The Trump administration is keen on keeping fossil fuel power plants online past their scheduled retirement dates for the sake of “electric grid reliability.” But doing so is unlikely to improve grid reliability, and could end up costing consumers billions of dollars, according to a new report published today by power consulting firm Grid Strategies.
The report, commissioned by four environmental groups, found that if the Department of Energy forces all large fossil fuel power plants scheduled to retire by the end of 2028 to stay online, the costs for ratepayers could exceed $3 billion annually.
Consumers would likely find themselves subsidizing cost recovery mechanisms for the power plants, the report said. The structure may be similar to contracts used in the past to keep aging and costly generation sources online for grid reliability purposes. In these contracts, the plants’ owners are guaranteed a payment to keep their plants running even if they’re uneconomical.
The $3 billion could grow to nearly $6 billion annually by the end of 2028 if more power plants decide to anticipate their scheduled retirement just to reap the benefits of some of those subsidies. This is a possible consequence of the “perverse incentive” of subsidizing retiring power plants, the report said.
Plus, keeping the retiring plants online is unlikely to do much to improve the grid’s reliability. If a plant has been cleared for retirement, it’s because its utility or Regional Transmission Organization has already determined it’s not needed.
Grid Strategies’ cost analysis comes a few months after President Trump signed multiple executive orders instructing Energy Secretary Chris Wright and DOE to create a framework for keeping retiring power plants up and running.
In May, DOE issued two mandates to cancel the retirement of the Eddystone oil and gas power plant in Pennsylvania and the Campbell coal plant in Michigan. (Keeping the latter online past its retirement date has already cost its owner, utility company Consumers Energy, $29 million for five weeks, which would translate to $279 million per year.)
The trend is likely to continue, especially in light of a July DOE report on the reliability of the U.S. grid, which makes dubious assumptions in claiming that failing to retire coal and gas-fired power stations will lead to blackouts.
If the administration steps in to prevent additional retirements, consumers in 39 states and the District of Columbia will see their annual rates increase because of it. California, Colorado, and Texas, which have the highest fossil fuel generation capacity slated for retirement, are likely to be hit the hardest. Alaska, Hawaii, New York, Oregon, and the six New England states, which have no retiring plants, are insulated from the potential new costs.
The estimated rate increases would come at a time of already soaring electricity prices, as the energy sector struggles to balance the demands of an aging grid, massive demand increase from data centers, impacts of extreme weather, and sharp increases in wholesale market costs, among other things.
Just in the first half of 2025, U.S. utilities have requested or secured a record-setting $29 billion in rate increases, more than double the price of hikes of the previous year.
