Energy plan benefits Trump donor
Critics call Perry’s proposal raising coal, nuclear plants’ rates a bailout
WASHINGTON — The Ohio coal magnate Robert Murray had a problem.
Coal prices were near historic lows, and the prognosis for coal mining companies, including Murray Energy, was only going to get worse as their best customers, coal-fired power plants, closed across the country. Murray, a prominent supporter of President Donald Trump, turned to the president, urging him to declare an emergency across the electric grid that would prevent any more coal plants from closing, according to a letter Murray sent to the White House in August.
Less than two months later, Energy Secretary Rick Perry, whose failed 2012 presidential campaign received a six-figure contribution from Murray and his employees, released a controversial plan to raise electricity prices paid to coal and nuclear plants. The proposal falls short of the emergency declaration sought by Murray, analysts said,
but it nonetheless appears designed to particularly benefit Murray and his company.
“If you want to tax customers to do favors for friends, be honest about it,” former Federal Energy Regulatory Commissioner Nora Mead Brownell, a Republican appointed by George W. Bush, said recently in Washington.
Since introducing his proposal in September, Perry has consistently described the goal as protecting the grid from power outages caused by loss of coal and nuclear plants unable to compete with the lower costs of natural gas and falling costs of wind and solar energy. But under the narrow terms of the Energy Department’s proposal, less than 25 percent of the nation’s coal and nuclear plants would qualify for increased rates, according to the Boston research firm The Brattle Group.
Vote on Dec. 11
Just four of the dozens of U.S. electricity markets would be affected by Perry’s proposal, analysts from three independent research firms said, and none more than PJM Interconnection, the nation’s largest wholesale electricity market with customers in 13 states across the Mid-Atlantic, Midwest and South, and the core market for Murray Energy’s coal. During one month last year, more than 70 percent of the coal Murray delivered to U.S. power plants went to plants in PJM, according to analysis by the Houston Chronicle of federal coal delivery data.
“In any given month (Murray) sends the majority of his production to PJM,” said Joe Aldina, director of coal research at S&P Global Platts, an energy and commodities research firm. “Murray is the biggest producer in northern Appalachia and the coal from there is the primary fuel source in PJM. De facto, he is the biggest beneficiary of anything that improves coal demand in PJM.”
The Department of Energy and White House did not respond to requests for comment. But Neil Chatterjee, chairman of the fivemember Federal Energy Regulatory Commission, which is scheduled to vote on Perry’s proposal Dec. 11, said Thursday that he didn’t see the plan as benefiting “any one company.”
“No one from the administration has tried to strong-arm me into taking a position on this,” said Chatterjee, who was appointed by Trump earlier this year.
A spokesman for Murray Energy declined to comment, but pointed to Robert Murray’s statement last month in which he called Perry’s proposal “necessary to ensure the reliability and resiliency of the nation’s electric power supply.”
Murray, 77, is a larger than life figure in coal country and owner of what is believed to be the largest privately held mining company in the nation. For both Trump and Perry, he has provided critical support during their political careers.
‘Consistent supporters’
Murray’s endorsement of Trump during last year’s presidential campaign helped shore up the New York billionaire’s promise to be the savior of the coal industry, along with more than $300,000 in donations from Murray Energy and its employees, according to the Center for Responsive Politics, a nonprofit, nonpartisan group that researches money in politics. Likewise, Murray and his employees donated more than $100,000 to Perry’s campaign during his failed 2012 bid for the White House, making Murray Energy the second largest corporate contributor to Perry’s campaign, according to the Center for Responsive Politics.
“We raised about $18 million in six weeks so there was a whole lot of fundraising that went on very fast,” said Ray Sullivan, the Perry campaign’s former communications director, who now runs an Austin consulting firm. “Mr. Murray and employees of his company attended Perry fundraising events in West Virginia and were consistent supporters.”
After Trump’s election victory in 2016, to be followed a few months later by Perry’s nomination as secretary of energy, Murray did not wait long to seek their help. The stakes were high. One of Murray’s largest customers, FirstEnergy Solutions, which operated four large coal-fired plants in Ohio, Pennsylvania and West Virginia, was on the verge of bankruptcy — a move that could lead to some or even all of the plants to close and force Murray Energy into “immediate bankruptcy,” Robert Murray said in his letter to the White House in August, which was obtained by the Associated Press and posted online.
What Murray wanted was Trump to issue a twoyear moratorium that would prevent coal plants from closing.
“Nine days ago, after my personally speaking with President Trump, he turned to Energy Secretary Rick Perry and said three times, ‘I want this done,’ ” Murray wrote in his letter. “As stated, disastrous consequences for President Trump, our electric power grid reliability, and tens of thousands of coal miners will result if this is not immediately done.”
It would have been a dramatic move, the likes of which the U.S. government had not taken since the 1970s energy crisis, when it banned new natural gas plants in response to a shortage of the fuel, said Matt Preston, an analyst with the energy research firm Wood Mackenzie.
“It’s not impossible the government can step in and do something like this,” Preston said, “but I don’t think they’ve ever done anything so far reaching.”
Issuing such an order, however, would appear to be a giveaway to coal executives, something likely to enrage not only Democrats eager to address climate change and free-market conservatives opposed to market meddling but also other energy industries, including the oil and gas companies headquartered in Houston that Trump drew support from during his campaign.
In late August, the Department of Energy announced it had decided against Murray’s request. But the Trump administration was not finished. In September, Perry asked the Federal Energy Regulatory Commission to amend power market regulations so they raised electricity prices for any power plant with a 90-day fuel supply — something that only coal or nuclear plants would have.
Such a move had its limits. FERC’s authority extends to only deregulated markets crossing state lines — leaving electricity markets in Texas and the western United States out of bounds. But it served to satisfy Murray and FirstEnergy, which have both come out in support of the plan.
Malcolm Woolf, senior vice president with Advanced Energy Economy, a trade group representing wind and solar firms, battery manufacturers and major power buyers like Wal-Mart and Google, said that if Trump administration officials wanted to help the coal industry, they could have gone to Congress the way the Obama administration did to bail out the auto industry during the worst of the national recession in 2009. But Woolf said, the Trump administration doesn’t have evidence coal and nuclear plant closures would lead to blackouts.
“They’ve resorted to this because this isn’t about reliability and resiliency,” he said, “but about bailing out a few failing companies in the marketplace.”
Opponents team up
Outside of the coal and nuclear industries, support for the proposal is hard to find. A coalition of eight former FERC commissioners, Republicans and Democrats, called the proposal a “significant step backward” for “transparent, open, competitive wholesale (power) markets.” Lobbyists as diverse as the American Petroleum Institute, which represents the oil and gas industry, and American Wind Energy Association have teamed up to stop the proposal, drawing congressional Democrats and Republicans into the fray.
“Any changes must also be technology-neutral and reflect the fact that all sources of energy are susceptible to natural or even man-made events of one kind or another,” Rep. Pete Olson, R-Sugar Land, and Rep. Bobby Rush, D-Ill. wrote to FERC this month.
Olson and Rush are members of the House Energy and Commerce Committee and represent districts where wind power and natural gas are significant economic drivers.
But as lawmakers and lobbyists fight against Perry’s proposal, both Murray Energy and First Energy have steadily grown their influence in Washington. In September Trump announced he was appointing Sean Cunningham, a veteran lobbyist for FirstEnergy, as the director of the Energy Department’s Office of Energy Policy and Systems Analysis.
In October, Trump announced the appointment of Andrew Wheeler, a Virginia lawyer and lobbyist for Murray, as deputy administrator of the Environmental Protection Agency.
At a confirmation hearing Wednesday, Wheeler said he lobbied for Perry’s proposal but downplayed his role. He added, “I have not been involved in anything the last few months when this issue has been front and center.”