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Potential Coal, Nuclear Bailout Could Cost $17-35B Annually, Study Indicates

The annual cost to support coal and nuclear plants as proposed by the Trump administration could climb as high as $35 billion, according to a report from The Brattle Group.

The analysis, funded by energy industry groups including the American Petroleum Institute and the Natural Gas Supply Association (NGSA), concluded that the annual cost would be $16.7 billion if every coal and nuclear plant in the country were given uniform support at the level of their average financial shortfall. If power plant owners were also granted a return on their invested capital, the price tag could balloon to $35 billion annually, the analysts said.

"We hope that federal policymakers will reject this short-sighted measure to bail out old and economically failing power plants at a direct cost to consumers that could exceed $17 billion for every year it's in place -- with no improvement to reliability," said NGSA CEO Dena Wiggins. "Policymakers should be even more deeply troubled by the longer-term consequences that went unquantified in the study, such as the harm the bailout would do to the competitive power markets that have brought economic and environmental benefits to all Americans."

Department of Energy (DOE) Secretary Rick Perry recently said the Trump administration does not have an estimate over how much the controversial proposal to extend a lifeline to struggling coal and nuclear power producers would ultimately cost.

Last month, a leaked draft memo revealed that 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.

Although trade associations representing the oil and gas industry are adamantly opposed to such bailouts, President Trump has been a vocal supporter of the coal industry since his campaign for the White House. Perry had argued that a notice of proposed rulemaking presented to FERC last September was a necessary bulwark to maintaining grid resiliency, but the Federal Energy Regulatory Commission unanimously rejected the DOE NOPR in January.

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