Pres. Trump Defies Free Market Principles and Moves to Force Consumers to Pay for Uneconomic Power

Chris Carnevale | June 2, 2018 | Coal, Energy Policy, Nuclear

President Donald Trump is preparing to issue a bailout for uneconomic coal and nuclear plants by forcing grid operators to buy their power, even though it is more expensive than alternatives. As renewable energy and natural gas has become very inexpensive, some coal and nuclear plants can no longer compete economically and are retiring early unless heavy-handed intervention, such as what was just proposed by the Administration, comes to the “rescue.” The Administration claims that the retirement of these plants is a national security emergency, although there seems to be little factual basis for this claim. To this end, the President ordered Energy Secretary Rick Perry to stop the early retirement of these uneconomic plants.

The move to mandate the purchase of electricity from old, uneconomic sources and guarantee revenue to the power plant owners has been described as an unprecedented intervention into energy markets. The Administration is trying to prop up proven losers, regardless of the negative impacts to the free market and utility customers.

SACE’s Executive Director, Stephen A. Smith, said of the idea of the proposal, written about last month in USA Today, that it “would be like the whalers of the 1800s trying to use national defense as a justification to continue to defend whale oil as a lighting source against the light bulb.”

This is not the first time that the Administration has sought to squelch free market competition by bailing out old, risky, uneconomic coal and nuclear plants. Last fall, they tried to prop up the industry by proposing a subsidy to the plants citing unfounded “grid resilience” concerns, which could have cost U.S. consumers billions of dollars annually and contributed to harmful pollution. Fortunately, the last bailout attempt was rejected unanimously by federal regulators, comprised mostly of Trump appointees.

The fact of the matter is that renewable energy is now the least expensive electricity available in the country. Coal and nuclear cannot compete with cheap renewables and gas. The Trump Administration, in its pledge to prop up the failing coal and nuclear industry, is throwing spaghetti at the wall in the hope that something, however suspect its factual basis, sticks. First it was “grid reliability” and now it is “national defense.” We call foul.

Chris Carnevale
Based in Charleston, South Carolina, Chris is SACE’s Coastal Climate and Energy Manager and South Carolina State Affairs Liaison. His work focuses on building a critical mass of support for…
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