Democrats Take Over: Ethics Rules and Energy Top "First 100 Hours Agenda"
The 110th Congress convened on January 4, 2007. Democrats, now in control of both the House and Senate for the first time in over 10 years, kicked-off their legislative campaign with a "100-Hour Agenda" focusing on politically popular issues, including initiatives to end subsidies for "Big Oil" and investing in renewable energy and energy efficiency and tightening Congressional ethics rules.
Towards that end, on Friday, January 5, the House adopted Speaker Nancy Pelosi's (D-CA) ethics package, which would reinstate rules, referred to as "pay-as-you-go (Pay-Go)," that would require any new tax cuts or spending increases to be offset by other cuts, a measure designed to reduce future budget deficits. By re-instating this budget rule, Democrats hope to reduce excess spending. This could, however, make increasing funding for programs important to NEPPA, such as the Renewable Energy Production Incentive (REPI) and the Clean Renewable Energy Bonds (CREB) more difficult, as offsets will be needed. The Democrats' House package also bans gifts and travel from lobbyists and requires Members to be identified who insert earmarks (i.e. "pork" or special projects) into bills. This proposal may hinder NEPPA's ability to host a Congressional staff tour in 2007, as the bill prohibits privately funded trips for Members and staff. State and local governmental entities may be exempt, but it is unclear at this time and will have to be clarified through "guidance" expected to be issued by the House ethics committee later this month. One thing is clear, however, and that is that Morgan Meguire, as NEPPA's registered lobbyist, can not help plan or participate in such events.
The Senate started consideration this week on its version (S.1) of a lobbying and ethics overhaul package, which we expect will dominate the Senate floor for several days and perhaps weeks. S. 1 that is similar to the new rules adopted by the House on Friday, but not identical. However, as a bill, not a rule, the Senate version will likely take far longer to complete and could be significantly amended.
FERC Modifies Transmission Incentive Rule; NE Consumers May Not Benefit, However
On December 21, the Federal Energy Regulatory Commission ("FERC") made positive modifications to its final rule on transmission incentives; however, this "national rulemaking" does not alter the incentives approved by FERC, (which are up for rehearing), for the New England region (see more details below).
According to FERC Chairman Joe Kelleher, the changes to the final rule reflected the strength of the rehearing requests the Commission received, which "were well reasoned and persuasive." He cited, specifically, arguments submitted by the American Public Power Association, National Rural Electric Cooperative Association, and the National Association of Regulatory Utility Commissioners. Kelliher also said that changes in the composition of the Commission itself "brought a new perspective to our deliberations."
The rehearing order (No 679-A) issued on December 21 was approved by a unanimous vote, as was the original order, that was issued on July 30, 2006.
Important to public power was a change in the final rule to clarify the "nexus" test, requiring an applicant to demonstrate that the incentives sought are tailored to address the demonstrable risks and challenges of building new transmission facilities. This makes it clear an applicant must show a close link between incentives requested and the risks and challenges. FERC Commissioner Kelly stated that this change reflects the fact that these incentives are "borne directly by consumers, and .... clarifies that "return-on-equity (ROE) incentives should not be handed out lightly."
Kelliher also indicated that these changes will allow the Commission to better balance a transmission owner's total package of requested incentives. For example, if an applicant seeks a higher return to reflect the higher risk of a project, but also seeks recovery of construction work in progress, which reduces project risk, the return granted may be lower than requested.
These changes are helpful, but still provide an overly favorable incentive package for transmission owners. Of the proposals rejected on rehearing by FERC, was a request by public power to make clear that incentives will not be given to transmission owners or providers that refuse to seek or accept reasonable offers of participation by consumer-owned entities. FERC also rejected suggestions by public power to impose, upon all ISOs/RTOs, an obligation to provide service at the lowest reasonable cost to consumers.
NE Litigation on Transmission Incentives Moves on Separate Track
While the modifications made in Order No. 679-A on rehearing are positive, they will not reverse the transmission incentive policy advanced by New England transmission owners and approved by FERC on October 31, 2006. In the New England case, the Commission approved a 100-basis point incentive Return-On-Equity (ROE) "adder" for new transmission investment, which New England consumer-owned entities strongly opposed. New England public power entities have sought rehearing of the Commission's determination. While this case remains pending on a separate track, there is a link between it and the December decision; the New England decision should be consistent with the principals articulated and adopted more recently by the Commission. FERC's recent action should give NEPPA members a basis to encourage the Commission to treat New England consumers equal to (not worse) than their counterparts elsewhere in the country. NEPPA is working on bringing a delegation to DC to meet with the New England congressional delegation on this issue.
To review FERC Chairman Kelliher and Commissioner Kelly's statements and/or to read through the Order, please go to: Chairman Kelliher statement, Commissioner Kelly statement, Promoting Transmission Investment Through Pricing Reform.
Snowe and Landrieu Work to Organize Moderates in the Senate On December 19, Sens. Olympia Snowe (R-ME) and Mary Landrieu (D-LA) sent a letter to 13 Democrats and 13 Republicans requesting their participation in a group comprised of moderate Senators to build bipartisan consensus in the Senate. Currently, the group has no membership (other than the two Senators), no name and no specific policy agenda - except a desire to overcome the partisanship that has caused gridlock in the Senate in recent years. In the letter, the Senators described the group as a "consensus-building, issue-oriented group." They are particularly interested in attracting new, moderate Democrats elected in November, such as Sens. Bob Casey (D-PA), Claire McCaskill (D-MO), Jon Tester (D-MT) and Jim Webb (D-VA).
In a closely divided Senate, even the smallest breakaway group of moderates could have a significant impact on legislation, and also on Leadership's ability to push their agenda. So as not to undercut their party leadership, however, Snowe and Landrieu specifically wrote "It is not the intent of this group to undermine each party's leadership or the Senate committees."
The Snowe-Landrieu group will hold its first meeting on January 11, but has no specific plans for taking policy positions on any particular legislation. A spokeswoman for Snowe emphasized that while the two Senators are primarily reaching out to moderates in both parties, they would welcome conservatives and liberals as well in the group if they agree with moderate positions.
McDermott Requests CREB Information from Treasury
On January 4, Rep. Jim McDermott (D-WA), a member of the House Ways and Means Committee, sent a letter to U.S. Department of Treasury Secretary Paulson requesting additional information on the recent Clean Renewable Energy Bond (CREB) allocations.
Specifically, the Congressman requests that Treasury provide him a complete list of successful applicants who received CREB allocations and whether the applicants were governmental or cooperative borrowers; the type and size of projects that received allocations and the average expected energy production for the projects; the dollar amount of each allocation for each project; and list of applicants and projects that did not receive allocations.
The IRS maintains that it cannot release certain information about how the $800 million in allocations were awarded because of "confidentiality" rules. McDermott is hopeful, however, that the Treasury Department will be responsive to his request.
The letter is the result of a meeting with APPA and Morgan Meguire to discuss how the Congressman can be helpful with regard to renewable tax incentives for public power and, specifically, the CREB program. On behalf of NEPPA, Morgan Meguire has also met with Rep. Richard Neal's (D-Springfield) energy staff to discuss the program and also solicit his help in extending (as well as modifying) the program in the 110th Congress. Rep. Neal is in line to possibly chair the Select Revenue Subcommittee of the House Ways and Means Committee. Another New England member on the House tax writing committee is Rep. John Larson (D-CT), and Morgan Meguire is working to secure a meeting with his office to discuss this program, as well.
Carper and Alexander to Aggressively Push "Clean Air Planning Act"
New Senate Environment and Public Works (EPW) Committee Member Lamar Alexander (R-TN) and fellow EPW member, Sen. Tom Carper (D-DE), announced they will quickly introduce the Clean Air Planning Act to put aggressive controls on carbon emissions. Alexander said the bill would also "go further and faster than President Bush's proposals to control sulfur, nitrogen and mercury emissions from coal-fired power plants."
Sen. Alexander introduced the bill in 2006 and a similar version in 2004, neither of which advanced. Among other initiatives, the proposal would cut sulfur dioxide emissions by 82 percent by 2015. A 2005 bill backed by President Bush sought to cut power plant emissions of pollutants by 70 percent, and allowed trading of mercury. Mercury trading is barred in Alexander's bill, a practice that would allow allows a plant to release more mercury if it purchases credits from other plants with cleaner emission records.
Jeffords' Chief of Staff Moves to Boston Law Firm; Chaffee's Committee Staff Moves to Nature Conservancy
Ken Connelly, Senate Environment and Public Works (EPW) Committee Staff Director and former Chief of Staff to Sen. Jim Jeffords' (I-VT) has decided to take a job in the DC office of the Boston based law-firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Connelly worked in the U.S. Senate for 13 years.
In the mid-1990's, Connelly participated in a congressional staff tour hosted by the Vermont Public Power Supply Authority and has been a friend to public power ever since.
In addition, Christy Plumer, subcommittee staff to Senator Lincoln Chafee (R-RI), Chair of the EPW, Fisheries, Wildlife and Water Subcommittee, is also leaving Capitol Hill to pursue a position with The Nature Conservancy as their Senior Policy Advisor for Fish and Wildlife. Plumer also a participant in the 2004 NEPPA congressional staff tour and was part of the winning team in the 2004 Lobster Pro-Am (miniature golf) Tournament.