Various US $ bills, rolled up into little cylinders

Fossil Fuel Subsidies

Chal­leng­ing Jus­ti­fi­ca­tions for Coal Plant Subsidies


Attor­neys gen­er­al suc­cess­ful­ly beat back Ener­gy Sec­re­tary Rick Per­ry’s notice of pro­posed rule­mak­ing in Octo­ber 2017 that direct­ed the Fed­er­al Ener­gy Reg­u­la­to­ry Com­mis­sion (FERC) to con­sid­er adopt­ing a rule under the Fed­er­al Pow­er Act (FPA) that would require com­pet­i­tive inter­state bulk elec­tric­i­ty mar­kets to sub­si­dize coal plants. The Depart­ment of Ener­gy (DOE) sought to jus­ti­fy the pro­posed new sub­sidy on an argu­ment that the avail­abil­i­ty of on-site fuel enhanced the reli­a­bil­i­ty and resilience of coal as an ener­gy source.

  • Octo­ber 2017

    In Octo­ber 2017, a coali­tion of 11 state attor­neys gen­er­al filed exten­sive com­ments with FERC object­ing to the pro­posed coal sub­sidy. The com­ments argued that the pro­posed coal sub­sidy was both dam­ag­ing to the envi­ron­ment and unsup­port­ed by data and expe­ri­ence, par­tic­u­lar­ly giv­en the states’ grow­ing clean ener­gy portfolios.

  • Jan­u­ary 2018

    In Jan­u­ary 2018, FERC issued an order that adopt­ed the posi­tion of the state attor­neys gen­er­al and declined to move for­ward with DOE’s coal sub­sidy pro­pos­al. As part of this order, FERC began a new pro­ceed­ing to eval­u­ate the resilien­cy of the pow­er sys­tem and direct­ed the region­al pow­er sys­tem oper­a­tors to sub­mit infor­ma­tion to FERC on select­ed resilien­cy issues before it deter­mines whether addi­tion­al action on grid resilien­cy is necessary.

  • Mach 2018

    In March 2018, the region­al grid oper­a­tors, known as region­al trans­mis­sion orga­ni­za­tions (RTO) and inde­pen­dent sys­tem oper­a­tors (ISO), sub­mit­ted their com­ments to FERC on the iden­ti­fied resilien­cy issues. Notably, ISO-New Eng­land (ISO-NE) expressed con­cerns that its analy­sis of the region­al ener­gy mar­ket showed that inad­e­quate nat­ur­al gas sup­plies could lead to an ener­gy crunch in future years, and sug­gest­ed ener­gy pric­ing changes that could reward nat­ur­al gas suppliers.

  • May 2018

    In response to ISO-NE’s com­ments, the attor­neys gen­er­al of Mass­a­chu­setts, Ver­mont and Rhode Island sub­mit­ted their own com­ments to FERC in May 2018. The com­ments urged FERC to not make rec­om­men­da­tions nor draw con­clu­sions relat­ed to the resilien­cy of the New Eng­land ener­gy mar­ket based sole­ly on ISO-NE’s analy­sis of the mar­ket because its study relied on faulty assump­tions and analy­sis. The com­ments by the attor­neys gen­er­al also reit­er­at­ed their objec­tion to requir­ing ratepay­ers to sub­si­dize uneco­nom­ic ener­gy sources based on exag­ger­at­ed resilien­cy concerns.

  • Jan­u­ary 2019

    In Jan­u­ary 2019, a coali­tion of ten attor­neys gen­er­al led by Mass­a­chu­setts Attor­ney Gen­er­al Mau­ra Healey urged new FERC Com­mis­sion­er Bernard McNamee to recuse him­self from the resilien­cy pro­ceed­ing. Com­mis­sion­er McNamee, who was con­firmed by the U.S. Sen­ate in Decem­ber 2018, was the lead pro­po­nent of the Depart­ment of Energy’s 2017 pro­pos­al to sub­si­dize coal plants and con­tin­ued to pro­mote the pro­pos­al even after it was reject­ed by FERC. Giv­en his involve­ment in the DOE ini­tia­tive, the attor­neys gen­er­al point­ed out that a rea­son­able observ­er would con­clude that Com­mis­sion­er McNamee can­not be objec­tive when mak­ing deci­sions on FERC’s grid resilience pro­ceed­ing that grew out of the reject­ed coal sub­sidy proposal.

Oppos­ing Bailouts of Coal Plants Slat­ed to Retire


  • March 2018

    In March 2018, FirstEn­er­gy, an elec­tric util­i­ty with coal plants in the east­ern Unit­ed States, request­ed that DOE declare a grid emer­gency under the FPA to prop up fail­ing pow­er plants slat­ed for retire­ment. Sec­tion 202© of the FPA pro­vides DOE with the author­i­ty to order tem­po­rary con­nec­tions for the gen­er­a­tion of elec­tric­i­ty in the face of an emer­gency. Orders are typ­i­cal­ly used to ensure reli­able pow­er sup­ply after sud­den emer­gen­cies, such as the 2003 black­out in the North­east and Upper Midwest.

  • May 2018

    In May 2018, Mass­a­chu­setts Attor­ney Gen­er­al Mau­ra Healey led a coali­tion of 10 Attor­neys Gen­er­al in fil­ing com­ments warn­ing Ener­gy Sec­re­tary Rick Per­ry that he can­not invoke an emer­gency because long-term trends, pos­si­ble retire­ments and declin­ing prof­its do not con­sti­tute a sud­den” emer­gency under the FPA. The com­ments also argued that the request­ed order would under­mine com­pet­i­tive ener­gy mar­kets and pol­lu­tion con­trol efforts.