For Dan Brouillette, the rejection of an Energy Department plan to subsidize coal and nuclear plants could actually be a good thing.
The Federal Energy Regulatory Commission in January rejected a proposal to give incentives for nuclear and coal plants to handle outages caused by weather and other problems.
Yet Brouillette, who is the deputy for Energy Secretary Rick Perry, said he will “respect” and “honor” FERC’s decision and move forward.
“The bottom line is this: We proposed an idea. We were hopeful that they would just take our idea, but there was never really any serious expectation that they would take it lock, stock, and barrel,” he said in an interview with the Washington Examiner from his office on Capitol Hill.
“The whole idea of Secretary Perry taking the action that he took was to begin a national conversation on an issue that everyone knows exists, including the FERC. So, we put our idea on the table. That being said, they chose to go a different way, and that’s quite OK,” he said.
“Instead, they are turning to regional grid power operators to gauge how to better improve the resilience of the power systems,” Brouillette said.
Despite the rejection, Brouillette remains optimistic that the issue isn’t dead. “At the end of the day, the FERC could have done absolutely nothing at all. They could have set aside Secretary Perry’s proposal and said, ‘Thank you very much, have a nice day,’ and they didn’t. And the reason they didn’t is because they know that there’s a problem that they have to address. So, we applaud the fact that they’re moving forward to address that problem and the fact that they’re gonna do it in a different way does not in any way, I think, reflect on the secretary,” he said.
Brouillette was tapped by Perry last summer to be his second in command. “How do you say no to Rick Perry?” he joked. But he also has a long line of private-sector experience that includes his most recent stint as a vice president at the Ford Motor Co. before joining the Trump administration.
He’s even worked at this building before. The Louisiana native, who hails from a working-class family from a small town named after Napoleon Bonaparte, served in the Energy Department during the George W. Bush administration. Brouillette was also chief of staff to the House Energy and Commerce Committee and is a former state energy regulator.
His road to the halls of government and the boardroom was an indirect one.
“I joined the Army when I was 20, or 21, I really cannot remember. I just wanted to travel. At the time, there wasn’t a whole lot going on in South Louisiana,” he said.
“I had tried a little of everything from welding to jobs in the pipeline industry, and I wanted to do something bigger. My father was a plumber and sort of a handyman, did the jack-of-all-trades kind of thing. He ran everything from lawnmowers to cranes, heavy scaffold work in oil fields and service industries, things like that. So, that’s kind of where I thought I was going to end up, which when you’re that young in South Louisiana and it’s 100 degrees outside and 100 percent humidity, you realize really quickly I don’t want to do for 40 years,” he said.
“My father had been in the Army in Germany, so I thought that was pretty cool. So, I joined the Army, became a tank commander. Ended up in Germany in the Fulda Gap back in the days of the Cold War, under Reagan. And that really shaped a lot of my thinking around national defense and nuclear weapons and all those things that were far beyond my intellect, but [were] nonetheless of interest,” he said.
It was there that he met his wife, who was an Army officer and nurse. They both ended up in Washington, where he began his career on Capitol Hill. “At the time, I didn’t have a political bone in my body; I wound up working for a South Louisiana [representative] because I felt I was qualified because my grandfather put his sign in our yard,” he joked.
At the time, Billy Tauzin was a Democrat who later switched to the Republican Party. “Billy was a great mentor of mine on the Hill. He rose through the ranks of both the Democratic Party and Republican Party. I think he’s still the only guy who’s ever served in the leadership of both parties,” he said.
When Tauzin rose to chairman of the House Energy and Commerce Committee, Brouillette became his chief of staff. “So, I got a chance to see a lot of energy policy being developed from that side,” he said.
Years later, after Brouillette left the public sector and he and his wife and nine children moved to Texas, Brouillette got to know then-Texas Gov. Rick Perry. “When he got the call to be the secretary, he called me and said, ‘Hey, can you help me get ready?’ I said, ‘Sure.’ And the more we talked, the more we traded notes on this department and what it does, I guess the more comfortable he got with me, and he said, ‘You need to come with me.'”
Six months into the job, Brouillette remains optimistic that Perry and Trump can reform the Energy Department into a leaner agency that focuses on developing more energy opportunities in this country, while relying less on others. They also want a department that frees up regulations that have created overlapping bureaucracies and have stalled job growth in the energy sector.
Washington Examiner: Because you were here in the Bush administration, then came back after the Obama administration, what has struck you as different?
Brouillette: Look, they had different policy objectives, and that’s what elections are all about. So, I’m not at all concerned about the direction they took. That was what they were elected to do, and that’s what they did. But what is facing us at this point is obviously a different administration, a different president, and a different approach.
What I saw was that they’ve taken the pure energy production type R&D stuff, fossil energy, nuclear energy, all these things, and they subordinated it to a climate action plan. So, they moved it under what was called the undersecretary of science and energy. The energy part was much less relevant to the science part.
They wanted climate science to dictate their energy policy.
We want to do it exactly the other way around. We think we can produce energy here in America cleanly and efficiently and responsibly. But the notion is we have to produce it ourselves. That’s what the president’s talking about with this energy dominance agenda. We have to do this. And I think if you look at the larger political situation, we are.
So this year, either this quarter or the first quarter of next year, the U.S. will for the first time be a net exporter of energy when you combine those numbers. I mean, we are achieving that independence that we talked about for three generations. And I think the proof of that, the proof positive of that, is the president’s announcement with Jerusalem. We have to ask ourselves: Would he have done that 10 years ago? Would any president have done that 10 years ago if we were still dependent upon Middle Eastern oil? I don’t think they are.
I think it is proof positive that we’re actually achieving the goals of energy independence. And I think we’re going to continue that. So, what we’re going to do is reorganize the department a little bit. Take those pure energy elements out, put them back under another secretary of energy, who’s going to be responsible for developing those programs even further and more aggressively than perhaps the Obama administration was doing, so that’s a fundamental change.
Washington Examiner: What about regulations? It is something both the secretary and the president have been adamant about reforming.
Brouillette: And that is the other thing we’re going to do, is take away some of the regulatory burdens that we’ve placed on things like LNG [liquefied natural gas]. One of the things I said at the shale gas event in Pittsburgh was there’s certain things that we do here that I’m not quite sure why we do them.
For instance, in the LNG space. To begin the process, if you wanted to become an LNG exporter for instance, you wanted to build a facility to export LNG gas because we have this abundant resource now, due to the technologies and things like fracking. If you want to export that, you would begin the process by coming to the DOE and having us do an economic analysis. Once we completed that economic analysis, then you were allowed to go to FERC to begin the actual permitting process in the application process over there.
With all due respect, we have some very bright people here at DOE. They’re very, very smart. We have more PhDs here probably than any other place in the country. We’re not economists.
The president feels very strongly about his all-of-the-above energy strategy. And to him, that literally means all of the above. It does not mean this one and that one, and we don’t like this one and that one. So for him, coal and nuclear are part of that all of the above.
So, the conversations that Secretary Perry and I have had with him and the team over there is that we will pursue the development of these resources here in the U.S.
I don’t know if you’ve ever heard that term of when you talk about the production of electricity in particular in the Northeast, you will hear that coal and nuclear are uneconomic because the theory is solar and wind are free. The wind blows, and the sun shines, and it’s free. Well, it’s not. And the only reason that coal and nuclear, not the only reason, but one of the main reasons that coal and nuclear are, quote, uneconomic is because they don’t get paid for their services.
The way the generation market is regulated or controlled or funds are allocated, especially in the Northeast, is through what’s called a Regional Transmission Organization, an RTO. They manage the transmission grid in the Northeast. And what they do is they have generation come online, they put it on there, and they price it accordingly based on the load and the needs that they have in a certain area or a certain time of the year.
Long story short, coal and nuclear provide what’s called a baseload for electricity generation in America. The reason you have lights on every single day is because somewhere there’s a nuclear plant that runs 24-7 or there’s a coal plant that runs 24-7. And in most cases, there’s a gas plant that runs 24-7. That’s why the lights come on. And that’s why they stay on, because you have to have a certain minimum amount of electricity in the grid.
And what happens when you use solar and wind to a larger degree, or too much, you have a lot of variability. Sun doesn’t shine, the wind doesn’t blow, and you’ve got no electricity. Frequency goes down, rates goes down, the grid collapses. That’s what happens. So, we want to always ensure that we have a certain amount of baseload available.
Well, if you don’t pay these people for their services, guess what happens? They go out of business. And that’s what’s happened. So, all of these facilities in the Northeast, these coal plants, and these nuclear plants, are retiring. Some of them because they’re old and they need to be replaced. Nobody suggested we keep a coal plant for a hundred years. But a lot of them are retiring because they’re not getting paid for their services, the provision of baseload electricity.
Washington Examiner: What is the future for coal and nuclear energy?
Brouillette: I’m not in the business of coal energy, so I can’t tell you from an economic standpoint. From a public policy standpoint, they’re going to be treated like every other generator. We’re not going to favor one over the other. We’re not going to discriminate against one or the other. We’re going to help them through our science programs at [the National Energy Technology Laboratory] and other places to improve their product. We want to burn coal. We want to burn it responsibly. We want it to have other uses.
So, we’re looking at things like cold carbon. You can use that product for other purposes. You don’t have to burn it in a fireplace or a mill. You can use it for other purposes. It has value.
This RTO that controls the electricity for 13 states, PJM, their coal and nuclear percentage is 65 percent. You can’t shut down 65 percent and survive.
This why we talk a lot about diversity of supply. So, natural gas is very cheap right now, and it’s really put some economic pressures on the coal industry.
But that’s a competitive aspect for the coal industry to deal with. I can’t help, though, with the competition. I can just, from a policy standpoint, we’re not going to treat them any differently or discriminate against them.
But from a public policy standpoint, the fact that natural gas is cheap and we move in that direction is fine because it’s good for consumers. But from a national security standpoint, if we’re dependent upon one fuel source, we create risk. And I’ve talked to a couple of utility CEOs not too long ago with an organization called the Edison Electric Institute, EEI. So, a lot of CEOs were there at their board meeting. So, I went out, and I visited with them for a day and a half.
And they were telling me privately, they said, “Look, a cold day in April’s a problem.” They’re rapidly approaching a point if today’s a cold day, it may be this day, that they have to make a decision. Their availability of gas is restricted by the lack of pipelines. They have to decide as a public utility: Are we going to heat the homes, or are we going to light the homes?
Because if you take gas and put it in an electricity generator, it’s not available for heat. So, they’re concerned. And they’re telling me this privately, which is why they want these rules fixed. They have to rely on coal and nuclear so they don’t face that choice if they can’t get gas.
Washington Examiner: The memorandum of understanding from the China energy investment in West Virginia. Do we know anything about that?
Brouillette: The governor of West Virginia, Jim Justice, called me about it, and we had a long conversation about it. Their secretary of commerce, I guess, was engaged directly with the Chinese parties. Look, if the Chinese want to develop infrastructure, it’s fine. We’re all about it, international investment. The only things that we’re going to look at as a government are going to be whether or not those infrastructure projects in any way affect our national security.
What we’re seeing with [the] Chinese in particular are very aggressive attempts to invest in key strategic areas. That’s a game changer in West Virginia. $83 billion. That changes communities’ lives for two generations.
