Energy Secretary Perry, in Philly, defends Trump's plan to save nuclear plants and coal

Energy Secretary Rick Perry on Friday defended the Trump administration’s controversial new proposal to subsidize the coal and nuclear-power industries, equating the higher cost of electricity under the plan to the cost of maintaining a national defense.

“We subsidize freedom with the military, which we pay for and subsidize,” Perry said in an interview in Philadelphia. “I suggest that electrical power is just as much a part of our national security and our personal security.”

Speaking to the Chamber of Commerce for Greater Philadelphia, Perry attempted to build support for the administration’s fast-track proposal to enact a rule allowing most of the nation’s nuclear and coal power plants to operate at a profit even if a less-expensive power supply is available. Operators of coal and nuclear plants say they’re being forced into early retirement because they can’t compete with low-cost natural gas.

The administration’s Grid Resilience Pricing Rule gives preferential treatment to “baseload” power plants that can maintain 90-day on-site fuel supplies — nuclear and coal plants. Perry said those power plants are essential to maintain a reliable electrical grid.

“We must stop the continued loss of baseload generation that possesses on-site storage,” Perry, a former Texas governor, told the audience. “We must confront the very real threat that our grid can go down and stay down when disaster strikes.”

Perry’s directive to the Federal Energy Regulatory Commission (FERC) has set off a firestorm from critics, who regard it as an effort to boost the struggling nuclear and coal industries. The commission last week rejected calls from advocates of renewable energy, the oil and gas sector, and consumers to slow down the 60-day public comment and approval process.

FERC’s policy would force regional grid operators, such as PJM Interconnection Inc. of Valley Forge, which manages competitive power markets in 13 states including Pennsylvania and New Jersey, to produce new tariffs. Utilities would pass through the higher costs directly to consumers in generation costs.

Perry declined to estimate the cost of the plan to consumers, which one study put at nearly $3.8 billion a year.

In asking for the new rule, Perry cited the experience of grid operators during the 2014 polar vortex, when the power system nearly collapsed from its inability to produce enough power to meet soaring demand during arctic conditions.

On Thursday, Perry made his first public appearance since unveiling the plan Sept. 28. He got a rough reception from a subcommittee of the House Energy and Commerce Committee, whose members questioned the administration’s finding that the electric grid is in crisis.

“Under the guise of a crisis of grid reliability, this proposal props up coal and nuclear generation,” New Jersey Rep. Frank Pallone, the top Democrat on the committee, told Perry.

On Friday, Perry shrugged off the attacks, calling them the not-unexpected acts of special-interest groups motivated by their own economic interests.

“Change is threatening, and every interest group fights for its own favorite energy source,” he said in a 20-minute speech to the chamber. “But I am not the secretary of wind, I am not the secretary of oil, or natural gas, or even solar. I’m secretary of energy.”

Critics also complain that the new policy would reverse more than two decades of efforts to make the electric-generation markets more competitive, resulting in lower energy costs, displacing the old system in which power producers were rewarded with guaranteed cost recovery, regardless of how efficiently they operated.

“Everything that occurs when government affects markets is controversial,” Perry said in the interview. “The idea that there is a free market in the electric business, the power business, is a fallacy.”

Camera icon FERC
Robert F. Powelson, of Kennett Square, joined the Federal Energy Regulatory Commission in August.

The proposal will cast a spotlight on FERC, an independent agency whose newest members include Robert J. Powelson of Kennett Square, a former member of the Pennsylvania Public Utility Commission and a defender of competitive markets. He is one of two Trump appointees on the commission.

In an interview Friday, Powelson said the commission has “maximum flexibility” to craft a reliability rule as it sees fit.

“The FERC does not pick winners and losers in the market,” he said. “That’s not our job. We are fuel-agnostic. Reliability drives and affordability drives where we come down.”