In a defeat for the Trump administration, a federal court on Friday ruled that the energy department exceeded its authority when it forced a Michigan coal-fired power plant to stay open past its scheduled retirement date last year.

Energy secretary Chris Wright had said the 64-year-old JH Campbell Generating Plant was needed to ensure reliable electricity in the region, and he used emergency powers to keep it operating. Environmental groups and three states – Michigan, Illinois and Minnesota – went to court to try to overturn orders keeping the plant online.

The US court of appeals for the District of Columbia circuit sided with the states and the groups, saying there was no real emergency under the law.

The section of the Federal Power Act that allows emergency orders “is essentially a narrow, last-resort backstop”, appeals court judge Cornelia Pillard wrote for a unanimous three-judge panel.

By reversing the Campbell plant’s “long and carefully planned retirement … the results are disruptive,” Pillard wrote. There was “no ‘emergency’ within the meaning” of the statute, she added.

The Michigan case is one of several legal disputes that have emerged across the country as the Trump administration uses emergency powers to force a half-dozen coal-fired plants from closing.

The orders, which also apply to plants in Indiana, Colorado, Florida and Washington state, are raising ratepayer bills and adding air and water pollution that could have been avoided, critics say. An oil and gas plant in Pennsylvania was also ordered to keep its turbines running as a hedge against electricity shortages in the mid-Atlantic grid.

Keeping the Michigan plant open beyond its May 2025 retirement has cost about $259m so far, according to new financial filings. Those losses will probably be paid by families and businesses in the midwest, opponents of the order say.

Ted Kelly, US clean energy director at the Environmental Defense Fund, said the court ruling rejected the Trump administration’s nationwide effort to force “unreliable, ageing coal plants that are bleeding money and polluting communities to stay online”.

The energy department’s “unlawful actions attempted to make families and businesses in the midwest wastefully pay hundreds of millions of dollars for a coal plant that should have been shut down over a year ago,” Kelly said Friday. The Campbell plant and other ageing sites are “incredibly expensive, dangerous to our health and break down frequently”, he said.

Sanjay Narayan, a lawyer for the Sierra Club, called the ruling a victory for families across the midwest who are “paying to keep this old, expensive and dirty power plant online”.

The Trump administration “has been pulling out all the stops to try to bolster dirty and expensive fossil fuels at public expense. This reckless agenda will not succeed,” Narayan said. “We will continue to fight back against the other illegal extensions across the country.”

The energy department did not immediately respond to a request for comment.