Proposed coal, nuclear power plant bailout could cost $34 billion, Brattle Group report finds
The Brattle Group released Thursday a report, which estimated the direct costs of a proposed Trump Administration plan to prevent the retirement of baseload coal and nuclear plants.
The analysis examined a Department of Energy (DOE) draft memo released in May, which outlined a proposal to require system operators and load-serving entities to purchase energy or capacity from designated generation plants for two years. The Brattle Group estimates that direct costs could range from $16.7 billion to $35 billion annually.
According to the report, if every coal and nuclear plant in the United States received a set dollar amount per unit of capacity at the level of the average financial shortfall they experienced, the plan could cost $16.7 billion per year, or approximately $34 billion, for two years.
However, if only the plants now facing shortfalls received payments sufficient to cover their operating losses, the cost could be $9.7 billion to $17.2 billion each year, or approximately $20 billion to $34 billion over two years.
If power plant owners received a return on invested capital in addition to payments for operating shortfalls, the costs could reach $20 billion to $35 billion annually, or $40 billion to $70 billion total.
“The magnitude and range of these estimates indicate the significant impact of yet-to-be-determined policy design parameters and the uncertainty of the scope and impact of those choices on cost,” the report said. “Arresting the retirement of uneconomic generating assets in the current market environment will likely prove quite costly.”
National business groups Advanced Energy Economy (AEE), American Petroleum Institute (API), American Wind Energy Association (AWEA), Electricity Consumers Resource Council (ELCON), Electric Power Supply Association (EPSA), and Natural Gas Supply Association (NGSA) funded the report.
“Giving aging power plants that are not needed to keep the lights on $34 billion just to exist – that’s money for nothing,” Malcolm Woolf, AEE senior vice president of policy, said. “It’s too high a price to pay when advanced energy resources and competitive markets can provide the necessary services to keep our grid affordable, reliable, and secure. Independent assessments confirm that these power plants – most of which are decades old – are not needed to ensure reliability or security. We urge the Trump Administration to abandon, and Congress to resist, this exercise in crony capitalism, which comes at the expense of American businesses, families, and economy.”
