Jennifer Danis is the federal energy policy director at the Institute for Policy Integrity at New York University School of Law.
The U.S. electric grid is a shared, interconnected system. When it fails, it fails for everyone.
To prevent this, regulators like the Federal Energy Regulatory Commission and regional grid operators like the Midcontinent Independent System Operator are, among other things, entrusted with a complex, round-the-clock task: ensuring reliability. They administer non-discriminatory markets that serve two-thirds of the U.S. electricity demand, promoting efficiency and reliability by allowing investors to make decisions based on market signals, including higher profits during periods of tighter reliability margins.
However, the U.S. Department of Energy is now invoking its emergency authority under Section 202(c) of the Federal Power Act to intervene in these markets.
While this power is intended to allow DOE to quickly respond to short-term crises — authorizing orders for up to 90 days — this DOE has demonstrated a willingness to subsequently extend these orders without any reliability entity requesting them or logical terminus, as it did with a Michigan coal power plant that was scheduled to retire in May 2025. This practice raises concerns about the use of an emergency mechanism for what could become a de facto long-term policy.
If there were a true energy emergency, the last thing a rational regulator would do is halt energy projects about to supply the grid with low-cost power (like Revolution Wind) and announce policies adding extra-statutory layers of review to other kinds of shovel-ready energy resources simply because they are not this administration’s preferred technologies. While vaguely couched in terms of preventing future outages, DOE’s centralized approach erodes trust in the market system and interferes with the good planning practices that are essential for long-term grid reliability.
A departure from historical use
Historically, the DOE has used its 202(c) authority for specific, short-term emergencies, often in response to natural disasters or unexpected events. For example, the authority was invoked to restore power after hurricanes like Ike and Katrina, or to stabilize the grid during the 2003 Northeast Blackout. These orders were typically short-lived, issued in response to planners’ requests for specific facilities, and didn’t interfere with long-term market signals. The DOE Reorganization Act left the statutory authority to issue emergency orders with DOE for a good reason: in a crisis, the ability to act quickly is crucial, and costs are a secondary concern.
FERC is not built for such rapid responses, as it must ensure “just and reasonable rates,” which necessitates a slower, due process-oriented approach. Recently, however, there’s been a clear shift in invoking those emergency orders.
The DOE has used 202(c) orders to prevent the long-planned retirement of power plants. Orders in 2025, for instance, directed the Michigan power plant to stay online, overriding market, state and federal regulatory processes that had already planned for its retirement. This new application of the law is no longer about responding to a sudden, unforeseen event; it’s about interfering with the energy markets and overriding planning mechanisms designed to manage long-term resource adequacy.
Bypassing institutions and experts
The Federal Power Act gives FERC, along with FERC’s designated “Electric Reliability Organization,” the North American Electric Reliability Corp., jurisdiction over and responsibility for ensuring electric reliability for the bulk power system, (i.e., the high-voltage transmission network and the energy that flows through it). The guidance from these authorities is then converted into actionable parameters implemented by the grid operators, who are the experts in operating and planning their regional grids, into their market and planning frameworks.
Grid operators constantly model and forecast future electricity needs, considering factors like load growth, new generation and planned retirements. Their purpose is to ensure the long-term reliability of the system.
By issuing emergency orders, the DOE is essentially telling these experts that their analyses and planning are insufficient. It also sets a precedent that a grid operator can simply wait for federal intervention instead of taking proactive, difficult steps to address looming reliability issues.
To be clear, reasonable people may disagree on the reliability risks of the power system, but there is a compelling argument that relying on the established, on-the-ground expertise of grid operators and state public utility commissions — with robust stakeholder engagement — is a more trustworthy path than ad hoc federal intervention.
Creating a moral hazard
The DOE’s use of emergency orders creates a moral hazard. Power plant owners may be incentivized to threaten to shut down their facilities in the hope that the government will step in and compensate them (give them “DOE candy”) to stay open. This is not a market-based solution; it’s a political one. And it can trigger a vicious cycle where a reliance on government compensation replaces the need for good business and planning practices, ultimately jeopardizing the grid’s reliability.
