Energy Independence Bills Advance in the House and Senate
Congressional focus on exploring climate change strategies continues, however, the House and Senate Leadership appear to have concluded that moving a large, comprehensive "cap-and-trade" bill this session is not feasible. Instead, leaders have focused their attention on advancing a number of smaller, yet important, legislative initiatives. Efforts are underway to advance energy efficiency, biofuels and carbon capture research and development legislation in both chambers. These initiatives, and others, will likely be combined into one package, and considered shortly after the Memorial Day recess on the House and Senate floors.
Senate Energy and Natural Resources Committee Reports Energy Package
On May 2, by a vote of 20-3, the Senate Energy and Natural Resources Committee adopted legislation to advance research and development of carbon capture technologies, electric drive transportation technology, promote biofuels and urge more aggressive action by the Department of Energy (DOE) on energy efficiency standards.
In a pre-markup agreement, Chairman Jeff Bingaman (D-NM) and Ranking Member Pete Domenici (R-NM) agreed to hold off, and advance later on the Senate floor, two key amendments in Committee dealing with: 1) a federal renewable portfolio (RPS); and 2) a provision that would mandate production levels for coal-to-liquid (CTL) as part of the biofuels program. During markup proceedings, however, the agreement unraveled, with Sens. Craig Thomas (R-WY) and Jim Bunning (R-TN) joining together to offer a CTL amendment which would create a mandate for fuels derived from coal, and "earmark" funding to study carbon capture technology on CTL facilities. During the heated and, at times, partisan discussion, Sen. Byron Dorgan (D-ND) threatened to bring up the RPS amendment in retaliation. In the end, the Thomas-Bunning amendment failed by an 11-12, party line vote, and the federal RPS amendment was not offered.
Among the amendments approved by the Committee was one advanced by Sen. Maria Cantwell (D-WA) "to accelerate and encourage the development of a new nationwide intelligent grid system."
In advance of the May 2 markup, 50 U.S. Senators sent a letter to Chairman Bingaman urging inclusion of a federal RPS (see details on bill below) in any upcoming energy legislation that the Energy and Natural Resources Committee considers. Four Republicans signed the letter: Sens. Olympia Snowe (R-ME), Susan Collins (R-ME), Arlen Specter (R-PA) and Norm Coleman (R-MN). Although this letter indicates strong support for an RPS, Bingaman reportedly has only 52 votes for the measure. Unless he thinks he can muster the 60 votes needed to defeat a filibuster, he may not want to jeopardize passage of the energy package by offering the RPS amendment on the floor.
Bingaman RPS Bill Released; 15% by 2030
Prior to the May 2 Committee energy bills markup, Chairman Bingaman released a draft version of his revised RPS legislation. The new bill is substantially similar to the RPS title approved in the Senate version of the Energy Policy Act of 2005 (EPAct), but it would require utilities to meet a renewables requirement of 15% by 2030, instead of 10% as in EPAct. The requirements would apply to all distribution utilities (jurisdictional and non-jurisdictional) that sell more than 4 million MWhrs of energy/year. That threshold would include about 22 large municipal utilities, according to data prepared by the American Public Power Association.
Affected utilities may meet the renewable energy requirements by using tradable credits issued by DOE for energy from new renewable energy projects, non-tradable credits issued for energy from existing renewable resources or by making alternative payment to DOE of 2.0 cents per kilowatt-hour. No credits will be issued for energy generated by an existing hydropower project, but energy generated at such a project may be subtracted from the base on which the renewables requirement is calculated. Incremental hydropower that results from improvements to existing projects made after the date of enactment of the RPS will be considered a "new" renewable resource and receives tradable credits.
Excel Floats Alternative RPS Proposal
Excel, a large, Colorado-based investor-owned utility is working to garner support for its "Clean Energy Portfolio Standard," that would mandate a 25% by 2025 standard which would include new nuclear power generation as well as integrated gasification combined cycle (IGCC) plants. There has been speculation that the Excel proposal would be offered during Senate floor consideration, of the Bingaman RPS proposal. At this time it is difficult to tell how much support in the Senate there is for the approach.
Cap-and-Trade Would Impact Economy, CBO Says
The nonpartisan Congressional Budget Office (CBO) recently released an eight-page analysis on the effects of a CO2 cap-and-trade system on the economy. The study found that electricity, gas and travel would all cost more, the U.S. would have job losses and the poor would suffer the most if such a system to control carbon dioxide emissions were implemented. If a 15 percent reduction in CO2 emissions were required, most sectors of the U.S. economy would lose jobs. High carbon emitting companies would have the hardest time, especially the coal industry. Depending on how legislators draft a bill, they could "mitigate consumer pain," according to the CBO. For example, the study found that if an "auction" system of allocating emissions credits were instituted, consumers would feel less economic pain.
Lawmakers had mixed reactions to the report. Sen. James Inhofe (R-OK) said that the report confirmed his belief that a cap-and-trade system would hurt the U.S. economy and do little to reduce emissions. Democratic spokespeople for the Senate Environment and Public Works Committee declined to comment.
House Science and Tax Committees to Consider Energy Bills
The House Ways and Means Committee is expected to consider, before the Memorial Day recess, an energy tax title on renewable and biofuels tax incentives. In addition, the House Science Committee is working to develop refine legislation that would establish an Advanced Research Projects Agency for Energy (ARPA-E), and promote critical technologies that would promote energy independence and accelerate innovation in energy technologies. The bills, once reported by their respective Committees, will be merged on the House floor and considered as one "energy independence" bill. Of interest to NEPPA will be tax incentives for public power to invest in renewable energy generation and effort to advance certain biomass energy technologies.
Cantwell to Introduce Energy Incentive Bill, with 5-year CREB Extension
Sen. Maria Cantwell (D-WA) plans to introduce this Thursday (5/10) a comprehensive energy tax incentives bill, titled the "Clean Energy Incentive Assurance Act," in an attempt to advance development of renewable energy and energy efficiency efforts. The bill includes, among other things, a five-year extension of the Clean Renewable Energy Bond (CREB) program, with an annual volume cap of $5 billion. In the summary of the bill, Cantwell also mentions that the "smallest-to-largest" project allocation has made it difficult for these bonds to be an effective incentive for large-scale projects.
In addition, the bill includes a five-year extension of the production tax credit (PTC) for eligible renewable energy resources, an eight-year extension of the investment tax credit (ITC) for solar and fuel cell technologies, and energy efficiency tax incentives for commercial and residential buildings. Sen. Cantwell is a new member of the Finance Committee and will be actively involved in the development of the Senate's version of an energy tax package, expected sometime in June.
Morgan Meguire has been meeting with the Cantwell office to discuss concerns about the current CREB program and ways to reform it. Cantwell's office is committed to working with public power to advance a reasonable (cost wise) and workable proposal, particularly as it relates to the "smallest-to-largest" methodology currently utilized by the IRS when allocating volume cap. In addition, Cantwell's office is aware that there is a definitional problem with the current statute (i.e. the broad definition of "governmental borrower" that allows entities other than utilities with an obligation to serve to receive CREB allocation), and may need further refinement.
Reps. Pomeroy and Lewis Introduce One-Year CREB Extension
At the request of the National Rural Electric Cooperative Association (NRECA), Reps. Earl Pomeroy (D-ND) and Ron Lewis (R-KY) introduced H.R. 1965, a bill that would extend the CREB program for one year (through December 31, 2009) and provide a bond allocation volume cap of $1 billion for 2008 and $1 billion for 2009. Additionally, the bill would limit the amount of CREB allocations to "governmental borrowers" to $625 million for 2008 and $625 million for 2009. The bill also provides some technical modifications. Reps. Pomeroy and Lewis are both members of the House Ways and Means Committee.
While the coop bill is substantively different from the bill advanced by Reps. McDermott (D-WA) and Ramstad (R-NM), and supported by the American Public Power Association (APPA), it demonstrates broader support for the CREB program among members of the powerful tax writing committee. It is likely that Chairman of the Select Revenue Subcommittee, Rep. Richard Neal (D-MA), will meld the two bills (H.R. 1821 and H.R. 1965) together when developing an energy tax package, in the coming weeks.
Kelliher's Re-nomination Hearing Announced; NEPPA Submits Questions to Sanders
On Thursday, May 10, the Senate Energy and Natural Resources Committee has scheduled a re-nomination hearing for the Republican Chairman of the Federal Energy Regulatory Commission (FERC), Joseph Kelliher. If re-confirmed by the Senate, Kelliher would serve for an additional five-year term. His current term ends June 30, 2007. If the Committee does not re-confirm him by that date, the President could do so by a "recess appointment" when Congress is not in session. A recess appointment however would only extend his term until the end of the 110th Congress (not a full five-year term).
Given that Democrats are in the Majority, and would prefer to advance their own candidate for the Commission, this scenario is certainly possible.
Today, Morgan Meguire, on behalf of NEPPA, briefed staff to Sen. Bernie Sanders (I-VT) on issues the Senator may want to ask Chairman Kelliher about at the hearing. They question whether:
Lastly, the Vermont Public Service Board sent a letter to Sen. Sanders, expressing support for the Kelliher nomination. In their letter, the Commissioners note Kelliher's "full respect for the role of states in the federal regulatory process."
NEPPA and others Send Letter of Support to House and Senate on EXTEND
On May 7, 2007, the Northeast Public Power Association (NEPPA) joined a coalition of chemical companies, environmental organizations, utilities and others in sending letters of support for S. 822/H.R. 1385, EXTEND the Energy Efficiency Incentive Act of 2007. The letters were sent to Chairman Charlie Rangel (D-NY) and Ranking Member Jim McCrery (R-LA) of the House Committee on Ways and Means and Chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA) of the Senate Finance Committee, requesting their support on this important legislation. The bill would extend the duration and levels of energy efficiency tax incentives enacted in the Energy Policy Act of 2005. The primary goal of the extension is to give organizations enough time to complete renewable and energy efficiency projects before the tax incentives expire.
The bill is cosponsored by 9 Members in the Senate and 30 in the House. From New England, sponsors include Reps. Ed Markey (D-MA), Barney Frank (D-MA), Patrick Kennedy (D-MA), and Chris Shays (R-CT) and Sens. Olympia Snowe (R-ME) and John Kerry (D-MA).