In June, the Trump administration announced its plans to protect coal and nuclear power plants from closure — including the possibility of a leaked plan to use wartime emergency powers to force grid operators and utilities to buy power from uneconomic plants, at a potential price tag of tens of billions of dollars for American consumers.
Since then, the administration has gone officially silent on its plans. But this week saw some important new information emerge indicating how it is using political influence to direct the outcome of work being done at key agencies involved in the bailout plan, specifically the Department of Energy and the Federal Energy Regulatory Commission.
First up is FERC, the independent regulatory agency that oversees interstate electricity and fuel transmission. On Wednesday, Politico reported that the Trump administration is planning to nominate Bernard McNamee, one of the chief architects of DOE’s failed plan to bolster coal and nuclear power plants as emergency assets, to replace outgoing commissioner Ron Powelson.
McNamee, an attorney and long-time advocate of deregulation who’s worked for the attorneys general of Texas and Virginia and for Senator Ted Cruz (R-Texas), was first appointed to DOE as deputy general counsel for energy policy last year. That’s when he participated in Energy Secretary Rick Perry’s proposal for FERC to use its authority to create out-of-market payments for power plants with at least 90 days of fuel on site — a plan influenced by Perry’s association with coal company CEO and owner Robert Murray, an outspoken financial supporter of Donald Trump’s presidential campaign.
In January, FERC commissioners unanimously rejected that plan, leading to DOE’s current push to find its own authority to order the same outcome. McNamee left the agency to work for the conservative Texas Public Policy Foundation (TPPF), only to be named head of DOE’s Office of Policy in May. According to Politico’s three sources, McNamee’s support for coal and nuclear bailouts in the past is seen as helping him pass a key “litmus test” for any new FERC nominee.
Forcing utilities to buy power from uneconomic power plants likely to be picked under the plan would raise costs on U.S. consumers by billions of dollars per year. Preliminary estimates range from the American Coalition for Clean Coal Electricity’s projection of about $4 billion per year, to The Brattle Group’s estimate of between $9.7 billion and $17.2 billion per year.
The Sierra Club viewed McNamee’s consideration for FERC as an attempt to “install a crony at FERC who will unfairly tip the scales in favor of propping up those failing industries. It’s outrageous that someone so clearly biased, who has championed an expensive and unnecessary bailout for millionaire Trump supporters, is even being considered as a commissioner to this independent agency.”
Attention wasn’t just focused on FERC’s commission this week, though. On Wednesday, reports emerged that FERC Chief of Staff Anthony Pugliese is directing FERC staff to identify power plants to be deemed critical for keeping power supplied to military bases, hospitals or other key sites during grid emergencies.
According to reports from E&E News based on a recording of Pugliese’s comments to a nuclear trade group last week, FERC is “working with [the Department of Defense] and DOE and [the National Security Council] to identify the plants that we think would be absolutely critical to ensuring that not only our military bases, but things like hospitals and other critical infrastructure, are able to be maintained, regardless of what natural or manmade disasters might occur.”
This research would appear to align with DOE’s plan to use its wartime powers under the Defense Production Act to declare certain “Subject Generation Facilities" as critical to national security, and then force grid operators and utilities to buy their power.
All five FERC commissioners — four of them appointed by Trump — told Congress in June that they do not believe a grid emergency exists to justify such an extreme action.
But according to E&E News, Pugliese told the American Nuclear Society that FERC is actively looking for ways to "value resilience" and “ensure that some of these critical assets like these nuclear plants do not go the way of the dodo bird.”
Pugliese, appointed as chief of staff by then-FERC Chairman Neil Chatterjee in August 2017, lacks the legal and energy industry background common to most who have filled that position over the past several administrations. He previously served as Senior White House Advisor for the U.S. Department of Transportation, and before that worked as a consultant at his father's lobbying firm, Pugliese Associates, and as director of legislative affairs for former Pennsylvania Gov. Tom Corbett, a Republican.
In phrasing considered unusual for the chief of staff of an independent agency, Pugliese was also reported as saying that “we, as in the administration, the White House and the FERC,” are working with Congress “to consider what legislative changes may need to take place to ensure that we have the ability and the authority” to expand FERC’s ability to direct state energy policies.
This comment comes as FERC is facing intense scrutiny over its potential role in any DOE emergency declaration for power plants. FERC is also facing backlash from stakeholders including state regulators, power producers and environmental and consumer groups to reconsider its 3-2 decision in July to order mid-Atlantic grid operator PJM to rebuild its capacity market in ways that could limit participation by both nuclear and renewable energy backed by state policies.
On Thursday, E&E reporter Sam Mintz tweeted a response from FERC that read, "The Chief of Staff is simply stating that the federal government is working to ensure that important critical infrastructure, such as hospitals, remains operations. FERC is an independent agency and therefore has not assisted in the development of policy but provides technical assistance as subject matter experts."
Finally, a Sierra Club Freedom of Information Act (FOIA) lawsuit has unveiled emails that show Trump-appointed DOE officials pushed to highlight coal’s importance — and natural gas’ failings — in a report on the electricity system’s performance during last winter’s “bomb cyclone" snow event. That report from the National Energy Technology Laboratory has been cited as support for supporting struggling coal power plants in the Northeast and mid-Atlantic regions of the U.S.
According to Bloomberg, the emails and other correspondence indicate that Office of Advanced Fossil Technology Director Angelos Kokkinos, a Trump appointee who formerly served as chief financial officer for energy systems manufacturer Babcock Power, asked staff to highlight certain points “we need to make” in the report, including data that showed 55 percent of total outages during that storm were tethered to natural gas while just 26 percent were tied to coal plants.
But according to the Union of Concerned Scientists, the National Energy Technology Laboratory report also uses “bogus metrics” to show that coal is more valuable than natural gas for grid resilience. These include citing the fact that expensive coal-fired power was called on during the bomb cyclone’s energy spikes as evidence that they’re needed for grid resiliency, rather than noting the fact that their power is too expensive to clear markets at other times.
Casey Roberts, Sierra Club senior attorney, noted that the NETL report was also completed in January, but wasn’t released until the last week of March. That was two days before FirstEnergy, the Ohio-based utility that’s likely to benefit greatly from the Trump administration’s plans, filed its request for emergency relief under Section 202(c) of the Federal Power Act — and two weeks before FirstEnergy filed for bankruptcy protection for its struggling coal and nuclear power business.
“The way that report was done seemed to find these unsubstantiated conclusions that were pretty widely dismissed as an analytical approach,” she said. On Monday, the Sierra Club and the Environmental Defense Fund filed FOIA lawsuits demanding the DOE turn over more documents related to the NETL report, as well as DOE documents and correspondence between DOE and FirstEnergy officials regarding the plan to use Section 202(c) authority to keep power plants open.
“We’re concerned that the department is going to use its emergency authorities in unprecedented ways to reward their political allies,” said Roberts. “We’ve requested internal communications about how the department is going about its work. […] Are they talking to each other about these requests from industry? Are they trying to manufacture justifications to respond to those requests? Are they talking to authorities on grid reliability — or are they just talking to the coal industry?”