By Michael Brooks and Rich Heidorn Jr.

WASHINGTON — Energy Secretary Rick Perry on Thursday defended his call for price supports for struggling coal and nuclear plants, telling the House Energy Subcommittee “these resources must be revived, not reviled.”

Perry also pushed back on criticism that his Notice of Proposed Rulemaking, which called for “full recovery” of the plants’ costs, would undermine competitive markets.

Republicans largely expressed support for the rule. But Perry did little to counter allegations that his action was motivated by President Trump’s campaign promises to help the coal industry — repeatedly sidestepping Democrats’ questions about the costs of his proposal and the evidence supporting the need for 90 days of on-site fuel.

“The base reason that we asked for this … is that, for years, this has been kicked down the road,” Perry said.

The NOPR, published in the Federal Register Tuesday, would require FERC-jurisdictional RTOs and ISOs with capacity markets and day-ahead and a real-time energy markets to ensure full cost recovery for any generation not subject to cost of service rate regulation that is capable of providing “essential energy and ancillary services” and has a 90-day fuel supply on site “enabling it to operate during an emergency, extreme weather conditions, or a natural or man-made disaster.”

Essential services include voltage support, frequency services, operating reserves, and reactive power. Just and reasonable rates for such generators would cover “its fully allocated costs and a fair return on equity,” including operating and fuel expenses and the costs of capital and debt, the NOPR said.

Countering Subsidies

Perry said he was attempting to counter subsidies that have benefited renewables at the expense of coal and nuclear. “There is no such thing as a free market for in the energy industry,” he said. “Government’s picking winners and losers everyday through regulations… and I’m at least honest enough to say it.”

Perry said the grid is normally resilient during “blue sky” days and said his support for an “all of the above” generation mix was proven during his time overseeing wind growth as governor of Texas. “But the wind does not always blow. The sun doesn’t always shine. The gas pipelines — they can’t guarantee every day that supply is going to be there.”

He said the NOPR was intended to “kick start a national discussion about resiliency and about the reliability of the grid.” Noting the vociferous opposition his proposal provoked, he chuckled, “And best I can tell we were pretty successful in doing that. …We’re having this conversation now that we really haven’t had in this country.” (See Consumer Advocates Slam Perry NOPR, RTOs, FERC.)

Indeed, about 50 companies, regulatory agencies and trade groups have intervened or made comments in the docket FERC opened to respond to the NOPR (RM18-1).

Not Supported by DOE Study

Rep. Frank Pallone (D-N.J.) said the NOPR was not supported by the grid study DOE released in August, asking Perry what analyses DOE or its national labs had done to support the proposal.

Perry did not respond to the question, instead challenging Pallone’s premise. The DOE study, he said, didn’t address “with specificity the events I’m concerned about,” he said, citing the 2014 polar vortex.

In fact, the report had about 17 references to “extreme weather” or the polar vortex. (See Perry Grid Study Seeks to Aid Coal, Nuclear Generation.)

Perry also sparred with Rep. Michael Doyle (R-Pa.), who said said the committee had held eight hearings on markets and reliability. “We’ve actually been having the conversation you claimed to be starting,” he said.

“This has been discussed for a long time, as you rightfully said,” Perry conceded. But he said it was now time for action.

“Our RTO made that adjustment” after the polar vortex, Doyle said, referring to PJM’s Capacity Performance rules, which increased the penalties and bonuses for capacity resources during grid emergencies. “We feel pretty confident of our capacity in Pennsylvania.”

“’Pretty confident’ is not going to get it [done]” Perry shot back.

Doyle also pressed Perry on discrepancies between the NOPR, which repeatedly says FERC “must” act and the secretary’s reference to a conversation. (See FERC’s Independence to be Tested by DOE NOPR.)

“Is it a directive to FERC to do this or a conversation?” Doyle asked.

“Both,” Perry said.

“So, it’s a directive then?” Doyle asked.

“My words are what my words are. I don’t back off from them,” Perry said.

“It can’t be both,” Doyle protested. “So, which one is it?”

“Well actually it is both. I can be both. We can have a conversation and I think [FERC] must move. I think they must act. We’ve kicked this can down the road as long as we need to.”

Rep. Kathy Castor (D-Fla.) also said the NOPR conflicted with the findings of the grid study and said it would cost consumers and businesses billions. “There is just no rational basis for this new FERC rule that you’re trying to move through as quickly as possible,” she said.

“If the request … the NOPR to FERC is what you say it is, [FERC] won’t go forward with it,” Perry responded.