By Timothy Gardner
WASHINGTON (Reuters) - The U.S. energy secretary defended his plan to reward nuclear plants with incentives against criticism it would manipulate markets by telling a congressional hearing on Thursday that a strong domestic nuclear industry boosted national security.
Rick Perry pushed the Federal Energy Regulatory Commission on Sept. 29 to issue a rule within 60 days that would reward aging nuclear and coal-fired power plants that store 90 days of fuel on site. He has said those plants should be supported for their ability to boost the reliability of the U.S. power grid.
Many U.S. representatives at the hearing, including Democrat Frank Pallone, said the plan favored aging industries, killed free markets and would saddle consumers with higher power bills. One lawmaker pointed to a study by ICF Consulting that said power bills could rise $800 million to $3.2 billion annually if FERC issued Perry's plan.
But Perry said the federal government had disregarded nuclear power for decades at a risk to national security.
"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, then we’re going to lose our role as a leader when it comes to nuclear energy in the world," Perry said. That in turn could hurt the country's ability to address nuclear nonproliferation, Perry said.
The United States has more nuclear power reactors than any other country. But Russia, China and other countries are rapidly building nuclear plants and some in the industry worry those countries could become the world's top nuclear innovators.
Perry's plan has divided the energy industry, with coal and nuclear interests squaring off against natural gas drillers, solar and wind power, and consumer groups. It is unclear what FERC will decide on the plan. The agency, an independent arm of the Energy Department, declined a request to lengthen a comment period on Perry's plan.
Republican Representative Pete Olson suggested that Perry was more in favor of free energy markets when he was governor of Texas. But Perry said the notion that energy markets were free and without subsidies was a "fallacy."
Pallone said a study that Perry had directed Energy Department staff to conduct concluded the grid was already reliable and that most recent grid outages were caused by problems in energy transmission, not by power plants.
Several coal plants were forced to shut by recent hurricanes because their mounds of coal supply were soaked by heavy rains.
Perry said his plan was a directive for FERC, but he added that he initiated it to start a conversation about protecting people from outages during extreme storms.
(Reporting by Timothy Gardner; Editing by Peter Cooney)