GAO to Study RTO Cost in MISO Later this month, the Government Accounting Office (GAO), a non-partisan arm of Congress, is expected to begin reviewing "the costs and operating practices" of the Midwest Independent System Operator (MISO) "as a case study of whether regional grid operators are saving--or costing--consumers money." The GAO probe comes at the request of House Transportation and Infrastructure Chairman James Oberstar (D-MN) and former Sen. Mark Dayton (D-MN). Oberstar and Dayton were responding to concerns expressed by Minnesota municipal utilities and the American Public Power Association (APPA).
The Oberstar-Dayton letter urged a broad study of RTO and ISO performances around the country. "ISOs and RTOs were supposed to save consumers millions of dollars every year. Unfortunately, they seem to be costing consumers millions of dollars instead," the letter said.
The areas of GAO inquiry will include use of a single price auction, price volatility, and the level of MISO's start-up and administrative expenses. The congressional letter to the GAO also expresses particular concern that the "single price" auction is providing inflated revenues to coal and nuclear plants in the Midwest, because market clearing prices may be set by expensive gas-fired units.
A MISO spokesman said that MISO has not been contacted by the GAO and noted that its pricing practices are public knowledge since they are contained in a FERC-filed tariff.
House Democrats Introduce Energy Bill
On January 12, House Resources Committee Chairman Nick Rahall (D-WV), unveiled legislation on behalf of House Democrats that will roll back oil industry tax breaks and recoup royalties from deep water Gulf of Mexico producers. The bill garnered the support of 196 Democrats and is expected to be "fast tracked" through the House. Senate action, however, is expected to be much slower.
The bill, H.R. 6, would steer new revenues into alternative energy development through a new reserve fund. The bill would raise an estimated $13 billion in new revenues, leadership aides said. The bill also repeals several royalty relief provisions from EPAct 2005, including incentives and royalty relief for producing "deep gas" in gulf waters. Other language would strip royalty relief for areas in offshore Alaska and in the National Petroleum Reserve, end the oil industry's eligibility for a 2004 tax break on income from domestic manufacturing and change a tax break allowing accelerated amortization of certain oil exploration costs.
The bill creates a new "Strategic Energy Efficiency and Renewables Reserve." It does not specifically say how the money is to be spent. Instead, it says the money in the reserve will offset the cost of subsequent legislation to speed up the use of renewable energy, alternative fuels, energy efficient products and conservation.
Boxer Ready to Move on Climate Change; Sanders' to Introduce Bill
On January 5, the Business Council for Sustainable Energy (BCSE) hosted a luncheon with Chairwoman Barbara Boxer's lead climate change staffer, Michael Goo, on the Senate Environment and Public Works Committee.
Goo said that Chairwoman Boxer wants to hold a series of hearings on climate change, commencing January 30th. Her immediate goal will be to establish an in-depth hearing record; he noted there was none of consequence under then-Chairman (and now Ranking Member) James Inhofe (R-OK), who disagrees with the premise that humans are responsible for global warming. The hearings would be comprehensive, including looking at the new California law and the Regional Greenhouse Gas Initiative (RGGI) in the Northeast. To kick-off the hearings, Senators will be able to make short statements for the record to present their perspective, concerns and ideas on the climate change the 3rd week of January.
Boxer does not want to rush legislation through, favoring instead a longer-term, comprehensive approach, including an "80 or 60 percent" reduction by 2050 and a benchmark for 2020. Staff said that she wants the international Kyoto Protocol community to know that they should not expect comprehensive legislation dealing with climate change in the next two years. In the shorter term, he thought that "sending a signal to coal-fired plants" may be the "most supported" idea.
During the hearings, Boxer will want to hear from all the stakeholders. Goo said that Boxer wants legislation that will be "good for businesses." Specifically, she wants to know from industry stakeholders how various requirements that might be legislated may affect their profitability and the impact on jobs. She also wants to be alerted to "red flag" issues, such as "what stakeholders cannot live with."
Several pieces of legislation will eventually be in play. Chief among them will likely be Sen. Jim Jeffords' (I-VT) legislation from the 109th Congress, to be reintroduced today as a Sen. Bernie Sanders (I-VT)-Boxer bill (see below). Others will likely include some from the 109th and some new, including by Sens. (1) Carper; (2) Kerry (see below); (3) Bingaman (see below); (4) McCain-Lieberman (reintroduced 1/12- see below); and (5) Feinstein. The bills could all move separately, but could also be married-up for passage.
Sanders, Lieberman Introduce Climate Bills; Kerry's Expected This Week; Bingaman Bill Still Under Development
The Sanders climate bill, S. 309, which was introduced on 1/16, would cut U.S. emissions 80 percent by 2050 by focusing on most sectors of the economy, including new and old power plants, automobiles, motor fuels and other major carbon-producing industries. In addition to having Chairwoman Boxer's co-sponsorship, the bill will carry the support of New Englanders such as Sens. Ted Kennedy (D-MA), Patrick Leahy (D-VT), Jack Reed (D-RI), and Sheldon Whitehouse (D- RI). Sen. Christopher Dodd (D-CT), a newly announced 2008 presidential candidate, notably will not sponsor the Sanders effort. (Dodd supported the Jeffords bill in 109th Congress).
The Lieberman-McCain bill, S. 260, would accelerate the reduction of greenhouse gas emissions in the U.S. by establishing a market-driven system of greenhouse gas tradable allowances, and would support the deployment of new climate change-related technologies. The bill was introduced late last week and has the support of Sens. Susan Collins (R-ME), Olympia Snowe (R-ME), Barack Obama (D-IL), Richard Durbin (D-IL), and Blanche Lincoln (D- AK). Environmental Defense President Fred Krupp announced his support for the Lieberman-McCain bill as well.
Sen. John Kerry (D-MA) is also putting the finishing touches on legislation to cap greenhouse gases, as well as a federal renewable portfolio standard (RPS) that will mandate that utilities produce 20 percent of their energy from renewable resources by 2020. Most New England states already have an RPS, but they do not all apply to consumer-owned utilities and include different resources as "eligible" to count towards the RPS goals.
Lastly, Sen. Jeff Bingaman (D-NM), Chairman of the Senate Energy and Natural Resources Committee, released a "draft" climate bill that would establish an emissions trading system, to begin in the year 2012, designed to reduce emissions with the lowest cost to the United States. According to a statement released with the draft, the bill is intended to require modest reductions of greenhouse gas emissions and would not impose high costs on any sector of the U.S. economy. Since it is a "discussion" draft, the bill is not expected to be formally introduced for some time.
In addition, the Energy Information Administration (EIA) released a study titled, "Energy Market and Economic Impacts of a Proposal to Reduce Greenhouse Gas Intensity with a Cap and Trade System." Senator Bingaman and others requested the EIA study, based on Bingaman's bill (from the 109th Session) to regulate greenhouse gas (GHG) emissions through a national cap-and-trade system.
The study examines several key areas where the earlier Bingaman proposal could have a major impact, including: emissions allowances and prices, energy markets, and the economy. It acknowledges that the cost of GHG allowances would be passed on to consumers, which would raise the price of fossil fuels, especially in the electric power market. At the same time, it recognizes that many provisions of the bill would encourage investment in energy saving technologies. The study concludes that the Bingaman proposal would have a negligible impact on the overall U.S. economy.
APPA Comments to Treasury on CREB Program
In a January 4 letter to the Department of Treasury, APPA's Alan Richardson made several recommendations for changes in the administration of the Clean Renewable Energy Bond (CREB) program. First among them is making the list of recipients public to allow APPA to "analyze the results of the allocation process and to advise policy makers regarding the future direction of the program."
Saying that the program has not met initial expectations or those of its Congressional sponsors, the letter states that by funding projects by dollar amount, from the lowest to the highest, public power systems received a relatively small portion of the allocations. Moreover, the letter notes that the allocations were made to governmental entities developing small, dispersed solar projects. "Such awards breed inefficiency and threaten the ability to create a market attractive to investors," APPA said.
Connecticut's Rep. DeLauro May Get Boost in Renewables in Ag Spending Bill
Increased oversight and more funding for renewable energy and food safety will top the legislative priority list currently in the works for the House Agriculture Appropriations Subcommittee this year, according to its new Chairwoman, Rep. Rosa DeLauro (D-CT).
Renewable energy programs could see significantly higher funding levels under DeLauro's leadership. Staff for DeLauro said she would work to increase investments in renewable energy and the development of new technologies like cellulosic ethanol. Last year, DeLauro proposed an amendment (which failed) to the agriculture spending bill that would have sunk $500 million more into various programs to support ethanol, biodiesel and other renewables -- more than doubling funding for some programs.