In July, the Trump administration’s Department of Energy (DOE) issued a report on the adequacy of electric generation resources to meet the current and projected demand for electricity. The DOE report ostensibly supports the continued operation of fossil fuel-based power plants, even if they are set to be retired as a function of weak economic viability. The open questions being debated are whether such measures are necessary and at what cost to consumers.
DOE’s report, warning of the potential for widespread blackouts if fossil fuel plant retirements occur, is being challenged both as to substance and form. DOE has 30 days to respond to the rehearing requests, which, if denied, may be appealed.
In their rehearing filing, three clean energy groups claim that the report “falls far short of a serious assessment of reliability and resource adequacy.” Kent Chandler, former Kentucky Commissioner, and a senior fellow at the R-Street Institute, characterized DOE’s assumptions as “near extreme.” The request challenges DOE assumptions under-valuing anticipated additions of generation to the grid and argues that the report likely over-estimates anticipated electric load growth, as well as fails to adequately value the reliability, or lack thereof, of fossil fuel plants during extreme weather events such as Winter Storm Elliott in 2022.
According to a report from Grid Strategies, DOE mandates to keep coal and other fossil-based power plants open could cost consumers $3 billion per year and nearly $6 billion by 2028. And given that some studies have indicated that almost all coal plants are more expensive to operate, on average, than other energy resources, the concern is that DOE mandates to retain “nearly all fossil power plants slated for retirement [by] the end of 2028” will override the “well-informed decisions” of utilities and state commissions and result in inflated “electric bills for homeowners and businesses . . . undermining the competitiveness of U.S. factories and data centers.”
This is not hypothetical. DOE, pursuant to the Federal Power Act, has already issued directives to continue operating fossil-fuel power plants in Michigan and Pennsylvania for at least 90 days, both of which were otherwise scheduled to be shuttered. Further, although DOE’s mandates are being challenged, the Federal Energy Regulatory Commission (FERC) has already issued an order to allocate the costs associated with keeping these plants online to all customers in the regional electric grids in which they are situated.
Whatever the outcome of the legal challenges to the DOE report and mandates, inevitable electric load growth on some level will occur as a result of data-intensive industry development and other factors, and there will be an absolute need for an amalgam of new and existing electric generation resources to meet that demand. The challenge is in navigating that landscape in such a manner that it minimizes costs to consumers while ensuring a reliable, safe supply of power. It is not clear that either DOE or its critics can meet that challenge.
