Snowe/Feinstein & Markey/McDermott Ready Reintroduction of the EXTEND Bill; Soliciting Co-Sponsors
Sens. Olympia Snowe (R-ME) and Dianne Feinstein (D-CA) plan to reintroduce the Energy Efficiency Tax Incentives Act ("EXTEND") on March 2. Reps. Jim McDermott (D-WA) and Ed Markey (D-MA) will introduce a companion bill in the House once they gain Republican cosponsor.
The Energy Policy Act of 2005 (EPAct) created tax incentives for energy efficient commercial buildings, homes, and equipment; however those incentives expire at the end of 2007 and 2008. The EXTEND bill, among other things, would improve upon these existing tax incentives by increasing the deduction for existing homes that are retrofitted to increase efficiency, extend for 5 years the tax deduction for energy efficient property installed in commercial buildings, and extend the tax credit for 5 year for energy efficient new homes. A fundamental change in this year's bill is an emphasis on providing "performance-based" incentives instead of providing "cost-based" incentives. So for example, the bill encourages energy efficiency measured by on-site ratings for whole buildings and factory ratings for products like air conditioners, furnaces, and water heaters. In the instance of retrofitting an existing home, the bill provides a $2,000 tax credit to the homeowner that retrofits their home to provide for 50% efficiency savings.
Efforts to garner co-sponsors in both the House and the Senate are underway by organizations such as the Natural Resources Defense Fund (NRDC). Sen. John Kerry (D-MA) has agreed to co-sponsor the Senate bill.
In October 2006, NEPPA joined 32 other organizations in sending a letter to then-Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Max Baucus (D-MT) in support of the 2006 EXTEND Act (S. 3628) and encouraging its inclusion in future energy tax incentives legislation.
Department of Energy Proposes Developing Energy Efficiency Standards
On February 26, the Department of Energy (DOE) sent a proposal to Congress that has a goal of developing energy efficiency standards for appliances and other products in a more rapid manner. The proposal would give DOE the authority to issue a "direct final rule" if stakeholders can reach an agreement on an efficiency standard for a given product. If a consensus is reached among stakeholders, but DOE receives "legally relevant adverse public comments," the new standards would not go into effect.
Secretary of Energy Samuel Bodman said that the legislation would give DOE the authority to set standards more rapidly, in turn achieving energy savings more promptly. Refrigerators, central air conditioners, water heaters and commercial freezers are among the more than 30 products which could be affected by the quicker process. Bodman added that it generally takes DOE a year or more to establish efficiency standards. This rule would decrease significantly, the time it takes to set a standard.
Labor Group Weighs-in on Climate Change
The AFL-CIO issued a statement yesterday, which supports "balanced measures to combat global warming." In the statement, the union says, "A growing body of scientific evidence has confirmed the environmental challenge posed by global warming, and the human use of fossil fuels is undisputedly contributing to global warming, causing rising sea levels, changes in climate patterns and threats to coastal areas." AFL-CIO encouraged a careful and thoughtful analysis of the effect of legislative alternatives on critical sectors of the nation's economy, and seemed to express "tacit" support for an approach being developed by Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) and Sen. Arlen Specter (R-PA.).
The Bingaman-Specter proposal, not yet introduced, would control emissions on an "upstream" basis, from fossil fuel producers as opposed to a power plants or vehicles. It includes greenhouse gas (GHG) caps based on "intensity" (defined as emissions per dollar of Gross National Product), and its targets are more moderate than those advanced in the Lieberman-McCain bill and/or other GHG reduction bills currently introduced.
The AFL-CIO statement stands out because labor groups have largely avoided the subject since the 1997 negotiations that led to the United Nations-sponsored Kyoto Protocol.
In a prepared statement, Chairman Bingaman said, "It's certainly encouraging to see organized labor weigh in with their views on energy policy, and especially on global warming. I'm looking forward to working with all labor groups as we continue to further refine and improve our climate bill."
Five Western States to Launch Global Warming Coalition; Similar to RGGI in the Northeast
On February 26, the governors of five Western states signed a global warming "Memorandum of Understanding" (MOU) linking up their efforts to cut greenhouse gas (GHG) emissions.
According to a press release, the five western governors from the states of California, Arizona, New Mexico, Oregon and Washington are now on track to launch a regional cap-and-trade program to address major industrial and commercial emissions, with specific regional emission targets within six months. They also committed to set up a market-based system "such as a load-based cap-and-trade program," by August 2008. Though each of the states will continue implementing their existing programs, the new MOU joins them together into a "Western Regional Climate Action Initiative." Ten Northeast states are on a similar track through the "Regional Greenhouse Gas Initiative (RGGI).
The Western coalition coordinated in part because they believes Congress has not moved fast enough to respond to global warming. The Senate Environment and Public Works Committee is holding a hearing on March 1 on state and local efforts to address global warming.
FERC Holds "Public Conferences" on Wholesale Electric Markets
On Tuesday, February 27, the Federal Energy Regulatory Commission (FERC) held the first in a series of conferences to examine the state of competition in wholesale power markets. Witnesses included prominent pro-competition economists, utility representatives, state regulators, wind energy companies and large customers. Although some speakers, such as John Anderson from ELCON, told the Commission that the organized markets are not working to the benefit of customers, the majority of the witnesses testified that Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) are improving electric industry efficiency and transparency, removing barriers to entry, allocating scarcity fairly and providing benefits to customers.
ISO-New England CEO Gordon Van Welie echoed those who believe the organized markets are a success. He told FERC that, in addition to lowering wholesale power costs in the Northeast and shielding consumers from the risk of financing new generation, ISO-NE would be the most efficient means of achieving regional and federal climate change, implementing a renewable portfolio standard and demand-side management goals.
Roy Thilly, CEO of Wisconsin Public Power Inc. (WPPI), noted that there were some positive aspects of the organized markets, e.g. increased reliability; faster response to outages and greater transparency. However, Thilly said, there were also significant problems in those markets: needed generation and transmission is not getting built; long-term power supply contracts are hard to obtain and some stakeholders have an interest in maintaining congestion. He urged the Commission to step back and undertake a credible assessment of whether the markets were benefiting consumers.
APPA's Joe Nipper told the Commission that the Association was working on a number of reports, which they would be submitting to FERC shortly, from their Electric Market Reform Initiative (EMRI). He also advocated the need to reduce transmission discrimination particularly in rural areas and strongly encouraged FERC to improve RTO regional planning and work to increase transparency and accountability to the end-consumer. Nipper encouraged FERC to embrace joint ownership of transmission, indicated that public power was ready, willing and able to contribute in needed transmission investment.
MISO Customer and Consumer Advocates Blast FERC and "Competitive Markets" in Capitol Hill Trade Press
In a full page advertisement in "Roll Call" (a trade publication widely read on Capitol Hill), large customer groups in tandem with advocates for affordable energy from the Midwest printed an "Open Letter" to FERC. They strongly advocated "relief from FERC policies and actions that have not produced competitive markets and, instead have harmed consumers, hurt our economy and erected barriers to reliable service and reasonable prices." The letter was published today as FERC opened the first of several planned "public conferences" on competition in wholesale electricity market (see article above).
The letter said that, "instead of lower prices, better service and enhanced infrastructure, customers are often confronting rate shock and declining reliability. Despite the mismatch between expectations and actual results, RTOs continue to add additional products and services onto their organized market platforms, attribute the rate shock to higher fuel costs, and blame rate shock on retail price caps imposed by state to, in part address stranded costs."
The letter's authors said FERC should not grant suppliers with market pricing authority absent an affirmative demonstration that competition exits and that it is capable of ensuring just and reasonable electric prices. They also called on Congress to conduct an independent examination of the effectiveness and cost impacts of RTO market mechanisms deployed, proposed, and on the horizon in PJM and MISO.
The group includes the Industrial Energy Users-Ohio (IEU-Ohio), Ohio Partners for Affordable Energy (OPAE), Coalition of Midwest Transmission Customers (CMTC), and West Virginia Energy Users Group (WVEUG).
New England Congressional Staff Changes
Sheila Duffy, Senator Dodd's (D-CT) energy Legislative Assistant has left the Senate to become the Legislative Director for Rep. Joseph Courtney (D-CT). In addition to managing the policy staff, Duffy will be handling energy, environment, and education issues.