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Trump Bailout of Coal, Nuclear Power Looks Like Real Deal as DOE, Interior Take Action

Days after news broke that the Trump administration is reportedly considering extending a lifeline to struggling coal and nuclear power plants on national security grounds, two cabinet departments appear to be taking the proposed directive as bonafide marching orders.

Last week, Bloomberg reported that the Department of Energy (DOE) was considering using its authority under two federal laws to compel the nation's grid operators to purchase electricity or power generation capacity from uneconomic coal and nuclear plants, which have struggled to compete against natural gas. The plans were outlined in a 41-page draft memo.

On Monday, DOE Secretary Rick Perry told attendees of the department's annual Cyber Conference in Austin, TX, that the premature closure of coal and nuclear plants could be disastrous if the United States suffers a cyberattack on its energy infrastructure.

"Fuel secure units are retiring at an alarming rate that, if unchecked, will threaten our ability to recover from intentional attacks or from natural disasters," Perry said, according to reports. "The president is right to view grid resilience as a serious national security issue, and he's directed me to prepare immediate steps to stop the loss of these critical resources...

"Attacks have become easier to launch, their frequency, their scale and sophistication is increasing. As secretary of energy, I have no higher priority than protecting our nation against those dangers."

According to the memo, which was reportedly circulated at a National Security Council meeting last week, the DOE had determined that the threat of a cyberattack is growing. It also said that disruptions to the energy sector, including the nation's "electricity grid and the natural gas pipeline system, are increasing the risk of high-impact events that could result in significant harm to human life, the economy, the environment and national security."

DOE added that recent and announced coal and nuclear retirements "are undermining the security of the electric power system because the system's resilience depends on those resources." The department would reportedly use its authority under Section 202(c) of the Federal Power Act, as well as the Defense Production Act, to order grid operators to make the purchases.

New Life for Arizona Coal-Fired Plant?

Meanwhile, Department of Interior (DOI) Assistant Secretary Tim Petty hinted that the department may insist that a water conservation district in Arizona continue accepting electricity from the Navajo Generating Station (NGS), a 2,250-MW coal-fired power plant near Page, AZ.

In a letter last Friday to the board of directors and general manager of the Central Arizona Project (CAP), Petty said DOI "understands that the Central Arizona Water Conservation District has been actively pursuing sources of power other than NGS." But Petty said there is "a significant concern" that a 1968 law -- specifically, the Colorado River Basin Project Act -- "appears to authorize NGS as a source of power for the CAP...

"While the DOI recognizes that many circumstances have changed since passage of the 1968 Act...it currently believes that the 1968 Act remains the applicable governing authority and must be addressed in any decision relating to future sources of CAP power," Petty wrote. "With the 1968 Act in mind, the DOI expects to consider several options going forward, including the feasibility of continued use of NGS-provided power."

CAP is a 336-mile aqueduct that diverts water from the Colorado River to central and southern parts of Arizona. Its board of directors is scheduled to meet Thursday to discuss and possibly approve alternative sources of power to NGS.

In February 2017, the four non-government utilities that own most of NGS agreed to keep operating the facility until December 2019, but only if they could reach an agreement with the Navajo Nation. That set off alarm bells within the Trump administration, which promptly called for meetings with Navajo Nation leaders and other NGS stakeholders to discuss the future of the plant.

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