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Trump's $625 Million Coal Plan May Raise Utility Bills for Millions of Americans

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The artificial intelligence boom has sent electricity prices reeling, with a recent Bloomberg analysis finding that wholesale energy prices in areas near data hubs have jumped 267 percent since 2020. President Donald Trump, who promised to lower electricity bills within 18 months of reentering office, believes he has found a way to fix this issue: taxpayer subsidies for coal. 

On Monday, the Energy Department announced that it will offer $625 million in funding to “reinvigorate and expand America’s coal industry.” The funding includes $350 million to modernize outdated coal power plants or recommission closed ones, and up to $175 million for coal power projects in rural communities. This announcement was coupled with an Interior Department directive to open 13.1 million acres of federal land for coal mining at lower royalty rates. The Environmental Protection Agency, meanwhile, announced on Monday it would roll back several Joe Biden-era regulations on coal plants, which the agency says will save consumers $200 million in electricity costs annually. 

“These funds will help keep our nation’s coal plants operating and will be vital to keeping electricity prices low and the lights on without interruption,” Energy Secretary Chris Wright said in a press release. “Coal built the greatest industrial engine the world has ever known, and with President Trump’s leadership, it will help do so again.”

Coal did indeed fuel the Industrial Revolution and was America’s dominant electricity source in the 20th century and the beginning of the 21st century, before being replaced by cheaper and cleaner sources like natural gas and renewables. But contrary to Wright’s claim, the government subsidizing coal is unlikely to keep “electricity prices low.” 

In May, the Energy Department issued an order to prevent a Michigan coal plant from closing in order to prevent blackouts. The order failed to keep the lights on and cost the utility $29 million over five weeks, which is expected to be, at least in part, paid for by ratepayers, according to E&E News

These cost hikes are likely to escalate if the federal government continues to force power plants to stay open. An August report from Grid Strategies, a power sector consulting firm, estimates that ratepayers could pay more than $3 billion per year through 2028 if the Energy Department “mandates that the large fossil power plants scheduled to retire between now and the end of 2028 remain open.” This figure could soar to $6 billion per year through 2028 if additional power plants move up their retirement dates to secure government subsidies. 

But electricity costs tell only part of the story: In addition to ordering these plants to stay open, the federal government has opened up millions of dollars in funding for coal projects and passed several measures to benefit coal, including subsidizing coal production overseas. The cost of those actions won’t necessarily show up in monthly utility bills—but it will force the federal government to borrow more heavily in the future, at a time when the national debt is already unsustainably large (more than $30 trillion held by the public).

Despite the steep costs, the Monday coal order is unlikely to change the energy landscape. Ben King, director of the Rhodium Group’s energy program, told Semafor “the price of coal would need to fall by at least half,” to “change the calculus” and make coal more attractive to investors than natural gas or renewables. Brendan Pierpont, director of electricity modeling at the think tank Energy Innovation, told the outlet, “this funding is essentially cash for clunkers, but without trading in the clunkers.”

Trump’s latest coal maneuver will benefit utilities and coal companies, but it will come at the expense of taxpayers, who will be forced to finance yet another wasteful government spending account, and ratepayers who will likely see their utility bills continue to climb.

The post Trump’s $625 Million Coal Plan May Raise Utility Bills for Millions of Americans appeared first on Reason.com.


Source: https://reason.com/2025/09/30/trumps-625-million-coal-plan-may-raise-utility-bills-for-millions-of-americans/


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