Appeals Court Curbs Energy Department's Power To Keep Coal Plants Open

 

October 12, 2026 - Britain’s last coal-fired power station, Ratcliffe-on-Soar, stopped generating at midnight on Sept. 30, 2024. In a statement, its owner, Uniper, marked the moment as the first time since 1882 that coal had not powered Great Britain. Two years later the U.S. government is ordering coal units to stay ready to run past their planned retirement dates, and a federal appeals court has just told it where its power to do so ends.

In an opinion issued on Sept. 11, the U.S. Court of Appeals for the D.C. Circuit vacated the Department of Energy’s first order keeping Consumers Energy’s J.H. Campbell plant in Michigan from closing. The order, issued in May 2025 under section 202(c) of the Federal Power Act, had canceled a retirement planned for May 31 that year. Writing for a three-judge panel, Judge Pillard defined a 202(c) emergency as “a grid-reliability risk that calls for an immediate response by DOE in particular.” Worries about the years ahead do not qualify. “Long-term resource adequacy risks generally do not necessitate immediate action by DOE,” the court said.

That matters beyond one Michigan plant. The administration’s wider case for keeping coal units open rests on a forecast of power demand driven by data centers. The ruling arrives as two other numbers come into view: a nine-figure bill for keeping Campbell available, and a federal forecast that American coal burn will keep falling even as power generation keeps rising.

What The Court Said

Campbell is a coal plant with 1,407 megawatts of nameplate capacity, according to the quarterly report of Consumers’ parent, CMS Energy. A DOE order issued in February notes that the planned closure came “fifteen years before the end of its scheduled design life.” Michigan regulators had approved the retirement, which the court called “long and carefully planned.”

The opinion is blunt about scope. “The Department’s reading of ‘emergency’ invites frequent federal interventions that are unsupported by the statute,” it says. DOE had pointed to a North American Electric Reliability Corp. assessment warning that the Midcontinent grid run by MISO was “at elevated risk of operational reserve shortfalls.” The court noted that the same report found “adequate anticipated resources” for peak demand.

DOE later added a second argument, in an order refusing rehearing: that most regions “will face unacceptable reliability risks within five years” if retirement schedules and new additions stayed as planned. The court said that rationale “falls even farther outside the meaning of ‘emergency’” than the first.

By the time of the ruling, DOE had extended its Campbell order repeatedly. The court counted 450 days of compelled operation across the first order and four extensions, each meant, in DOE’s words, “to ensure that the Campbell Plant will be available if needed to address emergency conditions.” Challenges to those extensions are on hold and were not decided. A sixth order, issued Aug. 14, runs to Nov. 14.

DOE makes its case in the orders themselves. The February order says continued operation of the plant “was necessary to alleviate immediate and anticipated threats” to reliability, and that Campbell generated an average of about 561,100 megawatt-hours a month from June through December 2025, providing “vital generation capacity to the region.”

The Demand Story Behind The Orders

The legal push started with Executive Order 14262, signed on April 8, 2025. It says electricity demand is climbing because of “rapid technological advancements” and names “the expansion of artificial intelligence data centers” as a driver. It told the energy secretary to speed up emergency orders under 202(c), and to stop generators larger than 50 megawatts from leaving the grid where that would cut accredited capacity.

DOE’s July 2025 report on grid reliability supplied the numbers. The department’s summary of the report says 100 gigawatts of new peak supply will be needed by 2030, 50 gigawatts of it “directly attributable to data centers,” and that the grid “is not prepared to meet the energy demand of AI.” The department’s reliability page carries the same five-year warning that later surfaced in the Campbell rehearing order, and the February Campbell order describes data centers as “a new and unexpected source of load growth.”

So the chain runs from AI demand, to a five-year risk, to an order keeping a particular coal plant open now. The court has now cut the middle link. A forecast of tight supply in 2030 may justify planning and new building. It does not, on this reading, justify DOE overriding a retirement today.

Who Pays

The bill is easier to measure than the benefit. In the same quarterly report, for the period to June 30, CMS Energy said the “net financial impact” of complying with the orders since May 2025 was $259 million, after $239 million of revenue from selling the plant’s output and capacity into MISO’s markets. Put another way, by our arithmetic, the market paid for a little under half of what it cost to keep Campbell going. The first 90-day order alone left a net cost of $42 million after $78 million of market revenue.

Consumers is not asking Michigan customers alone to cover the gap. In August 2025, according to the filing, FERC granted its complaint and ordered MISO to spread the costs across its North and Central regions. Michigan’s attorney general, Dana Nessel, said in an August statement that those regions take in 11 states and a Canadian province. MISO’s tariff changes to make that happen are still awaiting FERC approval, and Consumers expects up to $4 million more in retention costs for each 90-day order. In a statement after the ruling, Nessel’s office said the planned retirement had been expected to save Michigan customers nearly $600 million. It has filed six requests for rehearing with DOE and five petitions for review in the D.C. Circuit, and it is contesting FERC’s cost decision as well.

Coal Burn Keeps Falling

Here is the awkward part for the demand story. The Energy Information Administration’s October outlook, published on Oct. 6, expects American coal consumption to fall from 452 million short tons in 2025 to 424 million this year and 405 million in 2027. Over the same period it expects total power generation to rise, from 4,430 billion kilowatt-hours to 4,545 billion and then 4,613 billion.

For the coming winter, EIA expects less coal-fired generation than last winter, citing “milder expected weather this winter, upcoming planned coal plant retirements, and low natural gas prices.” Demand is rising. Electricity consumption in the third quarter was 4% higher than a year earlier, mostly because of a hot summer, and EIA expects commercial demand, the sector “which includes data centers,” to grow 2.8% next year. That growth is being met from other sources. Power-sector coal stocks tell the same story from another angle. The hot summer pulled them down to an estimated 100 million tons at the end of September, against 105 million a year earlier, yet EIA still expects consumption to fall.

That is the gap between the policy and the market. The orders keep a handful of coal units available at the margin. They have not changed the direction of coal use, which EIA expects to keep falling for at least another year.

The Orders Keep Coming

Campbell is not alone. DOE’s list of 2026 orders runs to 61 entries covering 64 order numbers. Most last a few days and are aimed at whole grids or utilities. Twenty-three are rolling orders tied to specific plants, among them coal units at Craig in Colorado, Culley and Schahfer in Indiana, Centralia in Washington and Stanton in Florida. Eddystone in Pennsylvania, whose two units run on gas or oil, has its own rolling order. An order for Centralia was issued on the day of the ruling. New ones for Culley and Schahfer followed on Sept. 18, and one for Craig on Sept. 25.

The same list holds a twist. In January, DOE used the same emergency power to let ERCOT and PJM direct backup generators at data centers and other large customers to run “as a last resort” in grid emergencies. In May it authorized PJM to deploy such generators again. The data centers invoked to justify keeping coal plants open have also been called on to help keep the lights on.

The Case For The Orders

DOE’s defenders have a point about risk. PJM’s July capacity auction fell short of its reliability requirement, as did the one before it, according to FERC’s September order, and a plant that has been demolished cannot be called back in a heat wave. A retirement is hard to undo; an order to stay available is easy to lift. The department points to the power Campbell has supplied while the orders have run, and there is a respectable argument that insurance of this kind is worth paying for.

The court left DOE room to act. It said the department must show an immediate need that ordinary planning by states and grid operators is failing to meet. That narrows the door without closing it. The question it leaves is whether a 90-day order issued six times in a row can ever fit through it.

What Happens Next

The Campbell order expires on Nov. 14, the order for Eddystone on Nov. 20 and the one for Stanton on Nov. 30. Whether DOE renews them, and on what grounds, will be the first test of how it reads the ruling. The Centralia order runs to Dec. 11, those for Culley and Schahfer to Dec. 18, and Craig’s to Dec. 25.

FERC still has to rule on MISO’s revised cost-sharing filing. The court must also deal with the challenges to the later Campbell orders, which it put on hold while it decided the first. Ratcliffe-on-Soar ran for 57 years before its owner switched it off. Campbell’s owner planned to do the same in May 2025; that date has now slipped by more than 16 months.