Rep. Allen Introduces Legislation to Hold ISO New England Accountable for Cost to Consumers; AWEA Weighs-In On Thursday, March 6, Rep. Tom Allen (D-ME), a member of the House Energy and Commerce Committee, along with Reps. William Delahunt (D-MA), James McGovern (D-MA), and Mike Michaud (D-ME) introduced H.R. 5547, the Consumer Protection and Cost Accountability Act. The bill is identical to S. 2660, introduced in February by six New England Senators under the leadership of Sens. Bernie Sanders (I-VT) and Olympia Snowe (R-ME). The House bill also garnered the support of the Maine Public Utility Commission and Maine Public Advocate.
Now that the legislation has been introduced in the House and Senate, NEPPA Members should write or e-mail their Members of Congress and request that they cosponsor H.R. 5547 and S. 2660. The more support the bill has, the more impact it will have on Federal Energy Regulatory Commission (FERC) and the New England Independent System Operator (NE-ISO). Secondly, if your Member of Congress committed to be an original co-sponsor, please send a thank-you letter on behalf of your consumer-owned utility.
In a related development, Lori Pickford of Morgan Meguire and Scott Strauss of Spiegel & McDiarmid plan to meet, later this week, with the staff of the American Wind Energy Association's (AWEA) to discuss S. 2660/H.R. 5547. As you know, the wind industry has raised some preliminary concerns with Sen. Sander's office on the bill - inquiring if the "cost-benefit" requirement could discourage renewable energy development. Pickford and Strauss plan to inform AWEA that it is not the intent of the legislation. Instead, the intent is to make clear to all RTO/ISOs that their mission must be expanded to ensure that they acknowledge the need to operate in a cost‑effective manner, and that RTOs and ISOs make express the cost-benefit tradeoffs inherent in their design initiatives. Moreover, the legislation is sufficiently flexible to permit the assessment of costs or benefits to include, among other things, increasing our nation's energy independence and addressing, over time, important global warming/climate change concerns.
Baucus Considering Energy Tax Package Without Oil and Gas Offsets
There is speculation that Chairman of the Senate Finance Committee Max Baucus (D-MT) is working to develop an energy tax package that will NOT include offsets targeting the oil and gas industry.
On February 27, the House passed H.R. 5351, the Renewable Energy and Energy Conservation Tax Act of 2008, which includes $17.6 billion in renewable energy and energy conservation tax incentives, a number of which NEPPA actively supports. In order to keep their campaign pledge, the House Democrats have "paid for" the bill by eliminating tax incentives currently available to the oil and gas industries. Support for the production and conservation tax incentives is broad and bi-partisan, but the White House, many House and Senate Republicans, as well as moderate Democrats from mostly oil and gas producing states, adamantly oppose the offsets, making passage in the Senate tenuous.
Baucus's signaling of a change in strategy on the Senate increases the likelihood of a stand-alone energy incentive package's making it through both chambers and to the White House, but the task is still difficult. Senate Minority Leader, Mitch McConnell (R-KY) and Treasury Secretary Paulson have resisted numerous attempts to engage on an acceptable package of offsets, consistently expressing support for renewable incentives, but reiterating opposition to the oil and gas "tax increases."
Baucus's strategy is to try to secure the support of oil and gas Democrats such as Sen. Mary Landrieu (D-LA), as well as moderate Republicans such as Sen. Pete Domenici (R-NM), ranking member on the Senate Energy and Natural Resources Committee. Whether this strategy will be successful remains to be seen.
Morgan Meguire Meets With Sununu Staff on Energy Incentives
On March 10, Lori Pickford of Morgan Meguire, along with a broad coalition representing large retail businesses, homebuilders, manufactures, environmental groups and utilities, met with key staff to Sen. John Sununu (R-NH) in an effort to garner support in the U.S. Senate to pass an energy tax incentives tax bill (see details above). Sununu is a new member of the Senate Finance Committee, and has voted against the energy tax title, most recently as part of the economic stimulus bill.
Generally, the group highlighted that these incentives will not only help address global warning concerns but also create new, high-wage American jobs and spur economic growth. Specifically, Pickford highlighted the Clean Renewable Energy Bond (CREB) provisions, and informed staff that the New Hampshire Electric Cooperative (NHEC) was awarded CREB allocation for two projects: 12 MW biomass facilities and 30 MW wind projects. Unfortunately, the projects did not move forward because the drawdown of the bonds and payback schedules required by the IRS' CREB rules could not be met, so NHEC forfeited its CREB allocation. Pickford, however, made clear that the technical changes made to the CREB program in the House-passed energy tax bill (H.R. 5351) would fix some of the problems NHEC was confronted with, and that the additional $2 billion in CREB funding would help them to move forward with additional renewable projects.
Staff asked for additional details on the proposed projects by NHEC and for a copy of the House CREB language. He also said Sen. Sununu was supportive of the clean energy tax extenders, but not the offsets to pay for them that target the oil and gas sectors.
Senators Reed and Collins Offer Amendment to Budget Resolution
This week, Senators Jack Reed (D-RI) and Susan Collins (R-ME) are planning to offer an amendment to the Budget Resolution to increase LIHEAP to the authorized level of $5.1 billion. President Bush proposed $1.7 billion for LIHEAP block grants in his FY09 Budget. The Senate Budget Resolution includes $2.5 billion for LIHEAP. This amendment would add an additional $2.6 billion, to the budget resolution. Sens. Reed and Collins, as well as other NE Members of Congress, are frequent supporters of increase LIHEAP funding.
Dingell Announces Plans to Release Climate Bill in April
House Energy and Commerce Committee Chairman John Dingell (D-MI) recently announced that he plans to release one or more draft global warming bills by mid-April. Dingell and Rep. Rick Boucher (D-VA), the chairman of the Energy and Air Quality Subcommittee, have repeatedly said they want President Bush to sign an economy-wide climate bill before the end of the year, but both Democratic congressmen have, until now, refrained from outlining any more specific schedule for their efforts.
At a recent meeting with major environmental group leaders, Dingell said that drafting cap-and-trade legislation was so complex that work needed to begin now, otherwise it could take numerous years to construct a workable bill.
Chairmen Dingell and Boucher have released three "white papers" on key issues, in an attempt to focus their 57-Member Committee on several of the hurdles to enacting a cap-and-trade plan. The three "white papers" released by the Committee focused on: the benefits and core design elements of a cap-and-trade program, the competitiveness of U.S. industry under a cap-and-trade regime, and what the role of state and local governments in a climate program.
Clearly, Dingell and Boucher have a difficult job ahead of them to find a majority of Committee members to support a bill. The Committee has a number of liberal Democrats, such as Reps. Ed Markey (D-MA) and Henry Waxman (D-CA), who will demand strict emission limits, as well as coal- and oil-state Democrats, such as Reps. Bart Gordon (D-TN) and Charlie Gonzalez (D-TX) and Chairman Boucher, himself, who are concerned about the economic impacts to their local economies if a cap-and-trade bill is advanced. In addition, there are a number of Republican members on the Committee who question whether climate change is even a problem.
Utility Sector Spars Over Cap-and-Trade Allowances
According to a recent E&E Daily article, a federal climate change issue that has been simmering recently burst into open view with private utility executives sparring over how to allocate greenhouse gas (GHG) emissions credits.
On one side, utilities such as Florida Power & Light (FPL) and Pacific Gas & Electric (PG&E), with substantial base-load generation from nuclear, natural gas and hydropower resources, want an auction system of distributing GHG emissions credits. On the other side, utilities such as American Electric Power Corp (AEP) and Duke, which have significant coal-based generation, are advocating for a system that would provide GHG emissions credits at no cost, based on a utility's historic emission levels. These differences of opinion, clearly, are not limited to investor-owned utilities (IOUs).
Adding to the trade press, Jim Rogers, the CEO at Duke Energy Corporation, recently criticized the Lieberman-Warner bill by describing the legislation as a "bastardized" version of a cap-and-trade program. The Lieberman-Warner bill, expected to be considered by the Senate as early as April, would initially allocate 19 percent of the allowances to fossil fuel burning utilities (and one percent to a specific group of electric cooperatives). Those allowances would decrease to zero by 2030.
Under the Lieberman-Warner framework, 21.5 percent of allowances would be auctioned in 2012, with another five percent allocated for "early auction; the percentage of allowances allocated to the auction would then grow to 61.9 percent in 2050.
Duke has defended the company's push for free allowances as a way to "lessen the economic shock" as companies transition to cleaner fuels or technology to meet the new climate requirements. Duke argues they are not "looking for a free ride", according to E&E Daily.
As the debate on comprehensive climate change legislation advances, the fight over allocation of allowances and the merits of an allowance auction will likely become more heated in all sectors of the utility industry.
Department of Energy Denies Requests for Rehearing of NIETCs
On Thursday, March 6th, the Department of Energy (DOE) issued notice that it had denied requests for rehearing of the Mid-Atlantic and the Southwest Area National Interest Electric Transmission Corridors (National Corridors) which were designated by DOE in October 2007 as areas of electricity congestion.
In dismissing the requests for rehearing, DOE said that the requests were without merit, citing the fact that extensive data analysis was conducted in its 2006 National Interest Electric Transmission study. DOE stated that there was plenty of opportunity for public review and comment, another reason why the requests were denied.
The NIETC program has come under fire from state regulators and others in the designated areas who fear the loss of state jurisdiction over siting of new transmission facilities. NIETC designation is the first step in a process authorized in the Energy Policy Act of 2005, which could lead to the exercise of "backstop" siting authority by the Federal Energy Regulatory Commission if state regulators delay or unnecessarily condition transmission siting permits in congested areas.
Sanders Sends Letter to Bodman, Klein
Sen. Bernie Sanders recently sent a letter to Secretary of Energy Sam Bodman in which he criticized the announcement of a joint nuclear workshop to be organized by the Nuclear Regulatory Commission and Department of Energy. The purpose of the workshop to deal with "technical issues and research topics for potential extended operation of the nation's nuclear power plants beyond 60 years." The Sanders letter said that the effort failed to consider recent assessments that indicate there are re-licensing problems within the nuclear energy industry. The letter added that extending licenses beyond 60 years is irresponsible considering the safety risks that already exists in many of the aging nuclear power plants.