Dive Brief:

The Department of Energy's proposal to provide cost recovery to coal and nuclear plants is "just a tax on customers" designed to "do favors" for friends of the Trump administration, a former Republican federal energy regulator said Tuesday.

Former Federal Energy Regulatory Commissioner Nora Mead Brownell said the proposal is "all about" benefiting companies like generator FirstEnergy and coal miner Murray Energy — both firms that had recent policy conversations with the White House. She made the comments at a Bipartisan Policy Center event with three other former FERC regulators, all of whom signed onto comments to FERC critical of the DOE proposal.

The Department of Energy, however, is pleased with the responses to its Notice of Proposed Rulemaking, a senior official said, adding that the proposal was a "first step," and "not intended to be an all encompassing resiliency proposal."

Dive Insight:

It's tough to remember now, but back in late summer the coal sector was frustrated with President Trump.

In a series of letters revealed by the Associated Press, Bob Murray, CEO of mining giant Murray Energy, wrote to White House advisors urging the President to enact emergency financial support for at-risk coal plants under Section 202(c) of the Federal Power Act.

President Trump, one letter claimed, had turned to an aide during a meeting with Murray and FirstEnergy CEO Chuck Jones and directed the aide to "tell [National Economic Council Director Gary] Cohn to do whatever these two say."

But the White House did not follow through immediately, rejecting the companies' pleas to enact the emergency provisions in late August. Instead, the administration soon turned to Section 206 of the FPA, which allows DOE to initiate rulemakings at FERC, as the vehicle for its controversial cost recovery proposal.

Filed at the end of September, the NOPR would provide federal cost recovery for all merchant power plants with 90 days of fuel supply onsite.

To Commissioner Brownell, a Republican appointee of President George W. Bush (R), the NOPR appears to serve the same goals as Murray's push for 202(c) intervention — propping up uneconomic coal generation and saving mining jobs.

"It's really just a tax on customers," she told the audience at the Bipartisan Policy Center event in Washington, "and if you want to tax customers to do favors for friends, be honest about it."

Speaking with Utility Dive after the event, Brownell cited Murray's letters to Trump and the cozy relationship the administration has with the mining company and FirstEnergy.

"If we want to create jobs and save jobs, which is frankly what all this is about — save FirstEnergy, save jobs, save friends — why aren't we investing in training people for jobs in the future?" she said.

The NOPR amounts to a "tax on people who have already paid," Brownell added.

"These are fully depreciated assets that got stranded cost [recovery], and in FirstEnergy's case I think they went back for a second bite of the apple," Brownell said. "So tell me why investing in something that's already paid for rather than investing in the future answers the question of national security ... I don't know how they can justify that."

FirstEnergy pushed back on those assertions, saying in an email statement that the NOPR is about saving needed baseload power, not benefiting one or two companies.

"While FirstEnergy strongly supports the proposed DOE rule, this is not about the company," spokesperson Jennifer Young wrote. "It is about preserving fuel-secure baseload generating facilities like coal and nuclear that support a strong, resilient electric grid for customers."

Murray Energy, for its part, directed attention to its initial comments, in which the company argued that it would be cheaper for customers to support existing generation than to build new capacity.

Former FERC Chair Pat Wood III pushed back on that point at the Tuesday event. As chair of the board at independent power producer Dynegy, "I know what old coal plants cost to run," he said, arguing that a number of more modern coal plants are still operating fine in wholesale markets.

"What we’re talking about here is not fuel type but the age of the unit," he said.

Those critical comments were echoed by other former FERC regulators. Former Chair James Hoecker referred to the proposal as a "scud missile of a NOPR," and former Chair Betsy Moler said " favoring specific generation sources is not the way to go."

In spite of the criticism, DOE is pleased with the response to the NOPR, said Sean Cunningham, executive director of the Office of Energy Policy and Systems Analysis. He said the agency counted more than 180 supportive comments for the NOPR, though a significant number came from form letters disseminated by FirstEnergy and there were thousands of comments filed in the docket.

At a Congressional hearing last month, Secretary of Energy Rick Perry sidestepped a question about the potential cost of the NOPR, saying those considerations should be secondary to the security of the nation's power supply.

"I think you take costs into account, but what's the cost of freedom?" Perry said. "What is the cost to build a system to keep America free?"

Asked if the DOE had modeled the costs of the NOPR, Cunningham also declined to answer directly, instead opting for a play on the secretary's earlier comments.

"We have not produced a cost estimate on freedom, and I think the point the secretary was making is obvious," Cunningham said. "The secretary looks at these issues in the big picture. You have to consider what the cost is to the consumer if coal and nuclear was removed from the mix."