The Energy Department Is Trying to Rewrite the Federal Power Act

The Energy Department’s misuse of its emergency powers undermines states’ authority over energy planning.

For the past year, the U.S. Department of Energy has ordered coal plants across the country to continue operating past their scheduled retirement dates. The Energy Department claims that an “emergency” shortage of electricity generation makes these orders necessary. But that conclusion disregards the findings reached by state electricity regulators and regional grid operators, which are responsible for ensuring that there is enough energy supply to meet demand. The Energy Department’s orders do not just elbow into state decisionmaking; they flip the Federal Power Act’s 100-year-old balance of authority on its head, making the Department the sole final arbiter in matters of electricity generation.

Electricity consumers will pay dearly if the Secretary of Energy can upend energy markets and override states’ and grid planners’ carefully prepared plans at will. Beyond the severe economic impacts of the Department’s orders, this power grab will make grids less reliable by disrupting capital investment signals and existing planning tools. This is not the system that the Federal Power Act designed.

The Energy Department directed the first of these unprecedented orders to Michigan’s 60-year-old J.H. Campbell coal plant in May 2025. The plant’s owner, the state public utility commission, and the regional grid operator spent years preparing for the plant’s scheduled retirement, including arranging for replacement generation. But just days before Campbell’s scheduled retirement date, the Energy Department swooped in, ordering the plant to continue operating for 90 days. Over a year later, the Department has extended that order four times and shows no signs of stopping. The Department followed the Campbell orders with orders directed to coal plants scheduled for shutdown in Washington, Indiana, Colorado, and Florida.

The U.S. Court of Appeals for the D.C. Circuit will soon determine the legality of the Campbell order. As we explained in the brief that we submitted in the case, the Energy Department does not have the power to make local decisions about long-term “resource adequacy” or the appropriate mix of energy sources to meet long-term electricity demand.

Under the Federal Power Act, states decide what kinds of energy generation should exist within their borders and where generation facilities should go. States are supported by operators that manage the regional electric grids and by the Federal Energy Regulatory Commission, which together run markets designed to ensure that regions have enough energy to avoid shortfalls.

Through its recent emergency orders, the Energy Department purports to rewrite the Federal Power Act’s fundamental jurisdictional structure. Section 202(c) of the Act grants the Secretary of Energy authority to issue orders requiring “temporary” generation and transmission measures during narrow “emergency” circumstances, such as a major storm. The purpose of this section is plain: temporary orders for temporary emergencies. This section does not authorize the Department to substitute its own judgment about long-term resource adequacy for that of the states. But at oral argument, the Department of Justice attorney representing the Energy Department argued that it is up to the “sole discretion of the” Department’s “Secretary to decide how much risk” of an energy shortage “is too much risk.” This astonishing assertion is the precise opposite of the Federal Power Act’s balance of authority over electricity-generation planning.

The Energy Department’s emergency determination rested on thin evidence from the start. Its first Campbell order cited anticipated high electricity demand during the summer of 2025 in the region managed by the Midcontinent Independent System Operator, which the Campbell plant sits in. The Department relied on a report by the North American Electric Reliability Corporation (NERC) that projected that the operator was at “elevated risk” of energy shortages under certain conditions that summer. But NERC’s analyses are designed to inform planning by the states and grid operators, not to support rogue interventions by the Energy Department. And they cannot provide a basis for identifying whether any one particular facility is necessary to maintain regional reliability. By the Department’s logic, every single plant located in a region that NERC designates as “elevated risk”—which, in NERC’s summer 2025 analysis, included all of New England and almost all of the Midwest—cannot retire without risking blackouts, no matter how the state and regional grid planners have prepared for the retirement.

Furthermore, NERC’s predictions about the risk of energy shortages fluctuate from report to report, depending on new information and on what lens NERC is applying. NERC’s recent assessments of the Midcontinent Independent System Operator region demonstrate this variability. In its 2024 Long-Term Reliability Assessment, NERC initially assigned the operator a “high” risk level. But months later, NERC acknowledged that its initial assessment suffered from a “data mismatch” and issued a corrected report adjusting the risk level downwards to “elevated.” NERC’s summer 2025 assessment—the report that the Energy Department relied on in its first Campbell order—also assessed the operator’s risk as “elevated.” NERC’s summer 2026 assessment then adjusted the operator’s risk level down to “normal.”

The Department’s orders did not even contribute to the operator’s declining risk levels. The summer 2026 assessment specifically notes that the plants subject to the Energy Department’s 202(c) orders, including Campbell, “were not incorporated into the anticipated resources of their corresponding assessment areas.”

In its subsequent Campbell orders, the Energy Department abandoned the pretense that the orders responded to any short-term summer emergency based on NERC’s assessments, claiming that the so-called “emergency conditions” would “continue in the near term and are also likely to continue in subsequent years.” The Department’s shifting rationales make the orders look less like emergency measures to ensure electric reliability and more like lifelines to the coal industry, keeping with the Administration’s separate efforts to reinvigorate “America’s beautiful clean coal industry.”

The impacts of these orders are not limited to abstract questions about the Federal Power Act. The result is a raw deal for ratepayers. The Campbell plant is an aging, inefficient coal facility with high operating costs. And since the Energy Department issued the orders based on an emergency provision, ratepayers across the Midwest will pay the bill, even if a court overturns the orders—an amount up to $180 million as of March 2026.

The Energy Department has no authority under the Federal Power Act to dictate the energy generation mix. The D.C. Circuit should recognize that and put an end to this wasteful subsidy.