The Brattle Group report reveals that the bailout could exceed $34 billion. The annual cost of $16.7 billion to support all coal and nuclear plants could rise to $35 billion annually if owners are granted return on investment, raising total cost to $70 billion over two years, according to Brattle Group analysis, for no discernible improvement to nation's electric grid.
The independent assessment was commissioned by a diverse group of energy industry associations representing natural gas, oil, energy efficiency, storage, grid services, solar, wind and other renewables, to estimate the cost of the Trump Administration’s proposed plan to bail out failing coal and nuclear plants across the country.
Assessing a range of out-of-market payment options to keep the national fleet of coal and nuclear plants available for operation – and not counting the additional cost of actually generating electricity from the facilities – the Brattle Group provided the following estimates of direct costs:
$16.7 billion per year, or roughly $34 billion for two years as proposed, if every coal and nuclear plant in the country were given a uniform ($ per unit of capacity) support at the level of the average financial shortfall experienced by such plants;
$9.7 billion to $17.2 billion annually, or roughly $20 billion to $34 billion over two years, if only those plants now facing shortfalls were given payments sufficient to cover their operating losses; or
$20 billion to $35 billion annually, or $40 billion to $70 billion total, if power plant owners were also granted a return on their invested capital in addition to payments for operating shortfalls.
“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 notes before concluding: “Arresting the retirement of uneconomic generating assets in the current market environment will likely prove quite costly.”
“This report sheds light on how costly the Administration’s coal and nuclear bailout could be” said Amy Farrell, American Wind Energy Association (AWEA) Senior Vice President for Government and Public Affairs. “The $10 to $35 billion this policy would take from American taxpayers to keep failing businesses open each year for the next two years is just the down payment – this misguided bailout would also completely upend the competitive electricity markets that are delivering billions in consumer savings. That’s a steep price to pay in an era of US energy abundance, when independent regulators and grid operators agree that orderly power plant retirements do not constitute an emergency.”
Independent assessments confirm that these power plants – most of which are decades old – are not needed to ensure reliability or security. The AEE is urging the Trump Administration to abandon what it calls an “exercise in crony capitalism, which comes at the expense of American businesses, families, and economy.”
The bailout has also been criticised by the American Petroleum Institute (API) Market Development Group, Electricity Consumers Resources Council (ELCON), Electric Power Supply Association (EPSA) and Natural Gas Supply Association (NGSA).
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