New England Senators Send Strong Letter to FERC Requesting "Substantive Parity" for Their Consumers on Incentive Rates; National Grid Counter-Punches
On Tuesday, February 6, a bipartisan group of seven New England (NE) Senators sent a strong letter to FERC Chairman Joe Kelliher, urging the Commission to reconsider and reverse its approval of the 100 basis point incentive "adder" at issue in a pending New England case (Order No 489). The letter was signed by Sens. Joe Lieberman (I-CT), Olympia Snowe (R-ME), Bernie Sanders (I-VT), Edward Kennedy (D-MA), John Kerry (D-MA), Christopher Dodd (D-CT) and Susan Collins (R-ME). Upon learning of the letter, National Grid and Northeast Utilities (NU) met with a number of Senate offices before it was sent to try to discourage their support.
In the letter, the Senators commended FERC on changes made in its national rulemaking on incentive rates (Order 679-A). They applauded the added consumer protection provision which "set forth a stringent ‘nexus' test under which the incentive proponents must show the relationship between requested transmission incentives and demonstrated risks and challenges facing transmission owners in building proposed transmission facilities."
The Senators told FERC, "We believe reversal would provide ‘substantive parity' for New England electric consumers, who deserve to benefit equally with all other consumers in the country from the Commission's decision to enhance the consumer protections in the transmission incentive rule."
National Grid and NU told the Senate offices that compliance with FERC's national rulemaking that it would further delay transmission construction and result in higher congestions cost and electricity prices in the region. They also pointed to the MISO region and indicated that the incentives approved in that region were even higher than what the NE transmission owners requested. Some Senators seemed swayed by these arguments and did not sign the letter.
NEPPA members estimate that the impact on consumers if the 1% adder remains in effect would be an added $27 million per year by 2011 (based on transmission projects already approved in the ISO's 2006 Regional System Plan.) On a cumulative basis, between 2005 and 2011, consumers will pay an additional $115 million.
Markey Tapped to Head Select Committee on Climate
Yesterday (2/9), Chairmen of the Energy and Commence Committee John Dingell (D-MI), and House Oversight and Government Reform Committee Henry Waxman (D-CA) settled a three-week-long dispute with Speaker of the House Nancy Pelosi (D-CA) over the creation of a new Select Committee on Global Warming and Energy Independence. Rep. Ed Markey (D-MA) has been tapped to head the new Select Committee.
Chairmen Dingell and Waxman, said they "now approve of the Select Committee," after receiving assurance from Speaker Pelosi that the new panel would not steal legislative authority and will expire on Oct. 30, 2008. "We are pleased that we have been able to successfully resolve questions concerning the authorities and responsibilities of the proposed select committee on climate change and energy and can now proceed to write legislation to address the causes and effects of climate change," the congressmen wrote.
As Chairman of the Select Committee, Markey will have a "bully-pulpit" form which he can make recommendations on legislation. However, he will not be able to legislate directly.
Dingell and Waxman will also receive "first crack" at any witnesses and must be consulted before the Select committee issues subpoenas.
Amid the dispute, Dingell announced plans to hold a series of global warming hearings, including a March 21 session with former Vice President Al Gore. Speaker Pelosi, on the other hand, has vowed to move global warming and energy legislation to the House floor by July 4.
Olver Sends Letter to Bush Urging Support on GHG reductions
In a recent letter Rep. John Olver (D-MA), Chairman of the Transportation, Housing and Urban Development appropriations Subcommittee, called on President Bush to endorse a mandatory, market-based "cap and trade approach" to reduce greenhouse gas (GHG) emissions. The letter was sent on February 1, with the support of 39 other House members, all of which are co-sponsors H.R. 620, the Climate Stewardship Act, introduced by Reps. Olver and Wayne Gilchrest (R-MD) on January 22. H.R. 620 would implement a market-based cap and trade approach to reducing GHG emissions by at least 75 % in the next half century.
The letter encourages the President to embrace a similar approach, noting that voluntary efforts have not been enough and that GHG emissions continue to rise at 1-2% per year. The letter also points to the fact that "CEOs from ten major companies with operations across the economy -- utilities, manufacturing, petroleum, chemicals and financial services -- banded together with leading environmental groups to call for a firm nationwide limit on carbon dioxide emissions." According to Olver, these companies realize that US businesses stand to gain from the cap and trade approach, both through regulatory certainty, which allows for efficient planning for future business investments, and through new market competition for energy and emissions-related technologies.
IPCC Says Human Activity to Blame for Climate Change; Rep. Markey Calls Report "Scientific Smoking Gun"
On February 2, the Intergovernmental Panel on Climate Change (IPCC) released a report called "Climate Change 2007: The Physical Science Basis," that concludes with at least 90 percent confidence, that CO2 and other greenhouse gases from human activities constitute the main drivers of global warming since 1950. This is the strongest language used by the IPCC to date, compared to a confidence level of 66 to 90 percent in the 2001 IPCC report that human activities are the main force. About 2,500 scientists from more than 100 countries have worked to put the report together over the last six years.
In releasing the report in Paris, scientists said that "evidence of global warming is ‘unequivocal' and human activities are the major factor driving the temperature rise," which prompted calls from world political and scientific leaders for immediate action to address global warming.
The IPPC release is the first of three major sections of the full IPCC report, which is the fourth put out by the international panel since its founding in 1988. A second portion, on the environmental and social effects of climate change, will be released in April, and a third section, on options to limit GHG emissions and mitigate global warming, is set for May. An overall summary of the three sections is due in November.
Rep. Ed Markey (D-MA), recently tapped by Speaker Nancy Pelosi (D-CA) to head a proposed special committee on global warming (see separate story), issued a statement calling the IPCC report a "scientific smoking gun."
Senate Majority Leader Harry Reid (D-NV) told reporters yesterday (2/6), when asked about the IPCC report, that "The majority of people in the House and Senate believe global warming is here, we know what it's caused by, and we need to do something about it. It's only this administration that doesn't want to do anything about it."
Chairman of the Environment and Public Works Committee (EPW), Barbara Boxer (D-CA), said she planned to discuss the report with officials at the United Nations. The international community is "excited there are senators paying attention" to global warming, she said. Meanwhile, EPW Committee ranking member James Inhofe (R-OK) dismissed the IPCC findings and Democrats' push for emissions reductions as "alarmist."
President's FY 08 Budget Released
On Monday, February 5, the President released his FY 08 budget, which includes $24.3 billion for the Department of Energy (DOE). Of interest to NEPPA, included in the DOE budget is $4.946 million for the Renewable Energy Production Incentive Program (REPI). Also included is $1.5 billion for Low-Income Home Energy Assistant Program (LIHEAP), with $282 million in emergency funding, for a total of $1.782 billion. This is approximately $1 billion less than FY 06 funding, and significantly lower than the $5.1 billion authorized for LIHEAP in the Energy Policy Act of 2005. Advocates of increased LIHEAP funding participated in "LIHEAP Day" on February 1, to encourage Congress to fund the program at $3.1 billion level, which was the total amount appropriated in FY06.
APPA Legislative Rally Slated for March 12-15, 2007
The 2007 APPA Legislative Rally is scheduled to start with the Welcoming Reception on Monday, March 12, and run through Wednesday, March 15, in Washington DC. NEPPA members will be scheduling Hill visits and Morgan Meguire will develop talking points and background information on issues of interest. A package of information will be mailed to all NEPPA members attending the Rally, prior to arriving. In addition, NEPPA will be hosting a breakfast briefing on Tuesday, March 13, so that members can discuss issues with Morgan Meguire staff prior to meeting with their Congressional delegation. More details on the briefing will be forthcoming.
A brief outline of the APPA schedule is below:
Monday, March 12
5:30-7:00 p.m. APPA Welcoming Reception
Tuesday, March 13
8:00 a.m. Breakfast Briefing for NEPPA Members (All encouraged to participate)
9:30 a.m. - Noon APPA Legislative & Resolutions (L&R) Committee Meeting
Noon - 1:30 p.m. APPA L&R Luncheon
2:00-5:00 p.m. NEPPA Hill Visits
Wednesday, March 14th
7:30 a.m. - 9:00 a.m. APPA Legislative Rally Breakfast
10:00 a.m. -6:00 p.m. NEPPA Hill Visits
Thursday, March 15th
APPA Board Meeting
Depart for Home
Details and registration can be found on APPA's website at http://www.appanet.org/.
Treasury Responses to Rep. McDermott Request for Additional CREB Allocation Details
On February 5, the IRS responded to a letter from Rep. Jim McDermott (D-WA) requesting additional information about the allocation of $800 million of Clean Renewable Energy Bond (CREB) authority. Although the IRS was prevented from releasing information about specific applications, it did provide data about the size, scope, nature and location of applicants and projects on a state-by-state basis.
The IRS evaluated 709 applications requesting funds for 772 projects and used the "smallest to largest" methodology without regard to whether a project would be owned by a governmental entity or coop.
Governmental borrowers submitted applications for 689 projects requesting approximately $2 billion, at an average of $2.9 million per project. Of these, 530 projects received full allocations and two received partial allocations. The IRS denied remaining governmental applications when the $500 million progam "split" authorized in EPAct was reached.
Coop borrowers submitted applications for 83 projects requesting $555.7 million at an average of $6.5 million per project. Seventy-seven of these received a full allocation and some were denied because they would have exceeded the cap. Because there were fewer coop applications, the funds approved were generally larger than those for governmental borrowers.
From New England, see list below for CREB allocation broken down by resource and by States. They include:
Wind:
Connecticut: 3 applied ($7.8 million); 3 granted ($7.8 million)
Massachusetts: 10 applied ($70.5 million); 2 granted ($3.4 million)
New Hampshire: 1 applied ($32 million); 1 granted ($17.3 million)
Rhode Island: 2 applied ($4 million); 2 granted ($4 million)
Biomass:
Connecticut; 2 applied ($11.1 million); 1 granted ($1.1 million)
New Hampshire: 1 applied ($14.8 million); 1 granted ($14.8 million)
Vermont: 2 applied ($31 million); 1 granted ($6 million)
Solar:
Connecticut; 3 applied ($2.4 million); 3 granted ($2.4 million)
Massachusetts: 13 applied ($4.7 million); 13 granted ($4.7 million)
Landfill Gas Facilities:
Rhode Island: 1 applied ($1.2 million); 1 granted ($1.2 million)
Vermont: 1 applied ($1.3 million); 1 granted ($1.3 million)
Trash Combustion Projects:
Connecticut; 2 applied ($10 million); 0 granted
Hydropower Projects:
Massachusetts: 1 applied ($2.5 million); 1 granted ($2.5 million)
APPA Holds Symposium on Restructuring; Releases Numerous Reports
On February 5, APPA held a symposium in Washington, DC to discuss the findings of six in-depth studies of problems in wholesale electric markets as part of the association's Electric Market Reform Initiative. Lester Lave, Co-Director of the Electricity Industry Center at Carnegie Mellon University said that restructuring of the electricity market has achieved some goals (such as improving operations) but not others, such as lowering prices and providing investment incentives.
The symposium and studies are the first stage in a two-part APPA process. The next step will be to address the problems in ways that benefit consumers and fit public power's business model. The studies examine the factors behind price increases, winners and losers in restructured markets, locational marginal pricing and other economic factors in the organized markets run by regional transmission organizations. For copies of the reports go to: (Assessing Restructured Electricity Markets: An APPA Symposium, February 5th, 2007)