Senate Passes Short-Term Clean Energy Tax Package by a Vote of 88-8 On April 10, the Senate passed, by a vote of 88-8, a Cantwell (D-WA)-Ensign (R-NV) amendment to the housing bill that extends an array of tax-based incentives for renewable energy production, conservation and energy efficiency initiatives. The Clean Energy Tax Stimulus Act (S. 2821) is a one-year, $6 billion energy tax incentive proposal that includes an extension of the Clean Renewable Energy Bonds (CREBS), the production tax credit for renewable development and investment tax credit for solar and fuel cell technology. The Cantwell-Ensign amendment also includes incentives to encourage energy efficiency in commercial building, new homes and to help finance energy efficiency improvement to exiting homes.
Of specific interest to NEPPA is the CREB program, which is extended for one year, until the end of 2009, with an additional authorization of $400 million. This authorization is split equally among public power utilities, electric coops and other governmental entities. There are no additional changes to the CREBs language, even though they had been sought by public power. These had included a modification to the allocation method, changing it from a "smallest to largest" methodology to "pro-rata." The underlying bill on housing was also approved, 84-12 and now goes to the House for consideration.
The Cantwell-Ensign amendment is expected to run into problems in the House, as the provision is not revenue neutral (i.e. does not include a reduction in federal spending to "pay-for" increased spending), and the House has adopted a rule, under which all federal spending must be paid-for by offsets, so as not to further increase the federal deficit. This pledge, and the current state of the economy, as well as it's desire to stimulate "green" investments as a first step in efforts to address climate change puts the House is in a tough position on how to advance long-term clean energy tax incentives this year.
In February, the House passed H.R. 5351, the Renewable Energy and Energy Conservation Tax Act of 2008, a $17.6 billion energy incentives bill. In order to "pay for" the renewable and energy efficiency incentives, the bill rolls back existing tax breaks for the oil and gas industry, which prompted the President to threaten a veto if the rollback are included in a final bill. The White House and the Republican Leaders in both the House and Senate have resisted, to date, efforts to find acceptable offsets that will pay for the clean energy incentives.
NEPPA Members to Meet with GAO on "Competitive Markets"
On Wednesday, April 16, a number of NEPPA members and their key staff plan to meet with the Government Accountability Office (GAO), an independent arm of Congress, to address questions regarding wholesale competitive markets and whether consumers are benefiting in New England. The meeting is a result of an investigation sought by Chairman of the Homeland Security and Governmental Affair Committee, Sen. Joe Lieberman (I-CT), and Ranking Member Susan Collins (R-ME) in May 2007. The Senators requesting 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.
In their May 21, 2007 letter to GAO Lieberman and Collins said, "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." 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, result in rates that are higher than necessary."
As a result of the request, GAO is reaching out to representatives of each RTO/ISO sector and of other interested groups in ISO-New England (ISO-NE). The scope of its review will focus on three objectives 1) key ISO and RTO operational costs and investments in property, plant, and equipment, (2) how ISOs, RTOs, and FERC review ISO and RTO costs, and (3) how FERC and others have estimated the benefits of ISOs and RTOs. In exploring these objectives, GAO plans to meet with stakeholder groups from two RTOs - the Midwest Independent System Operator (MISO) and ISO-NE.
GAO plans to issue its report in September 2008.
In 2007, NEPPA members, particularly MMWEC, CMEEC and Kennebunk Light and Power District, worked closely with these two Senate offices prior to the issuance of the GAO request. These public power systems, along with other NEPPA members, have consistently expressed concerns about the escalating costs associated with market design mechanisms and the RTO governance structure.
Kelliher Sends Letter to Kerry on FERC's Incentive Rates Decision
On March 21, Federal Energy Regulatory Commission (FERC) Chairman, Joseph Kelliher sent a letter to Senator John Kerry (D-MA) in response to a February 6, 2007 letter from seven New England Senators regarding incentive rates for transmission owners in New England. In the letter, Kelliher acknowledged Kerry's request for FERC to apply Order No. 679, (national transmission incentive rule) to transmission projects in New England and stated that FERC recently approved that request. Kelliher said that the Commission also "reaffirmed our prior approval of a 100 basis point ROE incentive for existing ISO New England regional transmission expansion plan approved projects that come on line by December 31, 2008." Following that date, new projects must justify receiving incentives on a project-by-project basis, the letter read.
On March 24, 2008 FERC acted on New England's transmission incentive rate case, and reversed, in part, the action it initially took in the NE case, as the New England Senators requested. In the recent decision , FERC agreed to "split the baby" on the 100-basis point adder, allowing transmission owners the additional 100 basis point adder for existing transmission projects (expected to be completed or come on line by 12/08.) However, for transmission projects going forward, FERC will use the criteria outlined in the "national" rule (Order No. 679‑A), for assessing whether the additional 100-basis point should be granted. The latter position was what the New England Senators' letter requested.
In 2007, NEPPA members, worked with the Congressional delegation to inform them of concerns that New England electric consumers could be disadvantaged if FERC did not reverse it's position with regard to NE incentives rates for transmission owners. The outcome is positive for New England consumers, and is proof that the Senators' active oversight of FERC and ISO-NE activities is, in fact, having a real impact.
In 2007, National Grid and Northeast Utilities (NU) told the Senate offices that compliance with FERC's national rulemaking would further delay transmission construction and result in higher congestions cost and electricity prices in the region. Some Senators were swayed by these arguments and did not sign the February 6, 2007 letter. The original letter was signed by Sens. Joe Lieberman (I-CT), Olympia Snowe (R-ME), Bernie Sanders (I-VT), Edward Kennedy (D-MA), John Kerry (D-MA), Christopher Dodd (D-CT) and Susan Collins (R-ME).
At that time, NEPPA members estimated that the impact on consumers, if the 1% adder remained in effect, would be an added $27 million per year by 2011 (based on transmission projects already approved in the ISO's 2006 Regional System Plan.) On a cumulative basis, between 2005 and 2011, consumers would have paid an additional $115 million.
To review a copy of the FERC letter to Sen. Kerry, please contact Lori Pickford at Morgan Meguire at lpickford@morganmeguire.com or call 202-661-6196.
House Members Question Aid to Former EPA Administrator
Republican Reps. Darrell Issa (R-CA) and Tom Davis (R-VA) are asking the House Oversight and Government Reform Committee to investigate whether senior U.S. EPA officials violated federal lobbying rules in assisting a former agency administrator, who advocated that EPA grant California a waiver to regulate GHG emissions from motor vehicles.
Issa and Davis want the Committee to investigate the "substantial information and advice" that senior EPA officials gave to former EPA Administrator William Reilly, who served for former President George H.W. Bush. Issa and Davis sent a letter to Committee Chairman Henry Waxman, in which they noted that EPA staffers helped Reilly with a presentation -- that stated that EPA's credibility could be "irreparably damaged" if EPA denied the waiver -- which he used for subsequent conversation with EPA Administrator Stephen Johnson to discuss the California waiver.
Davis and Issa wrote that this type of assistance calls into question whether "senior EPA officials either violated the lobbying ban or otherwise misused their positions to surreptitiously influence EPA's decision on the waiver request."
In a statement, Waxman said "although the committee has found no evidence that EPA career staff lobbied members of Congress with respect to the California waiver, I will give careful consideration to the minority's request."