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Washington Week: Trump directive shakes up US power markets

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Washington Week: Trump directive shakes up US power markets

President Donald Trump's order for the U.S. Department of Energy to stem the tide of coal-fired and nuclear power plant retirements has the utility sector bracing for potential major change.

On June 1, White House press secretary Sarah Sanders said Trump directed Energy Secretary Rick Perry to "prepare immediate steps" to stop the loss of "fuel-secure power facilities," which the DOE has defined to include coal-fired and nuclear generating units.

The announcement came shortly after the disclosure of a draft DOE document that laid out a plan to require that grid operators purchase power or capacity from an as-yet-unreleased list of fuel-secure plants that will likely be largely coal-fired and nuclear facilities. The plan would rely on legal authorities established by provisions of the Defense Production Act and Federal Power Act aimed at securing crucial energy resources.

The document, styled as an addendum to a separate order, is not final, and Trump has not indicated if he will ultimately back the plan. Nevertheless, the developments have the power sector awaiting possible upheaval.

Natural gas industry groups, whose members could be hurt by policies that make nuclear and coal-fired generation more competitive, were quick to blast the DOE draft plan.

"This misguided attempt to artificially resuscitate a specific set of aging and uneconomic power plants will do far more harm than good," said Dena Wiggins, president and CEO of the Natural Gas Supply Association. "It raises costs and undermines the very competitive power markets that have a long track record of delivering affordable power to customers."

But coal industry backers said the potential action would be long overdue, noting a large wave of U.S. coal plant retirements in recent years that they say is imperiling grid resilience and reliability. The American Coalition for Clean Coal Electricity, or ACCCE, said almost 40% of the U.S. coal fleet has shut down or is slated for closure.

"The loss of fuel-secure electricity sources, especially coal-fueled power plants, pose an increasing threat," ACCCE President and CEO Paul Bailey said. "We look forward to continuing to work with policymakers on both near-term and longer-term solutions to ensure that our grid is not threatened by fuel-insecure electricity sources."

The DOE plan comes as Perry weighs requests from merchant generator FirstEnergy Solutions Corp. and U.S. Sen. Joe Manchin of West Virginia for policy action to avoid the closure of more coal and nuclear generation. Despite the push for relief, a past DOE attempt to throw a lifeline to coal and nuclear plants encountered resistance.

The Federal Energy Regulatory Commission rejected Perry's September 2017 request for a rule to ensure cost recovery for plants operating in wholesale markets that could store at least 90 days of fuel onsite.

Congress back in action

The U.S. Congress will reconvene this week after the Memorial Day break.

With respect to energy, the U.S. House of Representatives is set to vote on the chamber's fiscal year 2019 energy and water development appropriations bill. The legislation, which the House Committee on Appropriations approved May 16, would lift spending on DOE fossil and nuclear energy research programs but cut funding for the department's Office of Energy Efficiency and Renewable Energy.

Turning to hearings, the House Energy and Commerce Committee's energy subcommittee will examine hydropower licensing on May 7. On the same day, the House Committee on Science, Space and Technology will hold a hearing on the "Electric Grid of the Future," with witnesses to include Bruce Walker, assistant secretary of the DOE's Office of Electricity Delivery and Energy Reliability.

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US Congress
June 6

The House Committee on Natural Resources will examine four onshore energy development bills.

June 7

The House Energy and Commerce Committee's energy subcommittee will hold a hearing on the hydropower licensing process.

June 7

The House Committee on Science, Space and Technology will hold a subcommittee hearing on the "Electric Grid of the Future."

Federal agencies

June 7

The U.S. Federal Energy Regulatory Commission and Nuclear Regulatory Commission will hold a joint meeting with staff presentations.

Industry events
June 4-5

The U.S. Energy Information Administration will host its 2018 EIA Energy Conference in Washington, D.C.

June 4-7

The Edison Electric Institute will hold its annual convention in San Diego.

June 5

The Global America Business Institute will host a presentation on U.S.-Korea cooperation on new nuclear markets at the institute's office in Washington, D.C.

June 7

The American Council on Renewable Energy and the Atlantic Council Global Energy Center will host the U.S. launch of the "2018 REN21 Renewables Global Status Report," an annual overview of world renewable energy, at the Atlantic Council's headquarters in Washington, D.C.

Other notable stories from last week

NERC warns of Texas, Calif. reliability concerns for summer 2018

Reviews mixed for nearly 7-year-old FERC transmission rule

Trump DOE's fossil fuel office envisions spreading futuristic, small coal plants

DOE review finds lack of transparency in FERC process for gas projects

Former Bush EPA chief assails Pruitt's focus on industry impacts

US EPA science board approves review of agency's science transparency policy

SEC commissioner says agency could do more on climate-related disclosures