Lieberman-Collins Request GAO Investigation into RTO Costs and Structure In a letter sent on May 21, Chairman of the Homeland Security and Governmental Affair Committee, Joseph Lieberman (I-CT), and Ranking Member Susan Collins (R-ME) requested the Government Accountability Office (GAO), an independent arm of Congress, to launch an investigation into the costs and operational structures of regional transmission organization (RTOs) and independent system operators (ISOs) to examine if they have brought the intended benefits to consumers as was predicted.
RTOs and ISOs, which were established as a result of FERC Orders 888 and 2000, were supposed to increase efficiency and reduce the cost of wholesale electricity. Sens. Lieberman and Collins questioned whether they are having the desired outcome.
"We are writing now out of concern that ISOs and RTOs might not be living up to their full potential with respect to improving efficiencies and reducing costs, and might not have adequate incentives to minimize costs," the Chairman and Ranking member stated.
"Creating and operating ISOs and RTOs have turned out to be costly," the letter stated. "Hundreds of millions of dollars have been spent on new staff, facilities, software, and other infrastructure" to begin operations, and additional millions are spent every year to operate them. Calling RTOs and ISOs "effective monopolies" within their geographic boundaries, Lieberman and Collins said there are concerns that "the lack of competitive pressure, which otherwise could help constrain ISO and RTO costs, can result in rates that are higher than necessary."
A copy of the Lieberman-Collins letter to GAO has been distributed to NEPPA separately. NEPPA members have been working closely with the two Senate offices to educate them on this important issue and have expressed concerns about the escalating costs associated with market design mechanisms and the RTO governance structure.
House Committees Move Forward on Energy Proposals
On Wednesday, May 23, the House Science and Technology Committee will convene the first mark-up in the House on energy-related legislation. The committee will consider several bills, one of which would create a new Energy Department agency focused specifically on the development of technologies that curb greenhouse gas emissions and improve economy-wide energy efficiency (H.R. 364). The House Energy and Commerce, Natural Resources and Ways and Means Committees are expected to follow the Science Committee's lead, with a comprehensive "energy independence" bill moving to the House floor sometime this summer.
The Science Committee will also consider legislation to advance hydrogen technology (H.R. 632) and fund a significant educational effort to improve college and postgraduate education related to "green" building design and construction (H.R. 1716).
Also on May 23, House Natural Resources Committee Chairman Nick Rahall (D-WV) will hold a hearing on his legislation, entitled the Energy Policy Reform and Revitalization Act of 2007 (H.R. 2337), intended to address energy and climate change policy within that committee's jurisdiction. The bill includes provisions related to advancement of carbon sequestration technology, repeals portions of the Energy Policy Act of 2005 (EPAct) related to oil and gas development on public lands, and addresses the effects of global warming on wildlife, among others. The bill also repeals the authority of the Departments of Energy, Agriculture, Defense, Interior and Commerce to consult and designate national interest corridors for future pipeline and transmission projects over federal lands and substitutes it with a study of the need for such designations.
The House Energy and Commerce Committee has scheduled a legislative hearing for May 24 to discuss proposals to expedite DOE efforts to implement energy efficiency appliance standards, encourage Smart Grid technologies for the nation's electrical grid and make modifications to the loan guarantee provisions from EPAct.
Morgan Meguire Meets with New England Tax Committee Members to Encourage Support for CREB Extension and Modifications
On May 18, Morgan Meguire met with Sen. John Kerry's (D-MA) tax staff, Kathy Kerrigan, and new energy staff, Kathleen Frangione, to express appreciation for the Senator's support on S. 1370, the Clean Energy Investment Assurance Act of 2007. Sen. Kerry joined his fellow Finance Committee members, Maria Cantwell (D-WA) and Gordon Smith (R-OR), in introducing S. 1370, a bill that would, among other things, extend the Clean Renewable Energy Bond (CREB) program for five years and increase bond allocation to $5 billion annually. Kerry's office said they are working closely with the Cantwell staff on efforts to include a CREB extension in the Chairman's mark-up.
In addition, Morgan Meguire met with Sen. Olympia Snowe's (R-ME) staff, Patrick Woodcock (energy) and Tucker Shumack (tax counsel), who indicated they would recommend the Senator cosponsor the Cantwell bill. Snowe also sits on the Finance Committee.
Cantwell, Kerry and Snowe have also said they would work with us to help fix the current definitional problem and allocation methodology so the CREB program works better for public power systems with an obligation to serve.
On the House side, Morgan Meguire met with Amy O'Donnell, legislative assistant to Rep. John Larson (D-CT), a member of the House Ways and Means Committee, and requested that the Congressman consider co-sponsoring Reps. Jim McDermott's (D-WA) and Jim Ramstad's (R-MN) CREB extension and expansion bill, H.R. 1821, the Clean Renewable Energy for Public Power Act (CREPP). The McDermott-Ramstad bill extends the CREB program for ten years and eliminates the volume cap. O'Donnell said she would talk with her Chief of Staff about co-sponsorship.
Co-sponsorship on the bills is helpful as the original sponsors attempt to assuage their respective chairmen to include various legislative proposals in the Chairman's Mark (i.e. the committee chairman's bill prior to amendments). The tax committees will be limited by the cost of the tax incentives, "pay-go" requirements, and also numerous competing proposals. NEPPA members are encouraged to request their Members of Congress co-sponsor H.R. 1821 (McDermott-Ramstad) in the House and S. 1370 (Cantwell-Smith) in the Senate.
Senate Leader Harry Reid Announces Senate Action on "Energy Independence" Plan Soon
On Monday, May 21, Senate Majority Leader Harry Reid (D-NV) announced his intension to combine several energy-related bipartisan bills for consideration by the full Senate "in the coming weeks."
In a statement released by his office, Reid said "Democrats are moving forward with energy legislation (H.R. 1419) to increase the nation's use of renewable fuels; improve the energy efficiency of vehicles, buildings and products; and advance research on capturing and storing greenhouse gas emissions. It will also save consumers money, protect them from price-gouging, and make our country safer and more economically sound by decreasing our reliance on oil - especially oil from unstable regions."
Senate consideration is not anticipated until after the Memorial Day recess.