Climate Change
Issue Swirls In U.S. the Senate
Due
to competing legislative priorities (health care, jobs, financial industry
reform), Senate Majority Leader Harry Reid (D-NV) has said the full Senate will
not consider climate legislation until the spring, at the earliest. The Kerry-Boxer climate legislation (S. 1733),
which was passed out of the Environment and Public Works Committee (EPW) on November
5, is currently in a holding pattern with many Members saying that the effort
is "dead-on-arrival" in the Senate.
Senators continue to look at alternatives to a cap-and-trade system (see
recent hearing mentioned below), and Sen. John Kerry (D-MA) is now working with
Sens. Lindsey Graham (R-SC) and Joe Lieberman (I-CT) on an alternative effort
they hope will garner bipartisan support.
Another
factor in the debate, is the December 7 Environmental Protection Agency (EPA) finding
that carbon dioxide and five other greenhouse gases (GHG) are pollutants under
the law "that threaten the public health and welfare of the American people,"
and motor vehicles contribute to that threat.
The finalization of the
"endangerment" finding allows EPA to proceed to regulate GHG emissions from
tailpipe and large industrial sources, including power plants.
The
timing of this decision could bolster the Obama Administration's position at
this week's U.N. climate talks in Copenhagen, with EPA Administrator Lisa Jackson
making remarks today (12/9) entitled "Taking Action At Home," and the President
appearing later this week. It also comes
at a time when Congress is locked in debate over the issue. Many believe that this finding provides
incentive and political cover for Congress to enact climate legislation before
EPA acts.
In
the Senate, debate and discussion continue.
On December 2, the Senate Energy and Natural Resources Committee (ENR) held
a hearing to discuss alternatives to cap-and-trade legislation, such as a
carbon tax or sector-specific, as opposed to economy-wide, limits on GHGs. "We
need to dispense with the blind loyalty to cap-and-trade, or at least begin to
question if it is warranted," said ENR Ranking Member Lisa Murkowski
(R-AK). "We should objectively review
the strengths and weaknesses of our policy options and develop a measure that
protects both our energy and the environment." Murkowski said Americans now associate
cap-and-trade with a tax that will raise prices on consumer goods, and that
should prompt Congress to consider other less expensive approaches that reduce
greenhouse gas emissions.
Sen.
Bob Corker (R-TN), offered support for a carbon tax, questioning the integrity
of a cap-and-trade system's allowance distribution system. In contrast, ENR Chairman Jeff Bingaman
(D-NM) noted that he is a "longtime supporter" of the cap-and-trade approach
but is open to hearing about the other ideas.
Adding
fuel to the fire are recently disclosed e-mails from reputable scientists at
the University of East Anglia's Climatic Research Unit in Britain, which seem
to raise questions about the scientific underpinnings of the issue. The
controversy centers on more than 1,000 e-mails that were obtained and released
by a computer hacker, which appear to show evidence may have been manipulated
to bolster their claims that human activity is causing global warming.
On
the same day as the Senate ENR hearing on alternatives to a cap-and-trade, key
Congressional Republicans sent a letter to EPA, calling on the Obama
Administration to conduct a thorough and transparent investigation into the
questions raised by the disclosure of e-mails.
Additionally, the letter said EPA should withdraw the Proposed
Endangerment Finding, as well as the Light Duty Vehicle Rule, and the
Greenhouse Gas Tailoring Rule until the Agency can demonstrate that the science
underlying these regulatory decisions has not been compromised."
The
letter was signed by House Select Committee on Energy Independence and Global
Warming Ranking Member Jim Sensenbrenner (R-WI), House Oversight and Government
Reform Committee Ranking Member Darrell Issa (R-CA), Senate EPW, Clean Air and
Nuclear Safety Subcommittee Ranking Member David Vitter (R-LA), and Senate EPW
Oversight Subcommittee Ranking Member John Barrasso (R-WY).
House
Takes up Comprehensive Financial Reform Bill; Including OTC Derivatives
Regulation
This week, the House will take up H.R. 4173, "The Wall Street Reform and Consumer
Protection Act of 2009", a comprehensive financial reform bill that
includes among other things, provisions to regulate over-the-counter (OTC)
derivatives. Congress is working to regulate large financial
traders -- which engaged in speculative credit default swaps and other risky
derivative transactions - as they are largely to blame for last year's financial
crisis. Of interest to NEPPA is a negotiated agreement between the
Chairmen of the House Agriculture and Financial Services Committees, Collin
Peterson (D-MN) and Barney Frank (D-MA), that will exempt end-users, such as
utilities, that use derivatives to keep energy costs down. The Peterson-Frank
agreement will be offered in the form of a Managers' Amendment and will replace
the current, more stringent provisions on derivatives regulation. Energy organizations,
including APPA, support this agreement.
Also in the Peterson-Frank Managers'
Amendment is language agreed to by the House Energy and Commerce and the House Agriculture
Committees, concerning jurisdiction over energy markets between the Commodity
Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission
(FERC). The language requires CFTC and FERC to negotiate a memorandum of
understanding to establish procedures for dealing with overlapping jurisdiction
and gives CFTC authority to cede jurisdiction to FERC where both parties agree.
Utilities, including public power,
support this agreement.
To view the Peterson-Frank Managers'
Amendment click here for amendment #115.
Also of interest to NEPPA is an amendment
filed by Reps. Scott Murphy (D-NY), Mike McMahon (D-NY), and Frank Kratovil
(D-MD) that ensures that major "swap" participants that pose systemic risk are
appropriately regulated. The Murphy-McMahon-Kratovil amendment is
supported by public power, and other end-users. The amendment changes the scope of the
definition of "major swap participants" to ensure that only institutions that
would affect the financial system as a whole could be deemed a major swap
participant, effectively exempting "end-users" like utilities.
On the downside, another
amendment filed by
Chairman Frank (D-MA) is expected to be "ruled in order" and considered
on the floor this week. It would require regulators to set margin
collateral requirements, if one of the parties entering into a
derivative
transaction is an end-user and the other is a large financial
institution, such
as a bank, for example. Consumer owned utilities (and other end-users)
are
opposed to this amendment as it will significant increase costs to
public power
customers.
Lastly, Rep. Bart Stupak (D-MI) may offer an
amendment, which the energy industry opposes, to strike the end-user exemption
altogether. Other amendments that would dilute the end-user clearing
exemption are expected to be voted upon as well. Morgan Meguire will be
monitoring the floor proceeding and will alert NEPPA members to contact their
Member of Congress, as appropriate.
Western Governor
Send Letter on Transmission Costs and Siting
The Governors
from the States of Arizona, Nevada, Oregon, Washington and California sent a
letter to Capitol Hill expressing their views on provisions included in
Bingaman's Senate energy bill, S. 1462, "American Clean Energy Leadership Act of
2009," dealing with
transmission cost allocation and siting provisions. The letter says the Governors are concerned
about provisions that "allocate the costs of new transmission projects
to utilities across a region," and prefer the approach in existing law, which
provides for the allocation of transmission costs through tariffs charged to
transmission users and approved by the FERC. They say the provisions, if included in a
final bill, will hinder their states' efforts to develop renewable resources. In addition, they express "continued support
for existing regional planning efforts that will accelerate the development of
transmission infrastructure, and streamline federal processes to site and build
transmission."
Many Western
public power systems supported the Corker amendment that was included in the
Bingaman bill that would prohibit the
allocation of costs to a region or sub region unless the costs are "reasonably
proportionate to measurable economic and reliability benefits." NEPPA members, as well as TAPS, opposed the
Corker language. The Western Governors letter appears to suggest a possible
compromise: directing FERC to develop
policy to allocate transmission costs based on current law.