through its available statutory powers to find any plausible support for its preferred action.
Such maneuvers were an affront to the rule of law when the Obama administration repeatedly used them, and they continue to be under the Trump administration. The fact that national security is being invoked so flippantly only compounds the offense.
However, it is not too late for the Trump administration to back away from this plan. In fact, doing so would spare them significant backlash from major consumer groups that strongly oppose the action because it would increase buyers’ costs by billions of dollars without producing any tangible benefit. Environmentalists, too, will pile on, rightly complaining that Trump’s plan will trade certain damage to citizens’ health (in the form of additional air pollution) in exchange for purely speculative national security protections.
If the administration persists, Congress should seriously consider revising the underlying statutes to limit the scope of emergency powers for the executive branch. The vitality and dynamism of America’s power sector and economy are at stake. If, as Commerce Secretary Wilbur Ross has asserted, America’s economic security is inseparable from our national security, then the only certainty here is that the Trump administration’s reckless power play will only erode the nation’s safety and security.
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