In May, the U.S. Department of Energy (DOE) ordered two power plants in Michigan and Pennsylvania to remain operational despite plans for their retirement. The DOE justified this decision by citing system reliability concerns. However, grid operators had already evaluated and approved the shutdowns, indicating no threat to reliability.
Section 202(c) of the Federal Power Act grants the DOE authority to issue such orders during emergencies. Historically, this power has been used annually over the past 25 years at the request of grid operators or utilities during extreme weather events like hurricanes or winter storms. This recent use was different as many state officials and experts argued that no emergency existed.
The orders faced objections from state regulators and environmentalists due to concerns about emissions and costs for ratepayers. Legal challenges followed swiftly.
In June, a heat wave hit Pennsylvania, increasing power demand and prompting the temporary operation of the Pennsylvania plant scheduled for closure. Despite this, PJM Interconnection managed to export power to neighboring regions during peak demand days.
Critics argue that these emergency orders do not address underlying planning issues or failures but merely override local decisions at a cost to ratepayers. A recent DOE report projects a significant mismatch between load growth and generating capacity by 2030, underscoring the need for structural reforms rather than ad hoc interventions.
Improving cold-weather performance, enhancing demand-side flexibility, addressing interconnection delays, and ensuring price signals reflect market conditions are suggested as more sustainable solutions for grid reliability.
The Trump administration aims to revitalize fossil fuel production within the energy industry but critics argue federal micromanagement undermines market strength. Instead of second-guessing retirements and overriding price signals, allowing markets to function freely is seen as essential for fostering investment and maintaining resilience in energy systems.