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Feds Must Support Nuclear Power for National Security, Perry Says

Oct. 12, 2017, 6:43 PMUpdated: Oct. 12, 2017, 9:21 PM

The commercial nuclear power industry needs a federal boost for national security reasons to prevent the U.S. from falling behind global competitors such as Russia and China, Energy Secretary Rick Perry told lawmakers.

“If we’re going to continue to be a leader in nuclear energy in the world, we’re going to have to support this industry in this country,” Perry said during testimony at an Oct. 12 House Energy and Commerce Committee hearing.

“The question is do we have a national security interest in the nuclear industry, and I think the answer is yes,” he said.

The Energy Department plays an integral nuclear security role by overseeing the country’s nuclear weapons stockpile and nuclear weapons cleanup from World War II and the Cold War.

“If we lose our supply chain, if we lose our intellectual chain of supply of bright scientists because we basically pushed the nuclear industry back,” Perry testified, “then we’re going to lose our role as a leader when it comes to nuclear energy in the world, and that in turn is going to affect our ability to address the weapons side of it.”

Perry was on the defensive during the hearing, which focused heavily on the Energy Department’s recent proposal directing the Federal Energy Regulatory Commission to take action to prop up certain coal and nuclear plants that are having difficulty competing in wholesale energy markets.

Members from both sides of the aisle questioned Perry about the intention behind the proposal, which he called “a way to kick-start a national discussion about resiliency and about reliability of the grid.”

An unusual set of energy industry bedfellows, including renewable, gas and oil industry groups as well as large industrial manufacturers and free-market think tanks, oppose the plan. FERC has set an expedited three-week public comment deadline of Oct. 23.

Free Market Talk

“I think the idea that there is a free market in electrical generation is not a bit of a fallacy—it is a fallacy,” Perry said at the hearing. “Every state regulates the energy industry.”

Perry said federal and state subsidies have benefited renewable resources such as wind and solar as well as other industries, including oil and gas.

“We have [state] governments picking winners and losers in the markets every day by regulations,” he said. “We have subsidized the energy industry for a long time.”

Perry said the Obama administration had a “particular philosophical favorite in the energy industry and they put their thumb on the scale” for certain renewable energy resources.

Rep. Paul Tonko (D-N.Y.) said it was a Republican-controlled Congress, not the Obama White House, that passed investment and production tax credits for wind and solar resources in December 2015 that phase down between 2019 and 2022.

The Energy Department’s proposal would allow generators with a 90-day supply of fuel on-site—which would include coal and nuclear facilities—to recover their operating costs at “a fair rate of return.” Coal and nuclear plants now get paid a wholesale energy market rate set by historically low prices of natural gas. This is making it difficult for nuclear and coal plants to cover their operating costs and leading some utilities to close plants due to difficulty competing economically.

FERC, as an independent agency, has the authority to choose how to address the market challenges identified in the proposal. It can do so by a rule or other action, regulators and legal experts told Bloomberg BNA.

Rep. Frank Pallone (D-N.J.), the committee’s ranking member, questioned Perry about the reasoning behind the grid proposal and said, “You are distorting the market, damaging the environment, and delivering preferential treatment to favored industries.”

Pallone sent a letter to the secretary Oct. 12 asking for a listing of all taxpayer money spent on the proposal, and all meetings that took place with groups in its development.

Criticism Over Charter Flights

Pallone also questioned Perry about the Energy Department’s recent revelation that it spent up to $56,000 on four non-commercial flights for trips by the secretary.

Pallone sent a letter Oct. 12 to the Energy Department’s Office of Inspector General asking it to look into Perry flying on non-commercial government and charter planes, including a trip to Olathe, Kan., for Perry to speak at an Energy Department Small Business Forum and Expo, which costs tax payers $35,000.

Perry said he would direct the Energy Department to look back at the travel of former Energy Secretary Ernest Moniz to see if his travel was in line with that of the current administration. “My intention will be to be as sensitive to this as we can be, and I totally respect Congress’ oversight capacity here,” he said.

(Updated to include more comments from Energy Secretary Rick Perry and members of Congress.)

To contact the reporter on this story: Rebecca Kern in Washington at rkern@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com