The controversial Trump Administration plan to nationalize the nuclear energy marketplace could cost U.S. consumers US$8‒17 billion a year in artificially high electricity bills, with the prospect of extensive coal-fired power plant subsidies potentially doubling that figure. Further, the bailouts of nuclear and coal could trip up America's renewables industry, leaving the U.S. even further behind in the global race for clean energy technology development and deployment.
On June 6, the Nuclear Information & Resource Service (NIRS) released updated and expanded figures on the nuclear bailout costs estimated in its November 2016 report that concluded that federal handouts for nuclear alone could add up to US$280 billion to electricity bills by 2030. A bailout of coal-fired power plants would leave ratepayers and taxpayers holding the bag for even more. NIRS estimates that the current Trump bailout scheme could costs consumers US$8‒17 billion for just the nuclear element and as much again for coal subsidies.
Tim Judson, executive director, Nuclear Information & Resource Service (NIRS), said: "By pushing for a nationwide bailout for nuclear power and coal, the Trump administration is rushing headlong into an energy buzz saw, and they don't even seem to know it. Subsidizing the nuclear industry alone is likely to cost American consumers US$8 billion to US$17 billion per year, and subsidies for coal could cost just as much. Betting on old, increasingly uneconomical nuclear and coal power plants as a national security strategy is like gold-plating a Studebaker and calling it a tank. And it could destroy the booming renewable energy industry, which is already employing more Americans than coal and nuclear combined."
Peter A. Bradford is a former member of the U.S. Nuclear Regulatory Commission (NRC) and former chair of the Maine and New York utility commissions. Bradford also taught energy policy and law at the Vermont Law School. Commenting on the bailout scheme, Bradford said: "The Trump Administration's desire to tax American consumers to support failing power plants is energy policy-making gone haywire. As was said in the run-up to the 2003 invasion of Iraq, the facts are being fixed around the desired end result. We have no military crisis and no threats of our system reliability or resilience that require this drastic and expensive governmental intervention. Claims of such problems are fairy tales, straight out of Mother Goose."
Bradford continued: "The Administration's warnings of dire effects from power shortages caused by shortages of reliable and resilient generation are contradicted by all of the bodies with actual responsibility for assuring adequate supplies. There are no state or federal energy regulators petitioning DOE for these measures. Indeed, those who have spoken clearly have said that such steps are unnecessary. By overpaying hundreds of dollars per family per year for electricity that can be obtained far less expensively from other sources, the administration is impoverishing customers, cutting off construction and industrial jobs and suppressing energy innovation, in which the U.S. has been competing for global leadership."
Tyson Slocum, director, Energy Program, Public Citizen, said: "President Trump's asinine nuclear and coal bailout will cost households billions of dollars, but will bolster the profits of a handful of Trump's top campaign and financial supporters. Trump is charging consumers billions to fill the swamp with undeserving special interests."
Slocum said that any effort to force consumers and/or taxpayers to bailout the owners of nuclear and coal power plants under the guise of resilience, fuel security or national security is absurd and will be subject to vigorous legislative, regulatory and legal challenges.
As such, it is likely that the Administration is still months away from an actionable plan using any of the three statutes it has identified. Action under 202(c) of the Federal Power Act would involve a subsidy structured through electric rates, subject to review and approval by the Federal Energy Regulatory Commission. Action under the 1950 Defense Production Act would require Congressional appropriations, and therefore a taxpayer-based subsidy, as would action under the Fixing America's Surface Transportation Act. Further, the formal National Security Council review process to develop a national security threat assessment intervention plan is at least months away.
The theories advanced by the Trump Administration for the nuclear and coal bailouts are radical, unprecedented, and unsupported by any factual or empirical analysis. Nuclear and coal power plants expected to retire because of their uneconomic performance pose zero reliability or national security concerns.
Nonetheless, an internal National Security Council policy memo leaked on June 1 outlined potential actions by the US Department of Energy (DOE) to provide billions of dollars in financial assistance over two years to uneconomic nuclear and coal power plants using: Section 202(c) of the Federal Power Act; the 1950 Defense Production Act; and the Fixing America's Surface Transportation Act. While the Trump Administration has been trying to push for such bailouts in a variety of ways over the past year, the involvement of the NSC introduces a new twist in these efforts by trying to make fuel security a new national security priority that requires aggressive federal intervention into domestic energy markets.
The National Security Council memo focuses on supposed threats to natural gas pipelines and infrastructure from natural disasters and malicious attacks, but it does not consider the essential vulnerability of a national electricity grid based on central station power plants, of which coal and nuclear power plants are the most typical. They require high-voltage transmission lines to deliver electricity from coal and nuclear plants, hundreds of miles in many cases. In addition, the memo neither considers the vulnerability of power plants themselves, nor does it discuss the attractiveness of nuclear power plants in particular as targets for malicious acts.
In an odd twist, the memo cites provisions of the Defense Production Act to justify federal intervention into industry during times of war that make a stronger case for reliance on entirely different technologies than central station coal and nuclear power plants: Defense Production Act authorities should be used "to reduce the vulnerability of the United States to terrorist attacks" and to "encourage the geographic dispersal of industrial facilities in the United States to discourage the concentration of such productive facilities within limited geographic areas that are vulnerable to attack by an enemy of the United States." These provisions of the Defense Production Act, taken to their natural conclusion, should encourage the expansion of distributed and on-site power sources and modern infrastructure designs, like "islandable" microgrids, rather than trying to retain a grid design based on large, vulnerable central station power plants.
Audio from a June 6 media teleconference hosted by NIRS is posted at www.tinyurl.com/bailout-audio
The November 2016 NIRS report, 'Too Big to Bail Out: The Economic Costs of a National Nuclear Power Subsidy', is posted at www.bit.ly/too-big-to-bail-out-nuclear