Discussions Continue on "Energy Independence" Bill
Closed-door discussions between House and Senate Leaders and key Members and staff continue on the "energy independence" bill, with the most recent "inside" intelligence indicating that leadership may split the bill into two separate efforts. The first bill would include an increase in the automobile fuel economy standards, a renewable fuels mandate, various energy efficiency appliance standards and key provisions to advance research and development of carbon capture and storage technologies (CCS). A second bill would include a 15% federal renewable portfolio standard (RPS) and a $15-20 billion energy tax title. The rationale, although nothing has been announced officially, is that the Senate does not have enough votes to advance a package that includes an RPS and a tax title, since the Senate version of the "energy independence" bill did not include either.
From NEPPA's perspective, this strategy would be unfortunate, because the tax title includes an extension of, and important modifications to, the Clean Renewable Energy Bond (CREB) program, as well as key tax deductions for energy efficiency commercial buildings and incentives for energy efficient new homes. New England Rep. Richard Neal (D-MA) has been helpful in advancing the CREB provisions as has Rep. Ed Markey (D-MA), on the energy efficiency provisions. Sen. Olympia Snowe in the Senate is the lead champion on the energy efficiency tax incentives, and Sen. John Kerry (D-MA) has also weighed in with key Senate Finance Committee staff on the CREB extension and modifications.
Senate Majority Whip Durbin Weighs-In With FERC on Transmission Allocation
On October 11, Senate Majority Whip *** Durbin (D-IL) sent a strong letter to FERC Chairman Joseph Kelliher expressing opposition about a recent decision approving a proposal to "roll-in" costs of new transmission facilities in the PJM Interconnection. Durbin advocated a reversal of the FERC decision, stating that those who will not benefit from these upgrades, particularly Illinois consumers, will be paying a significant portion of the costs, while the upgrades will primarily benefit the eastern portion of the PJM region.
Durbin said, "Illinois has been supportive of the Commission advancement of competitive structures. However, the Commission's recent decision is a dramatic departure from its traditional approach of cost allocation. I am concerned that this approach will result in an inadequate rate structure for Illinois electricity customers."
The Durbin letter indicates that those utilities that favor "participant funding" for new transmission facilities have not given up the fight and again, are turning to Congress to help persuade FERC to adopt that cost allocation formula.
Senate Holds Hearing on Climate Bill, Dec. 5 Markup Scheduled
On November 8, the Senate Environment and Public Works (EPW) Committee held a hearing on S. 2191, "America's Climate Security Act," sponsored by Sens. Joe Lieberman (I-CT) and John Warner ((R-VA). A second and third hearing on the bill are scheduled for November 13 (today) and November 15. EPW Committee Chairman Barbara Boxer (D-CA) announced on November 9 that a full committee markup will be held on December 5.
Witnesses testifying before the committee on Nov. 8 included representatives from PG&E, World Resources Institute, CRA International, the American Council for Capital Formation and the Environmental Resources Trust.
In her opening statement, Chairman Boxer said that while she would like to pass a perfect bill, she recognizes that it is impossible. Therefore, Boxer said, the focus of the committee should be to pass a "good bill," which the Lieberman/Warner bill is.
Sen. Inhofe (R-OK), a leading critic of the science behind climate change, commented that the bill would have enormous negative impacts on the U.S. economy. Sen. Lieberman (I-CT) responded that his bill would not hurt the U.S. economy and that an Energy Information Administration (EIA) analysis of the bill showed that electricity prices would only rise about one cent per kilowatt hour over the next 25 years.
In general, the Nov. 8 hearing highlighted the partisan breakdown of the committee and the general themes, such as distribution of allowances and the effect on the economy, which will be debated as the bill advances. We anticipate that the Committee will approve the bill at the markup on December 5, but do not expect it to be considered by the full Senate this session.
In a related development, the AFL-CIO sent a letter to Chairman Boxer outlining its opposition to a number of provisions in the Lieberman/Warner climate change bill. Specifically, the labor group said it opposes provisions that set up an Advanced Technology Vehicle Incentive program to accelerate introduction of new vehicles, as well as the Sanders amendment, that was adopted in subcommittee, that would limit "incentives" to only those vehicles that meet a 35 miles per gallon standard. That, according to the AFL-CIO, would "limit assistance to American automakers that are trying to increase the mileage standard of their SUVs and pickup trucks which have not yet reached 35 mpg." The union said the bill would reduce new job creation for American workers.
Additionally, two Republican Senators from the Southeast, Sens. Lamar Alexander (TN) and Johnny Isakson (GA) have both voiced their disappointment that the Lieberman/Warner bill does not include provisions to advance nuclear development. At the hearing, both Senators implied they would be more likely to support the bill if it included this type of language. They cited the lack of renewable resources in their states as reasons for needing increased nuclear development as part of any climate change bill.
No House climate change action will take place prior to adjournment.
Hearing Held on the Domestic Energy Industries' Workforce
On November 6, the Senate Energy and Natural Resources Committee held a hearing on the domestic energy industry, focusing on the available workforce and ways to expand it. Two panels, comprised of Department of Labor (DOL), Department of Energy (DOE) representatives, as well as utility and union CEOs, testified about the need for policies which will encourage more people to pursue technical careers in the utility industry.
The purpose of the hearing was to find out what needs to be done to ensure that there are sufficient skilled employees in the utility sector as many begin to retire. Each witness had data that indicated that there would soon be a shortage of skilled employees, such as utility linemen. The average lineman age is currently 48, with only a small percentage being under 30. Within five to ten years, over half of the employees for many utilities will be eligible for retirement. The CEO of Southern Company said that in ten years, 31% of its workforce will be eligible to retire.
The witnesses all offered suggestions as to what policies could encourage a spike in employment in this sector. The DOL, for example, described programs it is pursuing to educate young people about the high paying jobs that exist in this sector. They have given grants to universities to encourage engineering training specific to the utility industry and have founded partnerships with community colleges to assist in training this part of the workforce.
All of the Senators present at the hearing agreed that this is a problem that needs to be addressed quickly. They asked the witnesses for more suggestions on how to encourage young people to pursue these types of careers and said they will work to promote federal policies that will achieve this.
Hatch Drafts Legislation Dealing with Nuclear Waste
Sen. Orrin Hatch (R-UT) is in the process of drafting legislation intended to alleviate concerns regarding nuclear waste. The legislation would require DOE to develop standards for nuclear reactors to use thorium fuel rather than uranium. Thorium is a different type of nuclear fuel, used in place of uranium that has three benefits: no nuclear weapons-grade fuel is created from spent fuel, the amount of nuclear waste is reduced and the fuel improves industry operating economics.
Nuclear industry experts expect there to be an expansion in nuclear power in response to increased concerns about global warming and energy security. Nuclear opponents argue that concerns about nuclear waste disposal, as well as issues regarding nuclear weapons proliferation should decrease federal support for new reactors.
An aide to Sen. Hatch said that the senator's bill will reach a compromise between those who are opposed to the transport of nuclear waste and proponents of nuclear energy, generally. The former group includes prominent senators as Majority Leader Harry Reid (D-NV).
Proponents of the Hatch proposal argue that the thorium fuel cycle produces one third the waste that uranium does, which could help allay concerns about disposal and proliferation of materials.
The Thorium Energy Independence and Security Act of 2007 will be introduced in the coming weeks. The legislation is expected to be offered in time for consideration in upcoming energy bill negotiations, although with that bill already surrounded by controversy; its inclusion does not seem likely.