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REDIRECTING FEDERAL FUNDS
TOWARD COAL AND NUCLEAR
PLANT COMMUNITIES
BY SONIA AGGARWAL ● AUGUST 2018

The U.S. Department of Energy (DOE) has proposed directing power grid operators to purchase
electricity for a period of two years to prevent the retirement of certain power plants. DOE’s May
29 memo does not explicitly specify which power plants it would affect, but it implies large coal
and nuclear facilities, similar to those targeted by the 2017 Notice of Proposed Rulemaking,
originally issued by DOE and later rejected by the Federal Energy Regulatory Commission.i
This research note outlines how $2 billion in federal subsidies for six uneconomic FirstEnergy coal
and nuclear power plants could be better spent investing in an economic transition for the
communities where those plants are located, rather than keeping units online for two more years.

$2 BILLION IN SUBSIDIES OVER TWO YEARS FOR SIX POWER PLANTS
Energy Innovation and the Climate Policy Initiative analyzed DOE’s 2017 proposal in The
Department of Energy’s Grid Resilience Pricing Proposal: A Cost Analysis. In this analysis,
FirstEnergy’s market-exposed coal and nuclear fleetii would need about $1 billion per year to
keep these uneconomic plants running profitably. Assuming a two-year price support referenced
in the latest public memo from DOE, this would imply subsidies of about $2 billion over two
years to keep six of FirstEnergy’s plants operating. DOE’s memo is unclear on the question of
whether this payment would come from taxes or utility bills.
The regional grid operator (PJM) has repeatedly asserted federal intervention in support of these
plants is not necessary for grid reliability in the regioniii and the national regulatory body
responsible for ensuring national grid reliability (the North American Electric Reliability
Corporation) saysiv national grid reliability continues improving: Customers in Ohio, Pennsylvania,
and West Virginia would not see disruptions in their electricity service from these plants closing.
Moreover, trends suggest cheaper alternatives for producing power in the region will continue
to exist even if electricity demand grows in the future, and DOE’s memo gives no details about
how long the federal government would continue bailing out these power plants beyond the
initial two-year period.
Clean energy prices have dropped below coal and nuclear, so if economic trends are not in the
plants’ favor, it certainly seems that these government subsidies would at best delay closure

 dates for these plants for a few years. Billions will have been spent on subsidies, and the affected
communities would still face the same power plant closures a few years later, without having
developed long-term solutions.

COMMUNITY INVESTMENT INSTEAD OF WASTED SUBSIDIES
If the same $2 billion was directed toward locally-led solutions in each of the six communities
affected by imminent FirstEnergy closures, instead of keeping these uneconomic power plants
running for two more years, it could provide more than $300 million per community.
The proposed funds to keep uneconomic coal and nuclear plants afloat could instead be used to
help to diversify and strengthen local economies, as well as to support innovative workforce
development programs to aid affected workers and their communities.
For instance, congressionally funded Partnerships for Opportunity and Workforce and Economic
Revitalization (POWER) grants have been awarded across the region since 2015 to help
communities affected by coal plant and mining closures create new economic opportunities.
Other communities affected by power plant closures have begun successfully begun economic
transitions for similar facilities. Tonawanda, located outside Buffalo, recently released a
redevelopment blueprint to replace lost tax revenue and jobs after a coal plant closure, and New
York State’s legislators approved gap funding to cover missing tax revenue during the transition.
Any available bailout funds could be used for the same kind of gap funding in affected
communities.
In short, the communities where these plants are located—not the federal government and the
utilities—should decide how any available funds can best be spent to support them in this
economic transition. In Ohio alone, research shows embracing the clean energy economy could
create more than 20,000 new jobs and generate more than $25 billion in new investment.
If the federal government is concerned about workers and their communities at risk from power
plant closures, it would have a more positive impact by giving any available funds directly to the
affected communities to decide how they want to support a just transition, diversifying local
economies.
i

See https://elibrary.ferc.gov/idmws/file_list.asp?document_id=14633130 – Commissioner Richard Glick stated “There is no
evidence in the record to suggest that temporarily delaying the retirement of uncompetitive coal and nuclear generators would
meaningfully improve the resilience of the grid.”
ii
For this analysis, we include Davis Besse Nuclear Generating Station, Beaver Valley Nuclear Generating Station, Perry Nuclear
Generating Station, FirstEnergy Bruce Mansfield, FirstEnergy W H Sammis, and FirstEnergy Pleasants Power Station. All of these
power plants rely on competitive market revenue for at least a portion of their revenue. We do not include FirstEnergy Harrison
Power Station or FirstEnergy Fort Martin Power Station as they are under rate-based cost recovery in West Virginia (and do not
rely on competitive market revenue) so we assume they would continue to recover their costs and stay open regardless of
federal support. The number included here is based on “Reading 3” from this analysis: http://energyinnovation.org/wpcontent/uploads/2017/12/20171025_Resilience-NOPR-Cost-Research-Note-UPDATED.pdf.
iii
For example, see https://twitter.com/pjminterconnect/status/1002597210670936066
iv
See North American Electric Reliability Corporation’s “State of Reliability 2018” report
https://www.nerc.com/pa/RAPA/PA/Performance%20Analysis%20DL/NERC_2018_SOR_06202018_Final.pdf