By Kennedy Maize
A bogus presidential order and a feckless administrative agency has put the Trump administration in a nasty, complex dispute involving a private sector electric company, state regulators, a state governor, a multi-state electric grid management organization that includes a bit of Canada and runs to the Gulf of Mexico, a host of public interest groups, and national environmental groups.
The dispute is before the Federal Energy Regulatory Commission and may metastasize to state and federal courts.
The dispute also reveals that a faux-conservative White House — actually a centralizing, radical administration that knowns little about energy — and an energy secretary who knows not much about the intricacies of the U.S. electric system, are pursuing a Washington-knows-best agenda.
On May 23, Energy Secretary Chris Wright ordered Consumers Energy, a Jackson, Mich., based subsidiary of investor-owned CMS Energy, to scrap plans to take its 63-year-old, 1,500-MW, three-unit J.H. Campbell coal-fired power plant out of service on May 31. DOE ordered to plant to keep working until at least the end of August.
Wright based his order on President Trump’s Jan. 20 Executive Order 14156 (“Declaring a National Energy Emergency”), the Federal Power Act, and warnings from the North American Electric Reliability Corp. that the Midcontinent Independent System Operator, which dispatches power to a 15-state (and Canada’s Manitoba) region with 45 million population, faced a serious threat of summer blackouts.
The risk was overstated, as some careful staff work at DOE would have revealed. The utility said at the time that it had no concerns about closing the plant at the end of May. The company had prudently acquired power to replace the coal plant’s capacity. MISO agreed with Consumers, and challenged NERC’s analysis, which later proved mistaken. The Michigan Public Service Commission objected to the order.
Trump’s proclamation of an “energy emergency” was empty rhetoric, aimed not at solving real problems but at giving the president and his henchpeople authority to bigfoot any individuals or institutions that might get in the way of his pre-conceived notions about energy, most of which are fantasy (“drill, baby, drill”).
It’s clear that the president knows less than nothing about the Department of Energy. When asked recently about the impact of conflict in the Middle East on oil prices, Trump responded that he has ordered his energy department to implement his drill baby mantra. DOE has no authority and gas exploration and production.
In ordering Consumers to keep its coal plant burning, Wright showed that he doesn’t appreciate the complexity of the U.S. electric system and its state-centric nature. Nor did the agency dig deep enough into the implications of his order, including who would pay for it.
To jump ahead a bit to demonstrate the needless nature of the DOE order, MISO managed the enormous end of June “heat dome.” It would have done so if the J.H. Campbell plant had been out of service as planned.
Wright’s wrong order produced enormous pushbacks. On June 18, Michigan Attorney General Dana Nessel asked DOE to reconsider its order. Nessel wrote that DOE’s action was an “unlawful abuse” agency authority. She said the “emergency determination cannot bear even the mildest scrutiny.”
Nessel added, “The scheduled retirement of J.H. Campbell was the culmination of a carefully planned process that unfolded over four years,” adding that MISO had also reviewed the plant closure plan and it presented no reliability issues.
On June 17, at MISO’s urging, NERC acknowledged that it had misstated the regional transmission’s organization’s vulnerability to a summer heat wave. MISO’s independent market monitor David Patton of Potomac Economics at a June 5 FERC tech conference on resource adequacy offered a testy critique of NERC’s analysis. “I’d love to work with NERC to figure out where they got their numbers from, because I don’t think they’re accurate,” he said.
On June 23, the Organization of MISO States (consisting of the utility regulators in eight of MISO’s 15-state footprint: Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, the city of New Orleans, and Wisconsin) also asked DOE to reconsider. They argued that DOE failed “to establish, based on a dependable and comprehensive reliability assessment, that an emergency condition exists in the MISO footprint warranting the continued operation of the Campbell Plant through August 21, 2025.”
Also requesting to intervene on June 18 was a group of 10 environmental and public interest groups, represented by the environmental law firm Earth Justice. Sierra Club attorney Greg Wannier said in a news release, “There is no energy emergency in our country—and certainly no shortage of power plants in Michigan or in MISO—and it is illegal to invoke a made-up emergency to overturn a long-planned plant retirement. This action will only make bills more expensive for Michiganders and sets a dangerous precedent for government interference in the energy industry.”
Among the most important questions remaining from the administration’s ill-advised adventure into energy authoritarianism is who will pay for the added costs of keeping the plant running for three months beyond its scheduled demise.
The issue arose soon after DOE acted. On June 6, Consumers Energy filed a complaint with FERC, noting that the DOE order said the company should “file with the Federal Energy Regulatory Commission Tariff revisions or waivers necessary to effectuate this order.” The company said, “As soon as the DOE Order was issued, Consumers Energy began incurring and will continue to incur costs to comply….”
The complaint added that “the MISO Tariff currently contains no mechanism to provide compensation to generators in the MISO footprint….” Consumers asked FERC “to order MISO to revise its Tariff to provide for allocation of Consumers Energy’s (later-to-be-determined) Order Costs, net of market revenues.”
MISO responded that it “does not oppose the addition of a cost recovery schedule that would permit Consumers Energy to recover the costs incurred as a result of its efforts to comply the DOE Order. MISO will file such a schedule if directed by the Commission.”
Here’s the rub: Why should MISO’s customers pay Consumers Energy for costs that provided them with no benefits? On June 20, the Chicago-based Environmental Law and Policy Center, on behalf of a bevy of consumers and environmental groups, filed a rejoinder to the Consumers-MISO love fest.
The filing pointed to FERC’s “just and reasonable” standard for approving costs, arguing that one component of the standard “is the cost causation principle that ‘all approved rates reflect to some degree the costs actually caused by the customer who must pay them.’” The utility’s proposal “would violate that rule because there is no evidence that customers in Michigan, North Dakota, Iowa, or any other MISO state will benefit from the Department’s Order.”
The Quad Report: to subscribe, for back issues, and a searchable archive.