Trump Wants to Save Big Coal With $11 Billion Annual Bailout

President Donald Trump wants to subsidize big coal at the expense of American taxpayers. Reuters

The Trump administration wants to force electricity customers to pay for a $10.6 billion annual bailout of the failing coal and nuclear industries through surcharges on their monthly energy bills.

The quietly announced proposal would require ratepayers to fully underwrite a new mandate that coal and nuclear plants hold a minimum of 90 days' worth of fuel on-site under the false premise of providing security from power outages.

But critics say the subsidy is just a massive government-mandated transfer of wealth from consumers to coal and nuclear companies.

"This is like changing the energy system from capitalism to communism—and the U.S. government wants to do it within the next two weeks," said Michael Krancer, a principal at energy policy company Silent Majority Strategies.

The Department of Energy says the fuel stockpiles are necessary to prevent power outages "in times of supply stress, such as recent natural disasters." But only 0.00007 percent of all major power disruptions over the past five years were due to fuel supply problems, John Larsen, a power sector researcher for the Rhodium Group, told Newsweek.

"The true cause of power loss is on the distribution side—meaning telephone poles going down," he added. "The presence of a very large pile of coal next to my coal plant doesn't really change much."

So what is going on? Evidence points to a big handout to Big Coal from a president who campaigned on reviving the declining industry.

In August, the Associated Press obtained correspondence from Robert Murray, CEO of Murray Energy, the country's largest coal mining company, to Trump administration officials in which he explicitly asked for the change in policy.

"After my personally speaking with President Trump [and suggesting the policy], he turned to Energy Secretary Rick Perry and said three times, 'I want this done,'" the letter reads. Murray wrote to White House special assistant John McEntee. Murray also wrote directly to Perry.

The White House was initially hesitant to fulfill Murray's wishes, but Murray persisted, telling officials that his company would be bankrupt by October if the administration did not act. Murray Energy, he noted, would also be holding the bag for around $11 billion in pension and other payments.

The largest coal mining company in America going bankrupt under Trump's watch would be a disaster for the president, who campaigned on ending "the war" against coal miners and coal energy.

So in late September, just days before Murray's predicted bankruptcy, the Department of Energy proposed new rules to intervene in state electricity markets by subsidizing coal and nuclear power plants—the rule change Murray Energy sought.

Up📈7.8% past year.
Down📉31.5% last 10 years. #EndingWarOnCoal

— Donald J. Trump (@realDonaldTrump) October 31, 2017

So clearly this isn't about power outages, Larsen asserted. "The clear reading of these timelines is that the president made campaign promises to bring back coal, and a policy that subsidizes coal would do that," he said. The administration is rushing to fix a problem that doesn't exist, he added.

Spending "$11 billion to prop up power plants that don't change reliability is just not good policy," he said.

Nearly all of the $10.6 billion paid annually by Americans would go to 10 or fewer companies, according to a new study by nonpartisan energy groups.

American coal. Destination Ukraine. #americanenergy 🇺🇸

— Rick Perry (@SecretaryPerry) September 28, 2017

These subsidies would impose significant costs on electricity customers and require them to "pay the full costs of power plants that are too expensive to compete against cheaper alternatives in the market," the study said.

Americans may be also required to pay extra to make sure these companies turn a profit. The ambiguous language of the proposed subsidy could open the door to consumers being "forced to not only cover coal and nuclear plants' operating costs, but also ensure their profitability."

'Trump signs bill undoing Obama coal mining rule'

— Donald J. Trump (@realDonaldTrump) February 16, 2017

Coal-Powered President

Trump has rolled-back much of the environmental regulation enacted by President Barack Obama, including the Clean Power Plan, which stops power plants from dumping unlimited amounts of carbon pollution into the atmosphere. Last month, Trump announced that he will shrink two national monuments in Utah and open the land to drilling and mining.

Trump's efforts have led to a slight increase in coal mining jobs and production this year, but the industry is still in long-term decline. Five hundred and thirty-one coal-generating units retired between 2002 and 2016, according to the Department of Energy. Those plants are typically dismantled, but some have found success in converting to natural gas.

Since 2014, at least at 29 coal plants in 10 U.S. states switched to natural gas, according to SNL Financial. By 2035, natural gas will be the primary fuel for the nation's electricity. Converting coal plants to natural gas costs anywhere from $18 million to $300 million, depending on the size and age of the plant. A Canadian coal plant that underwent a $300 million transformation to natural gas estimated that the conversion would save $1.5 trillion by 2024.

We don't need a coal and nuclear bailout, Krancer told Newsweek. Instead, he said, we need politicians who invest in natural gas and other sources of clean energy.

Coal burning is responsible for one third of U.S. carbon emissions, according to the Sierra Club. Coal production causes as many as 13,000 premature deaths every year and more than $100 billion in annual health costs.

Newsweek has repeatedly contacted the White House and Department of Energy for comment.