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Perry Says Congress More Appropriate Savior for Struggling Coal, Nuclear Plants

Department of Energy (DOE) Secretary Rick Perry told a House panel Thursday that new legislation from Congress, rather than a rarely invoked provision within the Federal Power Act (FPA), may be a more appropriate vehicle for helping to keep uneconomic coal and nuclear power plants running.

Meanwhile, on the other side of Capitol Hill, Sen. Sheldon Whitehouse (D-RI) introduced a bill Wednesday that would require DOE to establish a natural gas demand response pilot program.

Perry's appearance before the House Subcommittee on Energy comes two weeks after FirstEnergy Solutions Corp. filed an application for an emergency order under Section 202(c) of the FPA, which gives the DOE secretary the ability to address power emergencies. FirstEnergy had asked that PJM Interconnection be directed to secure long-term capacity for nuclear and coal-fired plants that would compensate owners for the baseload power they provide.

"This administration looks at the national grid -- the resiliency of it, as well as the reliability of it -- as a national security issue," Perry said.

Rep. Pete Olson (R-TX), subcommittee vice chairman, emphasized that coal and nuclear power plants still had an important role to play in the nation's power grid. Case in point, NRG Energy Inc.’s WA Parish Generating Station, which is in Olson's district, had to ramp-up the use of natural gas after the facilities coal piles were ruined by more than 50 inches of rain from Hurricane Harvey.

"There have been proposals to help coal and nuclear plants through Section 202(c)," Olson said. "I believe we have to have a diverse grid. Hurricane Harvey showed that dramatically."

While Perry said he thought Olson "did a very good job of basically laying out why a 202(c) could be used in this case," he added that "it is imperative that we don't allow political decisions to be made relative to our power security in this country."

That prompted a follow-up question by Rep. Michael Doyle (D-PA), whose state includes three nuclear units that have either closed or have been marked for closure within the last five years.

"I saw you quoted as saying that that may not be the most appropriate and efficient way to deal with this, but it's not the only way," Doyle said to Perry. "While I applaud your caution on the 202(c) request, I'm curious what other options you think are on the table. Is this something that can be settled at DOE or in Congress or at FERC?"

Perry responded that the DOE's controversial proposal to the Federal Energy Regulatory Commission to subsidize the coal and nuclear industries, which was rejected last January, was one such option.

"We thought [that] was an appropriate way to address this. They obviously did not," Perry said of FERC. "The 202(c) is an option. I'd like to work with you and members of Congress on any other options that are out there, that are reasonable, and that get the result of what we need. The result from my perspective is a diverse portfolio.

"I think it's really important to have a civil nuclear program in place. Too many previous administrations made some decisions that, from my perspective, put particularly the nuclear energy industry in jeopardy. We now see the results of that.”

Rep. Frank Pallone (D-NJ) said Perry's actions so far were appropriate. "Judging by your recent statements, it sounds like you appreciate that Section 202(c) is for serious grid emergencies as explicitly defined in the statute, and not designed to bail out power plants that are losing money."

"This request by FirstEnergy, in my opinion, is like calling 911 because your credit card got declined," Pallone added. "It has united Republicans, Democrats, energy companies, environmental groups, regulators and consumers in opposition, because it's clearly and simply not just inappropriate, but I think illegal."

Whitehouse Bill To Create Pilot Program

The Whitehouse legislation, Senate Bill (SB) 2649, aka the Energy Infrastructure Demand Response Act of 2018, calls for Perry to consult with FERC to establish a natural gas demand response pilot program using "the latest demand response technology from the energy sector for natural gas." The bill lays out goals of reducing energy costs for consumers, reducing market volatility, increasing the reliability of the energy system and achieving reductions in air emissions.

Under SB 2649, Perry could deploy the pilot program in a number of different scenarios, including in a region "that is experiencing fuel shortages or natural gas infrastructure constraints that cause the cost of energy to increase for consumers." Natural gas utilities, local distribution companies, state public utility commissions, electric utilities, municipalities, and large industrial or commercial natural gas customers, among others, are eligible to participate.

"Incentives to use energy more wisely benefit everyone," Whitehouse said. "Customers save on energy costs, we get more out of our infrastructure, and less pollution ends up in our atmosphere to drive climate change.  Utilities are already succeeding with these programs.  My new legislation will help spread that success around the country."

The bill calls for data collection on the reduction in natural gas usage; decreases in the frequency and severity of natural gas infrastructure constraints, and changes in energy costs and reliability. The DOE would then submit a report to the Senate Committee on Energy and Commerce and the House Energy and Commerce Committee on how to improve data collection; metrics used to quantify gas demand response usage; and opportunities to improve the measurement and verification of changes in gas consumption resulting from gas demand response measures.

SB 2649 also calls for DOE to submit a technical report to Congress within 18 months detailing potential natural gas energy savings and load shifting, and the costs and benefits associated with those savings. The report must also identify areas of the country that would "benefit most from implementing demand response measures for natural gas infrastructure."

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