Federal Legislative Update

 

11-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: DOE proposal on pricing “fuelsecure” resources roils energy policy community; Political feud threatens timely confirmation of FERC Commissioners; Panel advances two hydro bills...

  • Tax Reform: Budget Resolutions clear path for tax reform…

 

DOE Proposal on Pricing “Fuel-Secure” Resources Roils Energy Policy Community

 

On Sept. 29, Energy Secretary Rick Perry issued an unexpected directive to the Federal Energy Regulatory Commission (FERC) calling on the agency to issue a rule within 60 days that would allow generators with 90 days of fuel on-site (i.e., coal and nuclear plants) to recover their full cost of service in organized markets with an energy and capacity market. The proposal has generated significant controversy because of the significant ramifications, the seldom-used provision of law under which the Department of Energy can task FERC as an independent agency, and the incredibly short window for action given the complexity of the issue. The directive cites severe weather-related outages as a justification for action to improve the “resiliency” of the grid, which is loosely understood to mean the grid’s ability to withstand and bounce back from extreme events.

 

FERC denied a request by several trade associations for more time to comment on the Notice of Proposed Rulemaking (NOPR), and on Oct. 23, the abnormally short comment period closed. Several groups weighed in, including APPA, TAPS, NRECA, the National Hydropower Association (NHA), and others. APPA’s comments focus on the legal deficiencies of the proposal, express concern at the potential costs to consumers, and point out that RTO markets are ineffective at establishing a diverse resource mix. The TAPS Group lists numerous legal issues with the proposal and its merits. NRECA’s comments center on the costs to consumers and the preferential treatment for some generators. NHA pointed out that hydropower resources possess many of the desired reliability attributes and should be part of a dialogue on resilience. Eleven Democrats on the Senate Energy and Natural Resources Committee sent a letter rebutting several premises of what they called an “ill-conceived” rule.

 

Ultimately, FERC will either vote to accept, reject, or modify DOE’s proposal. Commissioners Powelson and LaFleur have indicated that they do not support the NOPR as written. However, many commenters have given credence to concerns about the need to maintain fuel diversity in markets and to have a broader conversation about resilience, two issues FERC may address in the context of deliberations already underway.

 

Political Feud Threatens Timely Confirmation of FERC Commissioners

 

On Oct. 25, the Senate Environment and Public Works Committee approved the nominations of four of President Trump’s picks to lead the Environmental Protection Agency (EPA). Two more controversial picks passed on a party line vote of 11-10. The others passed by voice vote. Though Chairman John Barrasso (R-WY) described the GOP nominees as “well-qualified,” there was a great amount of criticism from Democrats on the committee. Ranking Member Tom Carper (D-DE) called one nominee, who ran a nonprofit that frequently downplayed the risk of chemicals, “one of the most troubling nominees” he had ever considered during his 17-year tenure on the committee.

 

None of the nominees are likely to see a confirmation vote on the Senate floor anytime soon, as Sen. Carper vowed during the hearing to continue blocking that nomination. In retaliation, Sen. Jim Inhofe (R-OK) has placed a hold on the Democratic FERC nominee Richard Glick. However, Inhofe’s plan could backfire, as Glick is part of a negotiated package of nominees and without him, the entire group will be stuck.

 

Energy & Commerce Panel Advances Two Hydro Bills

 

On Oct. 26, the House Energy and Commerce Subcommittee on Energy advanced two bills related to non-federal hydropower. One, H.R. 2872 by Rep. Larry Bucshon (R-IN), would allow FERC to exempt certain requirements for developing hydropower facilities at non-powered dams. The other, H.R. 2880 by Rep. Morgan Griffith (RVA), would promote closed-loop pumped storage development. Both measures passed by voice vote and will now await consideration by the full committee. A more comprehensive hydropower bill supported by NEPPA, H.R. 3043 by Rep. Cathy McMorris Rodgers (R-WA), was advanced by the full committee and still awaits a House vote.

 

Budget Resolutions Clear Path for Tax Reform

 

The end of the fiscal year on Sept. 30 ended Congress’ ability to use budget reconciliation under the FY17 budget resolution to repeal the Affordable Care Act with a party-line vote in the Senate. Having failed to agree on a bill to do so, GOP leaders determined they would use the FY18 budget process to advance tax reform, another bill they believe will pass with only votes from their party.

 

The House of Representatives passed the Senate’s FY18 budget resolution by a narrow 216-212 vote on Oct. 26. The resolution includes “reconciliation instructions” that will set into motion a process for the Congress to draft and pass tax reform legislation with a simple majority in the Senate. The instructions call on the tax writing committees to develop tax reform legislation that does not cost more than $1.5 trillion. While the resolution will allow for such procedures to be used for the remainder of the fiscal year, Republicans would like to pass tax reform by the end of the calendar year so that they can campaign on its success in 2018.

 

Substantively, however, Republicans are divided over how to pay for lower tax rates on businesses and individuals. Of the 20 Republicans that voted against the resolution, many hailed from New York and New Jersey where the proposed elimination for the state and local tax deduction would hit the hardest. If eliminating that deduction proves to be politically impossible, lawmakers may look to the exemption for municipal bond interest.

 

House Ways and Means Committee Chairman Kevin Brady (R-TX) intends to release draft tax reform legislation on Nov. 1 and has scheduled a markup of the legislation for Nov. 6.

 

10-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: FERC Nominees Advance, “Powering America” hearings continue...

  • Tax Reform: Draft outline preserves exemption for municipal bonds…

  • Distributed Generation: Storage bills introduced, new caucus formed…

 

FERC Nominees Advance

 

On Sept. 7, the Senate Energy and Natural Resources Committee met to hear testimony from two nominees for the Federal Energy Regulatory Commission (FERC) – Richard Glick and Kevin McIntyre – and other nominees. Many questions focused on FERC’s ongoing inquiry into the role of states and public policy; both nominees said resource decisions are the purview of states, not FERC. McIntyre noted that states have “an absolute right” to enact renewable portfolio standards, and both nominees emphasized that FERC must be fuel neutral. However, both expressed a view that interfering in market functions is problematic.

 

On Sept. 19, the Senate Energy and Natural Resources Committee voted to approve Glick and McIntyre. Upon Senate confirmation, Kevin McIntyre will serve as Chairman of FERC. A date has not yet been set for full Senate confirmation vote.

 

On Sept. 20, FERC held its first monthly meeting since January after a quorum was restored in August. The agenda was light, allowing for new Commissioners to get up to speed and as the full commission awaits the confirmation of McIntyre and Glick. The agenda included a discussion on the standard for emergency preparedness and operations by clarifying when and what type of damage to electric facilities are reported, notable in the wake of Hurricanes Harvey and Irma. Once the full Commission is in place, the FERC Commissioners will have a busy schedule in attempting to dig out of the current backlog of filings and pending standards.

 

“Powering America” Hearings Continue

 

House Energy & Commerce Subcommittee on Energy Chairman Fred Upton (R-MI) has continued the “Powering America” series of hearings. On Sept. 6, the Subcommittee held a hearing entitled, “Reevaluating PURPA’s Objectives and its Effects on Today’s Consumers,” and on Sept. 12, another on “Defining Reliability in a Transforming Electricity Industry.”

 

The Sept. 12 hearing featured Acting FERC Chairman Neil Chatterjee, DOE electricity chief Pat Hoffman, and Chairman of the North American Electricity Reliability Corporation (NERC) Gerry Cauley. Most of the witnesses’ testimony and Members’ questions focused on the grid’s ability to withstand and respond to outage events during extreme weather events such as Hurricane Harvey and Irma. The hearing was brief due to scheduled votes, but other questions included some on FERC’s ongoing inquiry into price formation and the role of public policy in wholesale markets, which Chatterjee said was a high priority.

 

On Sept. 26, the Subcommittee held the fifth hearing, entitled, “Technology’s Role in Empowering Consumers.” Witnesses included stakeholders within the electric sector, providing members the ability to examine the role consumers play in modern electricity systems.

 

Full committee Chairman Greg Walden (R-OR) questioned the panel on what could be done to improve the integration of distributed energy resources (DER). Advanced Energy Economy’s Arvin Ganesan suggested that the committee, “embrace competitive markets” to avoid “technology biases” within the United States. Upton concluded the hearing by arguing for the growth of innovative technology in providing a competitive energy market along with a more reliable and resilient electric grid.

 

The subcommittee is planning to hold another panel of its reliability hearing Oct. 3 and a hearing entitled “Consumer-oriented Perspectives on Improving the Nation’s Electricity Markets” on Oct. 5 (a witness list has not been announced, but NEPPA plans to submit a statement for the record).

 

Tax Plan Released

 

On Sept. 27, the White House released its much-anticipated tax reform plan. The proposal is a framework that describes the Administration’s goals and priorities for tax reform. The plan was worked out with Republican leaders of the House and Senate, though many details remain unresolved. The plan calls for sweeping tax cuts, slashing the top rate for businesses from 35 percent to 20 percent and reducing the top individual tax bracket rate to 25 percent from 39.6 percent, among other things. The plan does not mention the municipal bond exemption, but White House advisors informed members of Congress in a call on Sept. 26 that the plan assumes the exemption is maintained.

 

Republican congressional leaders still intend to use the budget reconciliation process to pass tax reform in order to avoid a filibuster by Democrats in the Senate. This process requires both chambers to pass and agree upon a budget resolution for the 2018 fiscal year. House leaders have signaled they may bring a resolution to the floor for debate next week, and the Senate is expected to follow shortly thereafter. Then the House Ways & Means Committee and Senate Finance Committee are expected to mark up bills, translating the proposed framework into legislative text and ironing out many yet unresolved details in the process. Senate Finance Committee Chairman Orrin Hatch (R-UT) has said that he does not feel obliged to adhere to any plan issued by the administration or House, but rather he will focus on crafting a bill that can win the support of his committee. There are divisions among Republicans about whether to combine tax reform with Obamacare repeal in the budget resolution. This could drastically complicate matters, and some members worry combining the two could result in no action on either priority.

 

Trio of Storage Bills Introduced

 

The Senate Energy and Natural Resources Committee plans to hold a hearing Oct. 3 to examine energy storage technologies, also the subject of a handful of recently-introduced bills. Three measures from Sen. Ron Wyden (D-OR) would direct DOE to identify grid fortification options, create cost-share programs for small projects, and fund DOE research on storage. Another bill from Sens. Al Franken (D-MN) and Martin Heinrich (D-NM) would create a new DOE program for storage and provide grants and assistance to local governments and utilities to install storage systems. Heinrich also introduced a bipartisan bill with Sen. Dean Heller (R-NV) to establish a 30 percent investment tax credit for storage projects (phasing down over five years). The bills face long odds to move, but represent a growing interest in storage technology in the wake of major hurricanes and resulting outages.

 

Separately, a new House caucus has formed to channel interest in distributed generation, led by a bipartisan pair of congressmen from Pennsylvania. The group plans to host informative briefings.

 

9-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: New DOE study calls on FERC to address price formation; Quorum restored at FERC...

  • Infrastructure: President Trump signs Executive Order on infrastructure...

  • Climate: Clean Power Plan pause extended...

 

New DOE Study Calls on FERC to Address Price Formation

 

On Aug. 23, the Department of Energy (DOE) released its longawaited report on the status of the U.S. grid, focusing on wholesale markets and regulatory stressors on reliability. Many congressional Democrats had expressed concerns that the study would unfairly target wind and solar policies as responsible for coal and nuclear’s declining market share. Instead, the final report focuses on cheap natural gas supplies as the major driver causing coal and nuclear retirements.

 

Unlike the previous Administration’s Quadrennial Energy Review, which sought significant outside input, the report ordered by Secretary Perry in April was intended to be an internal document summarizing the Department’s views and providing concrete recommendations. However, the report is now open for public comment.

 

The report highlights the important of baseload generation, defined by the ability to run continuously with little exposure to fuel supply chain issues, and considers ways to define “premature” retirement of these resources. It addresses questions of whether wholesale markets are keeping pace with the changing marketplace, saying the markets are functioning as designed but may be inadequate to meet future challenges. The report acknowledges that the market structure fails to value attributes desirable for public policy reasons, and calls for “further efforts [at FERC to] quickly reflect the urgent need for clear definitions of reliability- and resilience-enhancing attributes and … quickly establish the market means to value or the regulatory means to provide them.”

 

The report says the markets are valuing reliability but not resilience. The report uses the definition developed by the National Infrastructure Advisory Council developed and that is in use by NERC, which focuses on the grid’s ability to reduce the magnitude of disruptive events. DOE’s conception of the term appears to include themes of fuel assurance, hardening against severe weather and other hazards, and exposure to fuel cost spikes.

 

In general, the report takes a balanced view of the overlapping causes of plant retirement. The report provides a thorough and impartial review of the history of market development, with some evidence of sympathy to generators compared to state policymakers in the discussion of current events.

 

Quorum Restored at FERC

 

FERC regained a reporting quorum after new commissioner Robert Powelson took his oath of office on Aug. 10. Neil Chatterjee, the other new FERC commissioner, was sworn in on Aug. 8. These new appointments will fill two of the five seats at the Commission and join acting Chairwoman Cheryl LaFleur to finally restore a quorum for FERC after six months of vacancies. Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-AK) has said that she will hold a hearing to consider nominees for the two remaining vacancies on Sept. 7. If confirmed, Kevin McIntyre will serve as the Chairman of FERC; Neil Chatterjee was named Acting Chair pending that confirmation. FERC announced its first meeting for Sept. 20, but it is not yet clear how FERC will approach the backlog of work it amassed during the interregnum.

 

Trump Issues Executive Order on Infrastructure

 

On Aug. 15, President Trump issued an Executive order intended to expedite the development of infrastructure by streamlining federal environmental and permitting reviews. The order limits federal environmental reviews to just two years and puts a single federal agency in charge of each review and permitting process. The Council on Environmental Quality (CEQ) and the Office of Management and Budget are instructed to develop a “framework” for assigning lead agencies to projects based upon existing CEQ guidance and the multi-agency “Red Book” published in 2015 for synchronizing federal environmental reviews. While President Trump’s order intends to increase private investment in infrastructure, there was no mention of the $1 trillion infrastructure plan he had previously promised.

 

Clean Power Plan Pause Extended, New Source Rule Paused Indefinitely

 

On Aug. 8, the D.C. Circuit Court of Appeals extended the pause in litigation over the Clean Power Plan for 60 days, calling for the Environmental Protection Agency (EPA) to submit reports on its progress in replacing the rule every 90 days (the first report is due Oct. 27). Two judges wrote a concurring opinion reinforcing EPA’s “statutory duty” to regulate greenhouse gases under the Clean Air Act and pursuant to the Endangerment Finding. On Aug. 10, the same court decided to hold litigation over the Obama Administration’s new source performance standards in abeyance indefinitely.

 

8-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: House holds first hearings in “Powering America” series, NRC nominees approved by Senate committee…

  • Cyber and Grid Security: Senate committee considers energy security, Senate seeks more information on cyber protections at nuclear plants…

  • Municipal Finance: Treasury reconsiders “political subdivision” rule…

  • Environmental Policy: Pruitt takes aim at “sue and settle,” considers repeal of CPP based on mercury…

 

House Holds First Hearings in “Powering America” Series

 

On July 18, The House Subcommittee on Energy held its first hearing in the “Powering America” series, giving Members an opportunity to learn about electricity markets from market participants. A second hearing on July 26 featured testimony from RTO/ISO operators.

 

Subcommittee Chairman Fred Upton (R-MI) and others noted in opening statements the significant transformation the electric sector is currently facing, which has affected the overall configuration of the country’s electric generation mix and the industry’s approach to grid reliability. Full Committee Chairman Greg Walden (R-OR) focused on the importance of fairness to consumers, who expect affordable and reliable electricity even as providing it becomes more complex. He further encouraged the panels to help come up with a way to achieve state priorities while maintaining wholesale prices.

 

Public power was represented by Lisa McAlister of American Municipal Power and Jackson Reasor of Old Dominion Electric Cooperative. Self supply by municipal utilities in RTO regions was a prominent issue, as was the pressure on baseload generators and the fact that nuclear is not compensated for being emissions-free.

 

The second hearing, with testimony from RTO/ISO operators, focused on the functionality of the markets. Operators claimed that they had addressed self-supply and that no legislative changes were needed to help them make adjustments to their markets. The hearings are the first in what is expected to be an educational series on Federal Power Act issues.

 

NRC Nominees Approved by Senate Committee, Head to Floor

 

On July 12, the Senate Environment and Public Works Committee approved Nuclear Regulatory Commission (NRC) nominees Annie Caputo and David Wright. Their nominations now move to the Senate floor, joining a slew of nominees awaiting confirmation. That backlog includes Federal Energy Regulatory Commission (FERC) nominees Neil Chatterjee and Robert Powelson, who may be held pending committee action on Rich Glick and Kevin McIntyre’s nominations for the other FERC slots.

 

Senate Committee Considers Energy Security

 

On July 18, the Senate Energy and Natural Resources Committee held a hearing to examine the outlook for U.S. and North American energy resource security. Witnesses addressed the rapid development of the U.S. shale gas industry, the lifting of the ban on crude oil exporting, and the global “energy dominance” of the United States. In relation to cybersecurity, Stephen Cheney, Chief Executive Officer from the American Security Project and a retired brigadier general from the U.S. Marine Corps, said that the U.S. could not counter emerging threats if Congress approves of spending cuts to research proposed by the Trump administration. He expressed concern about the cost for utilities to conduct their own cybersecurity R&D and recommended that DHS handle information sharing and consultation for securing networks at private utilities. Cheney recommended Congress promote the rapid proliferation of renewables, and Mark Mills, senior fellow from the Manhattan Institute, encouraged the committee to support policies that promote renewables while not undermining oil and gas in sectors where there are not affordable or reliable alternatives.

 

Senators Seek More Information on Cyber Protections at Nuclear Plants

 

The North American Reliability Corporation (NERC) has alerted grid operators that hackers are using “phishing” e-mails with suspicious links and attachments to disrupt utility operations, though so far, none have caused a disruption in service. NERC’s report follows a separate alert from DHS and the FBI on June 28 warning energy, nuclear, and manufacturing firms of ongoing efforts by hackers to infiltrate and disrupt their operations. Wolf Creek Operating Corporation, which runs a nuclear generating power plant in Burlington, Kansas, is among the firms that have been targeted. However, DHS concluded that the impact of the cyberattacks did not reach far and did not compromise any actual control systems, and stated that the attack “appears to be limited to administrative and business networks.” Nevertheless, Senate Energy and Natural Resources Committee Ranking Member Maria Cantwell (D-WA) said that the reports reveal that “our adversaries are trying to take advantage of the very real vulnerabilities of our energy infrastructure’s cyber defenses.” On July 10, Sen. Ed Markey (D-MA) sent a letter to several agencies requesting more information about recent cyberattacks on nuclear plants and whether agencies have adequate funding to take the direct measures needed to address vulnerabilities in cyber-networks at U.S. nuclear power stations.

 

Treasury Reconsiders “Political Subdivision” Rule

 

On July 7, the Treasury Department announced that it may amend or withdraw the IRS’ proposed “political subdivision” rule. The rule was proposed last year by the Obama Administration to limit the types of entities that can issue tax-exempt bonds. The proposed rule’s narrower criteria threatened to prevent some joint action agencies and public utility districts from maintaining their tax-exempt bond issuing authority. Last year, the Municipal Bonds for America (MBFA) coalition and APPA filed comments opposing this rule. The Treasury Department’s review comes as it responds to President Trump’s Executive order on April 21 requiring it to reevaluate all “significant tax regulations” issued since January 2016 and propose changes to make them less burdensome. MBFA and APPA intend to resubmit comments opposing the rule.

 

Pruitt Takes Aim at Clean Power Plan, “Sue and Settle”

 

EPA Administrator Scott Pruitt is reportedly considering a withdrawal of the Clean Power Plan based on the legal argument some used to challenge the rule based on language in the Clean Air Act that may bar regulation of carbon dioxide at power plants if those sources are already regulated for mercury. Rejecting the rule based on that novel legal interpretation would likely lead to litigation and keep the rule tied up in court.

 

Separately, Pruitt issued an “oral directive” to end sue-and-settle practices, which some have suggested the Obama Administration used to create stricter environmental law faster and with less input than would have been possible under rulemaking procedures. Many Republicans on Capitol Hill have long advocated against “sue and settle” tactics, which involve EPA complicity in allowing environmental activists to sue the agency in certain cases. Republicans from the House Energy & Commerce Committee and the House Judiciary Committee sent a letter to the EPA and Department of Justice on June 29 asking them to provide written detail about the directive to curtail the practice and brief the Committees on the matter. In this letter, they note that “sue and settle” has led to 137 new Clean Air Act regulations since 2009, but indicate some concern that the policy is shifting without a written record of the change.

 

7-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: D.C. Circuit upholds PJM Orders, FERC Commissionersawait confirmation, House panel advances Hydropower modernization…

  • Cyber and Grid Security: NERC approves supply chain standard, “Crash Override” threatens grid assets...

  • Municipal Finance: Ryan, pence talk tax reform…

  • Environmental Policy: Nuclear waste bill advances, U.S. to withdraw from Paris Agreeemnt...

 

D.C. Circuit Upholds PJM Capacity Performance Plan

 

On June 20, the D.C. Circuit Court of Appeals unanimously affirmed an order of the Federal Energy Regulatory Commission (FERC) approving PJM’s “Capacity Performance” proposal. A similar performance proposal was instituted in ISO-New England, providing significant payments for delivering resources during times of constraint as well as stiff penalties for failure to perform even if the failure was due to scheduled maintenance. NEPPA opposed the policy. The opinion repeatedly defers to FERC’s expertise, rejecting the arguments of nine petitioners including APPA. It follows recent trends in court opinions deferring to FERC on jurisdictional and substantive matters, and demonstrates the court’s comfort with FERC’s line of argument supporting higher costs for consumers being justified.

 

Senate Energy and Natural Resources Committee Sends Nominees to Senate Floor

 

By a vote of 20-3, the Senate Energy and Natural Resources Committee voted on June 6 to advance the nominations of Neil Chatterjee and Robert Powelson to be FERC Commissioners to the full Senate. Despite protests at the hearing, Chairwoman Lisa Murkowski (R-AK) said she hoped to confirm all nominees before the July 4 recess. That now seems unlikely, as Democrats are hoping to advance a progressive nominee (Committee staffer Rich Glick) along with President Trump’s nominee for Chairman (expected to be Kevin McIntyre of Jones Day). Complicating matters, Commissioner Colette Honorable will step down from the agency June 30.

 

Hydropower Relicensing Reform Bill Clears House Subcommittee

 

On June 22, the House Energy and Commerce Subcommittee on Energy reviewed five bills related to energy security and hydropower. All five bills were sent to the full committee, including the “Hydropower Modernization Act of 2017” by Rep. Cathy McMorris Rodgers (R-WA). The bill would designate FERC as the coordinating agency for licensing and relicensing hydropower projects. This change would help streamline the complicated and lengthy relicensing process that can last a decade or more in some cases. Ranking Member Frank Pallone (D-NJ) noted Democrats’ support for the intent of the bill, but said it still needed work to receive their votes at the full committee level. The bill is slated for markup by the full committee on June 28.

 

Industry Approves Cyber Security Supply Chain Standards, Focus Shifts to FERC

 

On June 19, the North American Electric Reliability Corporation (NERC) approved reliability standards addressing cyber vulnerabilities in the supply chain. The proposals stem from FERC Order No. 829, but fall well short of the robust standards the Commission had hoped for – harsh requirements that would have attempted to have utilities dictate cyber security standards to vendors such as Microsoft – and instead call for utilities to simply have a plan in place to address supply chain risks. The measures received overwhelming support from industry, each passing with more than 82% of voting members. A prior proposal hewing more closely to FERC’s directive failed miserably in March, gaining just 10% support. NERC will now forward the proposals to FERC for final review. It remains to be seen how incoming FERC Commissioners Neil Chatterjee and Robert Powelson will receive the lighter-touch proposal. Acting Chair Cheryl LaFleur dissented from Order 829, but has made comments indicating skepticism about the industry’s preferred approach.

 

“Crash Override” Poses Threat to Grid Security

 

Dragos, an independent U.S.-based cybersecurity think tank, found that Russian hackers have developed a cyberweapon that may be capable of disrupting transmission and distribution lines in the United States. The malware, called “Crash Override,” was used to cause a brief blackout in Ukraine in December 2016, and researchers at Dragos believe it can be been modified to affect U.S. electric utilities. Once a utility is breached, “Crash Override” can disrupt circuit breakers and stop electricity flow. Additionally, it wipes the memory on circuit breaker system so that when an outage occurs it can only be restored manually at the affected substation. The malware can target multiple substations at once, potentially triggering several outages in different places simultaneously.

 

Dragos informed government agencies before releasing its report on June 12. The National Cybersecurity and Communications Center at the Department of Homeland Security later said that it is assessing the risk the malware poses to the nation’s critical infrastructure.

 

NERC issued an alert to utilities on June 13 encouraging them to limit access to their networks. The Electric Information Sharing and Analysis Center began circulating information and hosted an informational webinar for utilities on June 16. Researchers at Dragos were impressed with rapid response by the various public and private agencies to evaluate and disseminate information on the risks revealed in their report.

 

Pence, Ryan Talk Tax Reform to Manufacturers

 

Vice President Mike Pence and Speaker Paul Ryan (R-WI) spoke about tax reform before a conference sponsored by the National Association of Manufacturers on June 20. Both spoke in general terms about the importance of a territorial-based tax system, which would limit the tax liability of U.S. companies to their domestic activities, including imports. However, neither Pence nor Ryan spoke directly about the border-adjustment tax (BAT), a proposed tax on companies that import products. Also, neither Pence nor Ryan mentioned the tax exemption for income accrued from municipal bond interest, which was recently targeted in a Senate Republican Policy Committee report.

 

House Environment Panel Advances Spent Fuel Bill Favoring Yucca Mountain

 

On June 15, the House Energy and Commerce Subcommittee on Environment held a markup on several pieces of legislation, including a bill to advance several issues related to restarting the application process for storing spent nuclear fuel at Yucca Mountain. The bill would authorize licensing interim storage facilities only after a final determination has been made on the suitability of Yucca Mountain as a permanent repository, a policy known as “linkage” that would cut off a potential path for an interim site to be licensed under the Department of Energy’s existing authority. At the hearing, Rep. Doris Matsui (D-CA) offered and withdrew an amendment to allow an unlinked pilot facility to receive waste from currently shut-down reactors. Although the amendment was withdrawn, Committee Vice Chair Joe Barton (R-TX) spoke forcefully in favor of the Matsui Amendment, imploring Subcommittee Chairman John Shimkus (R-IL) – who has insisted upon linkage – to reconsider interim storage. The measure was advanced to the full committee by a voice vote and is scheduled to be considered June 28.

 

U.S. to Withdraw from Paris Agreement

 

On June 1, President Trump made a long-awaited announcement that he intends to withdraw the United States from the Paris Agreement, the 2015 international accord outlining the steps each signatory country will take to reduce its carbon emissions in hopes of stemming the rise of global warming. The move will fulfill a key campaign pledge, but will place the U.S. among just two other nations – Iran and Nicaragua – that have shunned the agreement.

 

6-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: New Commission nominees tout states’ rights in confirmation hearing, House Resources, Energy & Commerce Panels Examine Hydropower…

  • Budget: FY18 Budget released…

  • Cyber and Grid Security: President Trump issues Executive Order on Cyber Security…

  • Municipal Finance: Chances for BAT dim after House hearing…

 

New Commission Nominees Tout States’ Rights in Confirmation Hearing

 

On May 8, President Trump nominated Neil Chatterjee, a longtime energy aide to Senate Majority Leader Mitch McConnell (R-KY), and Robert Powelson, a Pennsylvania regulator serving as president of the National Association of Regulatory Utility Commissioners, to sit on the Federal Energy Regulatory Commission (FERC).

 

FERC has been without a quorum since Chairman Norman Bay resigned on Feb. 3. The two remaining commissioners – Cheryl LaFleur and Colette Honorable – convened a technical conference on markets and state public policies May 2-3, but acknowledged the incoming commissioners’ views would be determinative of the path forward.

 

On May 25, the Senate Energy and Natural Resources Committee convened for a hearing on the nominees. Although the nominees declined to give indepth answers to lines of questioning, Sen. Cory Gardner (R-CO) asked pointedly about wholesale power markets and state energy policies, asking, “Where would you come down on using federal authority to preempt state laws?” Powelson responded that he is “respectful of state’s rights” unless the policies add up to “an interference in the market design,” indicating that he would support FERC intervention and preemption in those cases. He later said his philosophy was to “do no harm” to state jurisdiction.

 

Sen. Tammy Duckworth (D-IL) asked whether FERC would throw out Illinois’ nuclear subsidies, which have come in conflict with PJM market rules. “I believe in state’s rights and in local communities making their own determinations,” Chatterjee said.

 

House Resources, Energy & Commerce

 

On May 3, the House Energy & Commerce Subcommittee on Energy held a hearing on hydropower and pipeline modernization, and the House Natural Resources Subcommittee on Water, Power, and Oceans held a hearing to examine keeping hydropower affordable.

 

The former focused on bills including Rep. Cathy McMorris Rodgers’ (R-WA) “Hydropower Policy Modernization Act,” which would streamline hydropower relicensing. Witnesses from FERC discussed how delays often arise when resource agencies with mandatory conditioning authority fail to move quickly or when developers select sites that lack support from stakeholders. The latter hearing focused more generally on the challenges to hydropower operations, but hydropower relicensing reform was central to the discussions. Although the Resources Committee does not have jurisdiction over FERC or its licensing process, it does have jurisdiction over the resource agencies that have mandatory conditioning authority over licenses.

 

Trump Administration Issues FY18 Budget

 

On May 23, the Trump Administration sent Congress its FY18 Budget request, titled “A New Foundation for American Greatness,” following through with plans to decrease funding for domestic programs, including at the Department of Energy (DOE), the Department of the Interior (DOI), and the Environmental Protection Agency (EPA). Funding for the Low Income Home Energy Assistance Program (LIHEAP) is eliminated, as is the Energy STAR program and the research program ARPA-E.

 

President Trump’s spending proposal would reduce DOE’s budget to $28 billion, with cuts above 30 to 50 percent to many of its programs. The Office of Energy Efficiency & Renewable Energy (EERE) would be cut from $2 billion to $636 million. Additionally, the Administration proposes an 11 percent decrease in DOI’s budget with cuts that would affect the acquisition and maintenance of public lands. EPA would see a decrease of 30 percent, with spending going from $8 billion to $5.7 billion. The budget also moves forward with plans to revive the controversial nuclear waste site, Yucca Mountain.

 

Several committees held budget hearings on the proposal, although strong bipartisan support for many of the programs President Trump is planning to cut make the budget proposal almost certainly “dead on arrival.”

 

President Issues Executive Order on Cyber Security

 

On May 11, President Trump issued a long awaited Executive order on cyber security and the electric grid. The order requires the Secretary of Homeland Security to work with the heads of other agencies, including the Energy Secretary, to prepare a report within 90 days on how the country should respond to large scale cyber attacks on critical infrastructure, which includes an attack on the electric grid that results in a large power outage. The order instructs the agencies to rely on the National Institute of Standards and Technology’s Cyber Framework, which was developed under the Obama Administration.

 

Chances for BAT Dim After House Hearing

 

On May 23, the House Ways and Means Committee held its second hearing this year on tax reform. This hearing focused on the effects a border adjustment (BAT) - a 20 percent tax on imports intended to discourage outsourcing – could have on jobs, investment, and economic growth in the U.S. The BAT is estimated to raise more than $1 trillion over ten years and is the linchpin for offsetting the costs of reducing tax rates in the House Republican tax plan. However, it is strongly opposed by the retail sector, which believes it will increase the price of consumer goods.

 

Speaker Paul Ryan (R-WI), a supporter of the BAT, conceded on May 24 that House Republicans were discussing alternatives to the BAT with the White House and Senate. If the tax bill does not include BAT, eliminating or curbing the tax-exempt status of municipal bonds may become an attractive option for raising revenue. Treasury Secretary Steven Mnuchin criticized the proposed BAT in a speech this week, but also delivered encouraging remarks about municipal bonds at a hearing of the Senate Finance Committee, saying, “Our preference is strongly to keep the interest deductibility of state and local bonds.” Mnuchin declined to take the exemption off the table, however.

 

5-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: Hydro bills reintroduced; Perry orders review of the grid; Trump Administration walks back Clean Power Plan…

  • Cyber and Grid Security: Senate Energy panel examines grid preparations; Strategic Transformer Reserve Report released…

  • Nuclear: Draft spent fuel bill gets hearing…

  • Municipal Finance: White House releases tax plan…

 

Hydro Relicensing, Other Bills Reintroduced

 

Rep. Cathy McMorris Rodgers (R-WA) has released a draft bill to revamp the hydropower relicensing process, a top priority for NEPPA members. McMorris Rogers, founder of the Congressional Hydropower Caucus, and Rep. Jerry McNerney (D-CA) pushed for further hydropower licensing revisions as part of last year’s abandoned energy bill. The current draft bill is substantially similar to the hydro provisions from last year’s legislation, including making FERC the lead agency for hydropower permitting. The bill also defines hydropower as a renewable resource and provides for longer preliminary permit terms, among other things. The House Energy & Commerce Committee has scheduled a hearing on the draft legislation on May 3.

 

Meanwhile, on Mar. 30, the Senate Energy and Natural Resources Committee passed by voice vote 59 energy and public lands bills, including several bills
that were previously part of last year’s bill. Nine bills relate to hydropower, including S. 724, which would provide FERC with authority to extend time limits for the construction of projects and the period of preliminary permits. The Committee also reported Sens. Rob Portman (R-OH) and Jeanne Shaheen’s (D-NH) bipartisan bill, now S. 385, that directs the Department of Energy to support national model building codes, set up financing programs, establish worker training programs and require agencies to employ efficiency methods.


Perry Orders Review of Policies Affecting Energy Supply and Reliability

 

On Apr. 15, Energy Secretary Rick Perry issued a formal order to his staff to prepare a plan for examining the impact wholesale markets, environmental and renewable policies are having on electricity supply and reliability, including baseload generation such as hydropower. The policy review will be conducted over 60 days and will inform the President’s policy proposals affecting the electric grid, including recommendations for action. Political appointee Travis Fisher has been tapped to lead the review. Fisher previously worked as an economist at the Institute for Energy Research and at FERC, and has publicly criticized incentives for renewable energy, such as the wind production tax credit.


Trump Signs Executive Order Walking Back Clean Power Plan, Court Pauses Suit

 

On Mar. 27, President Trump signed a long-awaited executive order directing agencies to review regulations that may adversely impact domestic energy production and begin plans to revise, rescind, or suspend such rules. The Clean Power Plan, the flagship climate regulation of the Obama Administration, is singled out by name for such reversal. The order also revokes previous Obama-era orders, reports, and memoranda related to climate change as well as the Council on Environmental Quality’s guidance on incorporating the effects of climate change into environmental reviews under the National Environmental Policy Act. On Apr. 28, the D.C. Circuit Court of Appeals paused the litigation over the Clean Power Plan for 60 days pending the review, with monthly check-ins from EPA.

 

Senate Energy and Natural Resources Committee Considers Cyber Threat


On Apr. 4, the Senate Energy and Natural Resources Committee held a hearing to examine the existing responses to cyber threats to the grid and how the federal government could be leveraged to fill in gaps. In his testimony, Gerry Cauley, President and CEO of NERC, enumerated the various mandatory cyber standards it has promulgated through the existing NERC/FERC regulatory process. Chairman Lisa Murkowski (R-AK) asked Mr. Cauley and Duane Highley of Arkansas Electric Cooperative about whether they agreed with the Quadrennial Energy Review’s (QER 1.2) recommendation to give FERC more independent authority to set mandatory cybersecurity standards without NERC’s involvement. Both witnesses expressed their disagreement with that recommendation and emphasized the importance of including subject matter experts in developing effective mandatory standards. Cauley distinguished between emergency standards and nonemergency standards, suggesting that the former should not be handled through the FERC/NERC process.

 

This hearing came on the heels of the panel’s Energy Subcommittee hearing on Mar. 28, which heard testimony on S. 79, “the Securing Energy Infrastructure Act,” to establish a two-year pilot program to identify physical and cyber security risks to the grid and determine whether analog technology and physical inspections can mitigate these risks.


DOE Issues Report on Strategic Transformer Reserve

 

On Apr. 10, the Department of Energy released a report to Congress entitled “Strategic Transformer Reserve.” The Office of Electricity Delivery and Energy Reliability, in conjunction with FERC and other government and private stakeholders, had been directed in the FAST Act to prepare a plan for developing a reserve of transformers that could be accessed in the event of an emergency that disables or destroys transformers affecting military installations and other critical infrastructure. After considering stakeholder feedback conducting an extensive technical analysis, DOE “does not recommend creation of a federally-owned reserve.” Rather, the department recommends “encouraging and supporting an industry-based option driven by voluntary industry actions” and standards approved through the existing FERC/NERC process. DOE intends to reevaluate in one year how it can work with FERC and the electricity industry in meeting that objective and determine whether additional government action is warranted.


House Committee Considers Nuclear Waste Legislation

 

On Apr. 26, the House Energy and Commerce Subcommittee on Environment held a hearing on the discussion draft of “the Nuclear Waste Policy Amendments Act of 2017.” Chairman John Shimkus (R-IL) is the main sponsor of the legislation, which aims to revive the stalled Yucca Mountain spent nuclear fuel repository. The draft bill also addresses interim storage and structural changes at the Department of Energy. Members of the Nevada delegation spoke out against the Yucca Mountain project, and Ranking Member Paul Tonko (D-NY) expressed concerns about Yucca Mountain’s suitability as a storage site. Democrats were also critical of a provision in the bill requiring the Nuclear Regulatory Commission to issue a final decision on Yucca Mountain before licenses for interim storage can be issued.


White House Releases Tax Plan

 

The White House released its long-anticipated outline for reforming the nation’s tax code on April 26. The plan would reduce individual tax rates and eliminate “tax breaks that benefit the wealthiest taxpayers,” while preserving the mortgage interest deduction and charitable deduction. The plan also would slash business taxes from 35 percent to 15 percent, a cut Gary Cohn, President Trump’s top economic advisor, referred to as “one of the biggest tax cuts in history.” The onepage plan is sparse on details, and makes no mention of tax-exempt municipal bonds or the border-adjustment tax under consideration in the House of Representatives. Republican members of the House Ways and Means Committee met for a retreat on Apr. 30 and May 1 to discuss pathways forward on tax reform.

4-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: FERC to hold technical conference on integrating state policy objectives into competitive markets, Challenge to delegated orders dropped…
  • Cyber and Grid Security: Supply chain standard fails…
  • Agenda: “Skinny Budget” released, Major health care overhaul abandonment calls into question other initiatives…
  • Infrastructure: Infrastructure hearings proliferate with hydro in the spotlight…

 

FERC to Hold Technical Conference on State Policies in Eastern Markets

 

The Federal Energy Regulatory Commission (FERC), still without a quorum to act, has announced a technical conference May 1 and 2 to explore ways the regions are working to accommodate state-level policy objectives to support particular resources or attributes. “In particular, Commission staff seeks to discuss long-term expectations regarding the relative roles of wholesale markets and state policies in the Eastern RTOs/ISOs in shaping the quantity and composition of resources needed to cost-effectively meet future reliability and operational needs,” the notice reads. “At one end of the spectrum, state policies would be satisfied through the wholesale energy and capacity markets. At the other end of the spectrum, state policies would be achieved outside of the wholesale markets, and the wholesale markets would be designed to avoid conflict with those state policies.”

 

In a statement supporting the intent of the conference, Commissioner Colette Honorable said, “The Commission’s whack-a-mole response to [state action] is inefficient and prolongs uncertainty. Through this broader effort, we hope to work with stakeholders to find ways to advance various policy goals – fuel security, environmental, or otherwise – while preserving valuable price signals and consumer benefits provided by regional electricity markets.” In acknowledging existing stakeholder efforts such as ISONew England’s “Integrating Markets and Public Policy (IMAPP)” process, Honorable commented that FERC’s action is meant to “enhance existing conversations and provide another venue to arrive at a collaborative solution.”

 

Challenge to FERC’s Delegating Order Dropped

 

On Mar. 22, the Wyoming Pipeline Authority withdrew a challenge to FERC’s order granting its staff additional authority to act on the five-member commission’s behalf while it lacks a quorum. The “delegation order” gave FERC staff the authority to act on rate filings, time extensions, waiver requests, and uncontested settlements while the commission awaits a new member, but the staff orders carry questionable legal authority. Overturning the order delegating authority to staff, however, would create even more difficulty in advancing business at FERC, something the Wyoming agency may have realized after filing the challenge.

 

Supply Chain Standard Fails at NERC

 

On Mar. 8, the North American Electric Reliability Corporation (NERC) released the results of an initial ballot regarding a reliability standard addressing cyber vulnerabilities in the supply chain. The draft proposal stems from FERC Order No. 829, which called for utility participants to negotiate with vendors (including large corporations such as Microsoft) for additional assurances or risk liability for using unacceptable vendors. At the conclusion of balloting, NERC found that only 10.36% of voting industry members voted in favor of the standard. NERC will go back to the drawing board and attempt to propose a standard that can garner more support.

 

President Trump Releases “Skinny Budget” Proposing Sharp Cuts

 

The Trump Administration sent its budget blueprint to Congress on Mar. 16. The so-called “skinny budget” is a document that outlines the young Administration’s broad spending priorities for fiscal year 2018, which begins Oct. 1. A more detailed proposal is expected later in the spring. Of the major federal agencies, only the Departments of Defense, Homeland Security, and Veterans Affairs would receive budgetary increases. The remaining agencies would face cuts: Environmental Protection Agency (EPA) by 31 percent and the Department of Energy by 6 percent, for example. The budget also proposes eliminating several programs, including the Low-Income Home Energy Assistance Program (LIHEAP). Despite significant cuts to Department of Energy’s research programs, the budget proposes $120 million to revive the Yucca Mountain nuclear waste site project.

 

Republican Health Care Plan Stalls in House

 

On Mar. 24, House GOP leaders cancelled a vote on their plan to “repeal and replace” the Affordable Care Act (ACA) after many members of the conservative House Freedom Caucus said they would not vote for the bill despite last minute concessions from the Trump Administration. Previously, President Trump had demanded a vote on the bill and said that if it failed on the House floor, he would “move on” to tax reform. However, failure of the signature item raises serious challenges for other parts of the President’s agenda, particularly as tax reform would have been easier to manage if the health care bill had succeeded in changing the tax baseline.

  

Infrastructure Hearings Proliferate with Hydro in the Spotlight

 

Several committees have held hearings in anticipation of action on infrastructure, although the contours of such a package have yet to materialize. In many hearings, hydropower has been a central focus:

 

  • On Mar. 1, the House Natural Resources subcommittee on Water, Power, and Oceans held an oversight hearing entitled, “Modernizing Western Water and Power Infrastructure in the 21st Century.” Much of the hearing focused on burdensome regulations that cost millions to companies and permitting processes that take years for approval.

 

  • On Mar. 14, the Senate Energy and Natural Resources Committee held a hearing on “opportunities to improve American energy infrastructure.” Chairwoman Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) in their opening remarks highlighted the bipartisan support for energy infrastructure development. Jeffrey Leahy, Deputy Executive Director of the National Hydropower Association, criticized Congress for extending tax credits for wind and solar energy and not hydropower. Witnesses also called for easier processes to build transmission lines across state and federal land, for investments in pumped storage technologies, and for Congress to work with the Trump Administration to act swiftly on expected FERC nominees.

 

  • On Mar. 15, the House Energy and Commerce Subcommittee on Energy held a hearing entitled, “Modernizing Energy Infrastructure: Challenges and Opportunities to Expanding Hydropower Generation.” Committee members examined with the witnesses the problems with duplicative and lengthy licensing requirements, the potential for hydropower to be a boon for the economy of a region, the opportunities for a reliable renewable energy source to bring stability to the grid, and the potential for private investments in infrastructure.

 

3-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: Bay’s Final Concurrence Leaves Roadmap for Public Power, FERC Delegates to Staff, PortmanShaheen Reintroduced…
  • Personnel: Gorsuch Nominated to Supreme Court…
  • Infrastructure: House Panel Holds Hearing on Grid…
  • Environment: House Panel Hold Hearing on Environmental Statutes…

 

Bay’s Final Concurrence Leaves Roadmap for Public Power

 

On Feb. 3, in one of the final acts of the Federal Energy Regulatory Commission (FERC) before losing a quorum to do business, Commissioner Norman Bay provided a comprehensive and compelling blow to the logic underpinning the capacity market’s most frustrating rule – just before leaving the Commission.

 

The Order in question was a denial of rehearing, requested by generators, of ISO-New England’s exemption from the minimum offer price rule (MOPR) for up to 200 MW/year of subsidized or mandated renewables. Generators had argued that the state actions reduce capacity prices, but FERC rejected the idea that prices are unjust and unreasonable simply because they are lower than they would be without the exemption, saying, “intermittent renewable resources … have limited or no incentive and ability to exercise buyer market power to artificially suppress capacity market prices.” The Commission also noted that an exemption is not the only mechanism to accommodate state public policy goals, and encouraged cooperation through the Integrating Markets and Public Policy (IMAPP) process.

 

Bay’s concurrence “would go further in reconsidering the MOPR’s rationale,” calling it “unsound in principle and unworkable in practice.” Citing the MOPR’s ongoing conflict with state goals, Bay called it a “significant intervention in the market that raises costs to consumers.” The concurrence goes on to question the logic behind the application of the MOPR to any resource that has received support outside the market, saying the MOPR “suffers from a troubling lack of coherence” and querying why the Commission simply assumes buyer-side market power exists when it employs elaborate screening to detect seller-side power.

 

Finally, Bay includes many of the arguments public power has made about the capacity market (including the frustration of having to potentially pay twice for capacity), and concludes that the MOPR could be relaxed or the capacity market could transition to a voluntary auction. The concurrence demonstrates that public power has made significant inroads in its persuasive arguments at FERC, even as Bay’s departure means the education process will begin again with new Commissioners.

 

FERC Moves to Facilitate Delegating Orders to Staff

 

FERC will provide staff more authority now that the agency lacks the quorum needed to approve certain transactions, Acting Chairman Cheryl LaFleur said. Without a quorum, FERC can still review and consider pending filings, proceed with environmental reviews of projects, hold commission meetings, tech conferences, workshops, and prepare orders for future voting. All existing staff duties, including hydropower inspections, LNG safety reviews, and audits will continue during the period of no quorum.

 

A new FERC nominee will need to go through an FBI background check, fill out government ethics forms, and face financial vetting. Following these actions, Senate confirmation on a nominee or nominees is required, and the full vetting process could take several months. The situation has the attention of Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-AK), who called finding Bay’s replacement a “top priority,” and said she would do her part to move the process forward, though the Trump Administration has not yet made a nomination.

 

Portman-Shaheen Energy Efficiency Bill Reintroduced

 

Sens. Rob Portman (R-OH) and Jeanne Shaheen (D-N.H.) formally reintroduced the Energy Savings and Industrial Competitiveness Act, an energy efficiency bill the two lawmakers have been trying to get passed for the last six years. As in years prior, Portman and Shaheen have gathered bipartisan support. Senators Michael Bennet (D-CO), Susan Collins (RME), Chris Coons (D-DE), Al Franken (D-MN), Joe Manchin (D-WV), Mark Warner (D-VA), and Roger Wicker (R-MS) have signed on as co-sponsors. Provisions similar to this bill were included in the comprehensive energy bill that passed the Senate last year but stalled in the House.

 

Gorsuch Nominated for Supreme Court

 

On Jan. 31, President Trump nominated Neil Gorsuch, a federal judge on the 10th Circuit U.S. Court of Appeals, to the Supreme Court. If confirmed, he would fill the seat vacated by Antonin Scalia. Gorsuch is seen as a mainstream, conservative judge who subscribes to “originalism,” or interpreting the Constitution as it was written at the time. Gorsuch faces a difficult path to confirmation because Senate Democrats are incensed that Senate Majority Leader Mitch McConnell (R-KY) delayed a vote on President Obama’s nominee, Merrick Garland, effectively “stealing” the Supreme Court seat. Supreme Court nominees still require 60 votes to pass the Senate, but a prolonged delay may force McConnell to change the rules to allow a simple majority to seat a justice, something known as the “nuclear option” that has been advocated by the President.

 

Energy Panel Hosts Wide-Ranging Hearing on “Grid Infrastructure”

 

On Feb. 15, the House Energy and Commerce Subcommittee on Energy held a wide-ranging hearing titled, “Modernizing Energy and Electricity Delivery Systems: Challenges and Opportunities to Promote Infrastructure Improvement and Expansion,” and covering pipelines, generation, transmission, distribution systems, technologies such as storage and data analytics, and cyber security. Panelists focused on technology, innovation, and the need for national policies that reflect the integrated, interconnected nature of the grid. The question period spanned interests in permitting, storage, renewables, and data production, reflecting that the theme of “infrastructure” may be a framework by which substantive energy policy changes are advanced.

 

Environment Panel Begins Broad Review of Statutes, Plans to Advance Targeted Bills

 

On Feb. 16, the House Energy & Commerce Subcommittee on Environment held a contentious hearing on modernizing environmental statutes, part of the expanded jurisdiction of the newly created panel. The hearing covered land, water, and air pollution laws, with sharp partisan divides on whether changes to the status quo are warranted. Republicans spoke about reforming the laws to facilitate infrastructure development and job creation, while Democrats cautioned against rolling back protections. One area that appeared to enjoy some bipartisan support was brownfields remediation, which is managed under the Comprehensive Environmental Response, Compensation, and Liability Act. Subcommittee Chairman John Shimkus (R-IL) suggested that that statute could be ripe for an overhaul similar to the modernization of the Toxic Substances Control Act in the previous Congress.

 

2-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: LaFleur to lead FERC and Bay to step down, FERC issues NOPR allowing dual cost recovery for storage, extends comment period on hydro licensing…
  • Presidential Transition: Transition has rocky first week, Speaker outlines 200-day agenda…
  • Cyber and Grid Security: DOE issues QER with dire warnings on cyber, “analog” bill reintroduced…
  • Municipal Bonds: Hultgren, Ruppersberger Circulate Letter…

 

LaFleur to Lead FERC Without Quorum

 

On Jan. 25, President Trump designated Federal Energy Regulatory Commission (FERC) Commissioner Cheryl LaFleur as Acting Chairman. That same day, current Chairman Norman Bay announced he will resign effective Feb. 3. With two existing vacancies, the Commission will lack a quorum to make decisions until new commissioners are confirmed.

 

Sen. Lisa Murkowski (R-AK), Chairman of the Senate Energy and Natural Resources Committee, said, “After next week, FERC will need a full complement of commissioners as soon as possible so that it can tackle the important work on its busy docket. I will make it a top priority to work with President Trump and my colleagues to move nominees rapidly and to reestablish a working quorum on the Commission.”

 

LaFleur announced that the pending rulemaking freeze (see related story below) had ended with respect to FERC orders, which the Commission is now trying to quickly finalize before losing a quorum.

 

FERC Issues Policy Statement Allowing Dual Cost Recovery for Storage

 

On Jan. 19, FERC issued a policy statement (over the dissent of Commissioner LaFleur) to provide guidance on cost recovery for storage devices. The guidance allows for cost recovery through both cost-based rates and market-based rates concurrently. LaFleur’s dissent expresses concerns about multiple payment streams, especially with respect to how they might complicate regional discussions on state policy initiatives.

 

FERC Extends Deadline for Comments on Hydro License Terms

  

On Jan. 12, FERC extended to March 24 its deadline for comments on whether, and how, to revise its policy for establishing the length of licenses for hydroelectric projects at non-federal dams. Current policy is to set a 30-year term where there is little or no authorized redevelopment, new construction, or environmental mitigation and enhancement; a 40-year term for a license involving a moderate amount of these activities; and a 50-year term where there is an extensive amount of such activity. APPA plans to comment in support of an alternative to grant a default 50-year term.

 

Presidential Transition has Rocky First Week

 

President Trump was sworn into office on Jan. 20 and immediately began signing Executive orders to implement his campaign pledges, including one to shorten the approval process for high-priority infrastructure projects and a memo hastening environmental reviews under the National Environmental Policy Act. He also halted all pending regulations until an Administration official can review them, and froze federal hiring. Further, the press learned of agency memoranda directing career officials to cease communications with the press and freeze all pending grants (many grants have since resumed).

 

Congressional Republicans were also blindsided by the President’s order establishing extreme vetting of refugees, which was rolled out with no advance notice for Congress and generated major protests over the weekend of Jan. 27. The issue may continue to distract from the legislative agenda.

 

Speaker Outlines 200-Day Agenda, Including Infrastructure

 

Speaker Paul Ryan (R-WI) has laid out an ambitious 200-day agenda that includes repealing the Affordable Care Act by April and rewriting the tax code by August using the “reconciliation” process to avoid a filibuster in the Senate. Both priorities have hit early snags, making the timeline particularly ambitious given the need to also pass continuing appropriations and raise the debt limit in that time frame. The plan also includes action on a major infrastructure bill, a top priority for the President that Ryan and Senate Majority Leader Mitch McConnell (R-KY) initially dismissed.

 

Cabinet Members Vetted, Confirmed

 

On Jan. 17-19, Senate committees of jurisdiction held hearings on the nomination of Rep. Ryan Zinke (R-MT) to be Secretary of the Interior, Oklahoma Attorney General Scott Pruitt to be Administrator of the Environmental Protection Agency (EPA), and former Texas Gov. Rick Perry to be Secretary of Energy. All three echoed a common theme on climate change, breaking with President-elect Trump to say they believed climate change is real, and possibly man-made, but that that the degree of human influence and control is debatable. The nominees are expected to be confirmed the week of Jan. 30.

 

Energy Department Releases QER 1.2 with Dire Warnings on Cyber

 

On Jan. 6, the Department of Energy released its second and final installment of the Quadrennial Energy Review (QER) – version 1.2, focused on the electric sector from generation to distribution. The report earned headlines for saying the grid is in “imminent danger” from cyber attacks and made several recommendations to give new and broader authority to FERC – often in specific ways that the industry has resisted, such as allowing FERC to edit or propose standards rather than going through the existing process with the North American Electric Reliability Corporation (NERC). Senate Energy and Natural Resources Ranking Member Maria Cantwell (D-WA) has said she will introduce implementing legislation. “

 

“Analog Control” Cyber Bill Reintroduced

 

Sens. James Risch (R-ID) and Angus King (I-ME) reintroduced “the Securing Energy Infrastructure Act,” which would authorize a two-year pilot program at the National Laboratories to research technologies to reduce the likelihood of a cyber attack on the electric grid, including “retro” analog technology and manual systems, which enabled Ukraine to quickly respond to a power interruption caused by Russian hacking in 2015.

 

Hultgren, Ruppersberger Circulate Municipal Bond Support Letter

 

Reps. Randy Hultgren (R-CA) and Dutch Ruppersberger (D-MD) are asking House colleagues to sign a letter to leaders of the tax-writing committee in support of municipal bonds. The letter says that changes to the tax code should recognize the vital role of municipal bonds. Recent drafts of tax reform proposals would tax municipal bond interest. APPA is asking its members to contact their delegation members to sign on.

 

1-1-17 NEPPA Newsline

In This Issue:

  • Energy Policy: Omnibus Energy Bill dies at end of 114th Congress…
  • Cyber and Grid Security: Burlington Electric discovers Grizzly Steppe malware on company laptop, Defense Authorization includes EMP/ GMD…
  • Municipal Bonds: House GOP meets on tax reform, MBFA circulates letter…
  • Leadership: Committee leaders named, Cabinet and other nominations…

 

Energy Bill Dies at End of 114th Congress

 

On Dec. 7, Speaker Paul Ryan (R-WI) announced the House would not take up the conference report to S. 2012, the once-broad energy bill that had been significantly narrowed in conference negotiations over the previous weeks. Senate Energy and Natural Resources Chair Lisa Murkowski (R-AK) admonished the House for abandoning the effort.

 

Over a year of work had gone into the bill, which contained several measures of interest to public power. Key features of the bill included hydropower relicensing process improvements; a provision to give FERC a formal role in agency rules that impact electric reliability, and several energy efficiency measures.

 

Of particular interest to NEPPA, both versions of the bill would have required RTOs to submit a report on resource diversity in capacity markets. The Senate version, which NEPPA supported, would have required the RTOs to explain how the market rules provide enhanced opportunities for self-supply. The House version would have required a description of how the market rules support resources that have a 30-day supply of fuel available on site. NEPPA had concerns that that language would promote unnecessary complication in an effort to support coal and nuclear.

 

In the final weeks of the year, conferees struggled to find compromise on numerous items and trimmed the bill down to only a handful of non-controversial positions, excluding most of the items listed above. The failure to act on a final measure leaves open the possibility that the 115th Congress will take up some form of energy bill, although it is likely that other priorities will take precedence.

 

BED Discovers Grizzly Steppe Malware

 

Burlington Electric Department found malicious software associated with the Russian state-sponsored hacking program “Grizzly Steppe” on one of its laptops. While the laptop was not connected to the grid, the news links lingering Congressional concerns about grid vulnerability to a high-profile narrative on Russian interference in the election.

 

Defense Auth Passes with EMP/GMD Language

 

On Dec. 7, Congress passed the final conference report on S. 2943, the FY 17 National Defense Authorization Act (NDAA), by wide margins. The bill contains concerning, last-minute language on electromagnetic pulses (EMP) and geomagnetic disturbances (GMD).

 

House GOP Meets on Tax Reform, MBFA Pushes Back on Muni Bonds

 

On Dec. 14, House Ways and Means Chair Kevin Brady (R-TX) began a two-day meeting with GOP committee members to map out a plan to move tax reform early in the next session. While no decisions have been made as to the treatment of municipal bonds, Committee members and their staff have made comments indicating that taxing municipal bonds is likely, and others have said, “It is safe to assume that the draft will tax municipal bonds.”

 

The Municipal Bonds for America coalition has begun planning a strategy to push back on the use of municipal bonds as a revenue raiser. NEPPA has signed a letter from the group to key Members of Congress and encourages its members to add the name of their system by clicking here.

 

Committee Leaders Named

 

Republican and Democratic leaders have announced Chairmen and Ranking Members for key committees of interest to NEPPA and public power. Among the energy authorizing committees, the only change is that Rep. Greg Walden (R-OR), who has been a friend to public power, will chair the House Energy and Commerce Committee. On the House Ways and Means Committee, Rep. Richie Neal (D-MA) will assume the Ranking Member position. New Englander Neal has been a champion for the protection of municipal bonds, which are likely to be targeted in tax reform legislation (see related story above).

 

Trump Nominates Members of Cabinet and Other Administration Posts

 

President-elect Trump has announced several key nominees:

 

  • Secretary of Energy: Texas Governor Rick Perry (R), who previously advocated for abolishing the Department. A Trump spokesperson refused to rule out the possibility that the Administration might entertain the idea (to do so would require an act of Congress, however, which is unlikely).
  • Secretary of the Interior: Freshman Congressman Ryan Zinke (R-MT), an early Trump supporter, who beat out hydropower champion Rep. Cathy McMorris Rodgers (R-WA) after sportsmen’s groups close to one of Trump’s sons expressed concerns about her willingness to sell federal lands.
  • EPA Administrator: Oklahoma Attorney General Scott Pruitt, a leading opponent of the Obama Administration’s climate and regulatory agenda.
  • Office of Management & Budget (OMB) Director: Rep. Mick Mulvaney (R-SC), a founding member of the House Freedom Caucus who has voted against raising the debt ceiling.
  • White House Regulatory “Czar”: Billionaire investor Carl Icahn.

 

12-1-16 NEPPA Newsline

In This Issue:

  • Election 2016: Trump elected President, reversing outlook for Clean Power Plan and dimming chances for energy bill, boosting chances of tax reform…
  • Markets: FERC pushes further into retail functions with new proposals, Watchdog group calls for review of new PJM rules…
  • Nuclear: Senate holds hearing on nuclear power, action on spent fuel possible in 2017…

 

Election Ushers in Change Agent

 

Voters on Nov. 8 elected Donald Trump to be the next President of the United States. Republicans kept majorities in both House and Senate, albeit with smaller margins, setting up a 115th Congress that is sure to be full of major policy shifts, including reversing course on major Obama Administration priorities.

 

While several Trump Administration nominees have been announced, there is little more than speculation about the agencies that most directly affect the utility industry, including the Department of Energy (DOE), Environmental Protection Agency (EPA), and the Federal Energy Regulatory Commission (FERC), which has two Republican vacancies.

 

Perhaps the highest profile regulation on the chopping block is the Clean Power Plan. President-elect Trump has vowed to “cancel” the rule, setting up a legal battle with environmental and health groups. Acknowledging that clean energy advocates have little recourse to advance technology-driving regulations without support from the Administration, current EPA officials have issued statements focused on the economic drivers leading utilities to adopt greener portfolios.

 

The election results have also dimmed the prospects for legislation moving in the lame duck session, including an energy bill conference report. The Senate now appears far more motivated to complete a bill than the House, which replied to the upper chamber’s initial proposal with a vastly slimmed-down version. A second volley from the Senate attempted to reignite negotiations on several provisions, but prospects for final passage are low.

 

On the other hand, Republicans are eyeing the opportunity to advance an overhaul of the tax code they have been preparing for the past several years. Past drafts would cap the deduction for municipal bonds, reducing the value of public power’s chief financing tool.

 

Next week, leaders plan to unveil a year-end spending package that may or may not include provisions from the energy bill, water resources projects, and other items. It is expected to fund the government at current levels through March, 2017. After passing that bill, Congress is expected to adjourn before returning Jan. 2.

 

FERC Proposes Storage and Demand Response Integration

 

On Nov. 17, FERC requested comments on a proposal to integrate storage and distributed energy resources into wholesale markets. The proposal would require RTO/ISOs to develop market rules to recognize these resources operational characteristics and define distributed generation “aggregators” as a type of market participant.

 

Watchdog Group Calls for Review of PJM Capacity Rules

 

Monitoring Analytics, the Independent Market Monitor for PJM Interconnection, filed a request with FERC asking the agency to immediately reinstate rules requiring that replaced capacity be physical, among other requirements. The newer rules were adopted over the objection of FERC staff, the filing says, and are “unjust and unreasonable, inconsistent with competitive markets.”

 

Senate Hearing on Nuclear Power’s Future

 

On Nov. 16, the Senate Appropriations Subcommittee on Energy and Water Development held a hearing to discuss the future of nuclear power. During opening statements, Chair Lamar Alexander (R-TN) expressed the need to invest in advanced nuclear reactors while pushing for the licensing of Small Modular Reactors. Ranking Member Dianne Feinstein (D-CA) said that first there must be a viable solution for spent fuel; and industry must “financially commit” to the technology.

 

In the 115th Congress, both Sens. Alexander and Feinstein plan to work with House Energy and Water Appropriations Chairman Mike Simpson (R-ID) and Ranking Member Marcy Kaptur (D-OH) to reach a solution on spent nuclear fuel. Potential Energy and Commerce Chair John Shimkus (R-IL) has said he would advance nuclear waste legislation to open Yucca Mountain, which may be a possibility now that its staunchest opponent, Minority Leader Harry Reid (D-NV), is leaving office. However, incoming Senate Majority Leader Chuck Schumer has pledged to take up Reid’s mantle and follow the “tradition” of opposing Yucca Mountain.

 

11-1-16 NEPPA Newsline

In This Issue:

  • Markets: D.C. Circuit Dismisses Public Citizen Case on FCA8, NY Subsidies Challenged…
  • Environment: Clean Power Plan Cases Advance…
  • Appropriations: Continuing Resolution Funds Government, Lame Duck Session Announced…
  • Energy Policy: Senate Sends House First Energy Bill Volley, FERC Announces Storage Conference…
  • Cyber Security: FERC Sets GMD Standard…

 

D.C. Circuit Dismisses Public Citizen Suit on FCA8

On Oct. 25, the D.C. Circuit Court of Appeals dismissed Public Citizen’s petition for review of the Federal Energy Regulatory Commission’s (FERC) failure to address the results of ISO-New England’s Forward Capacity Auction 8 (FCA8). FCA8 left consumers with $3 billion in capacity costs after the last-minute closure of Brayton Point – which many surmised was calculated to benefit the plant’s owners, who received significantly higher payments to their other facilities as a result of the constrained supply.

Following the 2014 auction, the Commission voted 2-2 on whether to investigate allegations of manipulation, allowing the rate to go into effect under operation of law. Chairman Bay and Commissioner Clark issued a joint statement saying they would vote to investigate whether the auction results were manipulated by the withholding of capacity. Commissioners LaFleur and Moeller believed the tariff had not been violated and did not appear to be tainted by market power.

Under the Federal Power Act, only Orders of the Commission are reviewable - Because the deadlock meant there was no FERC Order, petitions for rehearing were not considered.

Many hoped the Court of Appeals would intervene, seeing the inherent unfairness of not only the auction, but also the absurd result that would have at least been reviewable if another Commissioner had voted against investigating. Unfortunately, the court of appeals interpreted FERC’s organizing statute and the Federal Power Act literally and determined that FERC had not taken action, leaving the court with nothing to review. However, a similar case concerning another government agency was compelling, and the Court dismissed for lack of jurisdiction.

The decision strengthens the need for the “Fair RATES Act,” legislation that passed the House this Congress with NEPPA’s support. The bill would make deadlocked votes reviewable by both FERC and the courts.

 

Generators Challenge NY Subsidies

Generators in the New York ISO system filed suit challenging recently-enacted subsidies to nuclear plants in the state. The competitive generators say the subsidies run afoul of a recent Supreme Court decision limiting state remedies to bring new generation online inside regions with a mandatory capacity market. The Court said the Federal Energy Regulatory Commission preempted out-of-market state actions, but also indicated that some subsidies would be allowable.

 

Clean Power Plan Cases Advance

On Sept. 27, the U.S. Court of Appeals for the D.C. Circuit heard over seven hours of arguments in the case challenging the Environmental Protection Agency’s (EPA) Clean Power Plan.  

One question will be whether the Court applies the usual Chevron deference to an agency’s reasonable interpretation of an ambiguous statute, or a more heightened standard for regulations of “great significance.” That question implicates the “transformative” nature of the rule, which was heavily debated. Challengers spoke to the vast economic consequences of the rule and the unusual use of beyond-the-fence-line measures, saying that Congress would have had to give clearer direction to EPA if it intended to authorize such dramatic requirements. Defenders pointed out that the rule simply accelerates existing trends in the power sector, and that EPA’s interpretation was a pragmatic and reasonable reading of the statute.

Surprisingly, the judges did not seem persuaded by one of the most prominent issues in the challengers’ case. Challengers had found fault with EPA’s use of Sec. 111(d), which curiously was codified with two competing versions – one of which appeared to preclude regulating any point source already subject to regulations under Sec. 112, the air toxics section. EPA regulated mercury from power plants under Sec. 112 in 2013.

On Oct. 13, litigants filed opening briefs in the case challenging EPA’s emissions standards for new, modified, and reconstructed power plants under Sec. 111(b) of the Clean Air Act. The case is separate from, but corollary to, the case against the Clean Power Plan (which covers existing plants). Challengers argue the standards for new and reconstructed plants are based on technology that is not “adequately demonstrated” – carbon capture and sequestration – and that they are unachievable by commercial plants that did not receive federal clean coal demonstration funds. EPA has said the “individual components” of the technology have been adequately demonstrated, and under the Clean Air Act, that is sufficient to show the technology is viable.

Any rule for existing sources under the Clean Air Act must come after a rule governing new sources. Therefore, if the new source rule is struck down, EPA would be unable to implement the Clean Power Plan for existing sources until it is rewritten.

 

CR Funds Government Through Dec. 9

Late in the evening on Sept. 28, the House of Representatives passed a ten-week long Continuing Resolution (CR) to fund the federal government at the current year level of $1.067 trillion through Dec. 9. Members then left to campaign and will return after the Nov. 8 election for a four-week session to pass additional funding, which could serve as a vehicle for tax extenders, energy bill provisions, and other matters.

 

Senate Sends House First Energy Bill Volley

On Oct. 26, the Senate Conferees considering S. 2012 sent a bipartisan package to the House Conferees for consideration. The details of the package have not been released to stakeholders, but the move comes after several weeks in which negotiations appeared to be at an impasse. How and when the House Conferees will respond is unclear at this time. Given that the two bills are very different, and the time left in the session is short, the prospect of reaching a stand-alone agreement that can pass both chambers and be signed into law this year remain low. Provisions may be included in a yearend omnibus, but which sections have enough support to be enacted is not yet clear.


FERC Announces Technical Conference on Storage Resources

FERC will hold a Nov. 9 technical conference on electric storage resources. FERC staff will explore the circumstances under which it may be appropriate for electric storage resources to provide multiple services, whether the RTO/ISO tariffs need to include provisions to accommodate these business models, and how the Commission may ensure “just and reasonable compensation” for these resources in the RTO/ISO markets.

 

FERC Finalizes New Reliability Standard on Geomagnetic Disturbance

On Sept. 22, FERC approved Order 830, a new reliability standard addressing the vulnerability of electric transmission systems to geomagnetic disturbances (GMD), which occur when the sun ejects charged particles that interact with and cause changes in the earth’s magnetic fields. In a related action, On Oct. 13, President Obama signed an executive order directing the Department of Energy (DOE) to conduct tests to protect the electric grid and other infrastructure from “space weather,” such as solar flares.

 

10-1-16 NEPPA Newsline

In This Issue:

  • Markets: House Panel Examines “Historical Perspectives” on Federal Power Act …
  • Energy Policy: Energy Bill Conference Kicks Off, Letters Sent…
  • Cyber Security: Moniz Testifies on DOE Role in Energy Security…
  • Finance: CFTC Head Calms Concerns on Two Policy Items …

 

House Panel Examines “Historical Perspectives” on Federal Power Act

 

On Sept. 7, the House Energy and Commerce Subcommittee on Energy and Power held a broad-ranging hearing titled, “The Federal Power Act: Historical Perspectives.” The hearing is the first in a series of inquiries into the Federal Power Act planned by the Committee, whose leaders announced the initiative in July with a letter to Federal Energy Regulatory Commission (FERC) Chair Norman Bay.

 

Although the hearing covered significant ground, the only witnesses were former FERC general counsels (Susan Tomasky and Doug Smith) and Commissioners (Clifford M. Naeve), and one former Deputy Energy Secretary (Linda Stuntz). The federal experience of the witnesses meant that the perspectives of state and local representatives, utilities, and consumer advocates were not voiced, although future hearings could provide opportunities for these views. Members appeared to be interested in taking a deep dive into granular energy issues, and no overarching themes or partisan angles emerged in the nearly two-hour hearing.

 

Subcommittee Chair Pete Olson (R-TX), taking over for Ed Whitfield (R-KY) (who helped spearhead the broad review efforts but resigned from Congress the day before the hearing), discussed the benefits of electric choice at the wholesale level, but said the markets were “far from perfect.” Full Committee Ranking Member Frank Pallone (D-NJ) said there is a legitimate question as to whether recent developments make the Act “obsolete.”

 

Several members discussed technological changes, such as distributed generation. Stuntz said one of the strengths of the Act is its breadth, but the jurisdictional bright line will be challenged by distributed generation, demand response, and other developments. Naeve said it is difficult to anticipate the effects of new technologies, and said that the breadth of the statute was helpful in adapting to changes – although FERC could need additional authority in the future. Other Members asked questions about the functioning of competitive markets, and received replies across the board indicating that the markets are essentially functioning “well” or “very well,” and although some limitations of markets were acknowledged, the witnesses generally suggested that the existing structures could accommodate changing goals and values.

 

Chair Emeritus Joe Barton (R-TX) said Congress has been “all over the map” over the last 30 years on creating a framework that customers think is fair. He asked how the Clean Power Plan might work given all these challenges, and Stuntz said that it was unclear how it would work. “I foresee real difficulties,” she said. Additional hearings are likely to be scheduled in 2017, when the panel will have a new full committee and subcommittee chair.

 

Energy Bill Conferees Kick off Energy Bill Conference

 

Forty-one House and Senate negotiators met on Sept. 8 to start the official process of working to reach agreement between two very different energy bills and produce a bipartisan conference report that the President will sign into law. This is a tall order given the limited time left in the Congressional session, and the many controversial provisions in each bill. Senators are generally more likely to believe the committee will produce a final bill. House conferees are far less optimistic. House Energy and Commerce (E&C) Chair Fred Upton (R-MI), however, said he thought they could “find a sweet spot” and committed “to working to develop a final bill that the President will not veto.”

 

On Sept. 8, APPA sent a letter to leaders of the energy bill conference expressing support for a final bill and summarizing the organization’s priorities, including hydropower reform, reliability impact statements, energy efficiency provisions, vegetation management, and the Senate version of the report by transmission organizations on diversity of fuel supply. Separately, APPA joined the National Hydropower Association, National Rural Electric Cooperative Association, and Edison Electric Institute in a letter of support for the hydropower provisions. NEPPA previously sent a letter to Sen. Bernie Sanders (D-VT) and Rep. Peter Welch (D-VT), both conferees, supporting the Senate version of the fuel diversity measure and hydropower reforms.

 

On Sept. 20, 2016, 13 environmental organizations sent a strongly worded letter to the House and Senate energy bill conferees urging them to oppose provisions in both bills that would “harm our environment, climate, and public health.” The letter lists over 28 provisions the groups oppose, including hydropower licensing reforms.

 

DOE Secretary Moniz Testifies on Federal Role in Securing Energy Sector

 

On Sept.15, Secretary Moniz testified on the federal government’s role in ensuring the energy sector is secure. Moniz said cybersecurity will likely remain one of the highest priorities for the DOE.

 

Moniz said the next Quadrennial Energy Review (QER) report will focus on the changing generation mix; low load growth; increasing vulnerabilities to severe weather/climate change; the proliferation of new technologies, services and market entrants; emerging cyber/physical threats; aging infrastructure and workforce; the growing overlap between jurisdictions; value creation; and the growing need for an integrated North American electricity market. It will be released by the end of the year, he said.

 

CFTC Head Signals de minimis Exception Will Stay at $8 Billion, Backs off Private Rights of Action

 

On Sept. 15, Commodity Futures Trading Commission (CFTC) Chair Timothy Massad said that he will recommend keeping the threshold for registration as a Swap Dealer at $8 billion in notional swaps for an additional year. The threshold was set to drop to $3 billion at the end of 2017.

 

“The de minimis threshold was set in 2012 by the CFTC and the SEC jointly. At that time, the agencies had limited data on the market,” Massad said. “Adopting this order [to delay the drop for one year] will give us more time to consider this critical issue. Given its importance, a delay is the sensible and responsible thing to do – and doing it now will provide much-needed certainty to market participants.”

 

In an unrelated action, Massad announced in a letter to Sen. John Boozman (R-AR) that he would recommend against a proposed policy change that would allow a private right of action to enforce general manipulation provisions under the Commodity Exchange Act in RTO/ISO markets. Energy trade groups, including APPA, weighed in advising against such a change due to the uncertainty and liability it would create in the markets. Boozman had advanced an amendment to CFTC reauthorization legislation that would have blocked the change, but that legislation stalled and is not expected to advance this year.

 

9-1-16 NEPPA Newsline

In This Issue:

  • Markets: ISO-NE and PJM Consider Policy Objectives, CA Pauses “Regionalization” Plans, NY Bolsters Nuclear Plants Struggling in Capacity Market, FERC Releases RTO/ISO Metrics…
  • Energy Policy: Energy Trades Call for Robust Hydropower Provisions in Energy Conference, DOE Releases Hydropower Vision Report …
  • Environment: New NEPA Guidance Issued, Oral Argument Schedule in CPP Case Set …

 

ISO-NE, PJM Consider Reform Proposals

 

On Aug. 11, the New England Public Power Pool gathered to consider a series of presentations containing proposals for reforming the region’s market structures to better account for various public policy goals. Dubbed “Integrating Markets and Public Policy” (IMAPP) in New England, the effort is also underway in the PJM region, styled as “Grid 20/20.”

 

The discussions acknowledge the inability of the markets to effectively address public policy goals such as carbon reduction, resource diversity, and affordable consumer costs. The groups considered various proposals to modify the markets, create even more markets, or revert to residual markets. They are currently identifying areas of focus, with the goal of moving forward on a framework before the end of the calendar year.

 

CA Legislature Will Not Consider Regionalization in 2016

 

On Aug. 8, California Governor Jerry Brown announced in a letter to the Governors of five Western states that the California Legislature would not consider a proposal to move forward with a regionalization plan to transition the California ISO to a regional grid operator. Citing “unresolved questions that would be difficult to resolve in the remainder of California’s current legislative session,” Brown pledged to continue working with the ISO and stakeholders to present a plan in January, 2017.

 

The California Legislature previously approved the expansion in concept, aiming to provide a way for California’s renewables to reach a wider market. After a proposed governance structure was released and revised, many legislators had concerns about environmental impacts, maintaining control, and increased transmission costs.

 

Municipal utilities, regulators, and Congressional leaders from the West have been sharply skeptical of market structures since the energy crisis of 2000. The Bonneville Power Administration (BPA) does not intend to join an expanded ISO, but made positive comments about the proposal’s envisioned role for PMAs and suggested revisions to increase the voice of public power and PMAs in the policy formulation process.

 

NY Approves Clean Energy Standard with Subsidies for Nuclear

 

In the wake of several premature nuclear retirements – many due to the challenges posed by flawed regional markets prevalent in the East – the New York State Public Service Commission unanimously approved on Aug. 1 a Clean Energy Standard (CES) that requires 50% of the state’s electricity to come from renewable sources by 2030 and guarantees income for three upstate nuclear power plants to keep them from closing. The plan guarantees a 1.7¢ per kWh subsidy to upstate nuclear reactors and calls for further energy market reforms.

 

FERC Issues COmmon Metrics Report on RTOs/ISOs

 

Staff to the Federal Energy Regulatory Commission (FERC) on Aug. 9 released a Common Metrics Report for the period 2010-2014, which it said is the latest activity “in an initiative to examine the performance and benefits of RTOs and ISOs,” compared to several individual investor-owned utilities.

 

A summary of key “insights” include findings that RTOs and ISOs managed dispatch of energy from a diverse set of generation types; maintained adequate power supplies, in accordance with planned reserve margins; and reported the approval of a large number of transmission projects for reliability purposes; and that administrative costs per megawatthour varied across RTOs and ISOs, with the lowest in SPP and the highest in ISO-NE.

 

Energy Trades Weigh in Supporting Hydropower Licensing Improvements

 

On Aug.15, four energy trade associations–the National Hydropower Association (NHA), American Public Power Association (APPA), Edison Electric Institute (EEI) and National Rural Electric Cooperative Association (NRECA) – sent a letter to the lead conferees working to reconcile versions of the energy bill, jointly advocating for the inclusion of “a strong hydropower title that improves the licensing and regulatory approval process for new hydropower development and relicensing of existing projects.”

 

Specifically, priority improvements the groups advocated for in a final conference report include:

 

  • Directing FERC to lead the coordination of the many approvals needed for hydropower projects and to work with agencies and other licensing participants to set timely schedules;
  • Holding all participants to the schedule by providing consequences for undue or unjustified delays, while also providing sufficient resources and time for decision makers to complete their work;
  • Protecting and improving licensing improvements achieved in the Energy Policy Act of 2005 for trial‐type hearing and alternative conditions;
  • Clarifying that certain mandatory conditioning authority is limited to addressing actual project effects; and
  • Providing new, more efficient approval processes for low‐impact projects, such as environmentally beneficial license amendments, building on non-powered dams, and closed‐loop pumped storage.

 

DOE Releases Hydropower Vision Report

 

 

On July 26, the Department of Energy’s (DOE) Wind and Water Power Technologies Office released its Hydropower Vision report, subtitled “A New Chapter for American’s 1st Renewable Electricity Source.” The report looks at the future of the U.S. hydropower sector with a focus on technological advances, increased energy market value, and environmental sustainability. It also mentions the need for additional improvements in the licensing/relicensing process.

 

New NEPA Guidance Asks Agencies to Consider Climate Effects

 

On Aug. 2, the White House Council on Environmental Quality (CEQ) released long-anticipated final guidance on how federal agencies should assess climate change impacts of major federal actions under the National Environmental Policy Act (NEPA). The non-binding guidance aims to provide a more uniform approach to assessments across agencies and makes a number of specific recommendations, including that agencies should quantify a proposed action’s projected GHG emissions, using them as a “proxy” for potential climate effects. It does not set a threshold for the amount of emissions that is cause for concern; however, it cautions agencies against assuming that a project’s relatively minor emissions would not meaningfully contribute to climate change in the aggregate.

 

D.C. Circuit Announces Oral Argument Schedule in Clean Power Plan Case

 

On Aug. 17, the U.S. Court of Appeals for the D.C. Circuit issued an order setting the oral argument format for the case challenging the Clean Power Plan. The Court will hear a total of three hours and 38 minutes of oral arguments on Sept. 27, an uncommonly lengthy hearing. The order establishes several distinct issues to be argued, including, among other things, whether the Plan impermissibly forces generation shifting, whether the rule is Constitutional under other standards, whether aspects of the rule were properly subject to notice and comment, whether the controls required have been “adequately demonstrated,” and whether the cost-benefit analysis was adequate.

8-1-16 NEPPA Newsline

In This Issue:

  • Overview: Congress left Washington the week of July 15; will return Sept. 7...
  • Energy Policy: Senate Votes to Proceed to a House/Senate Conference to Reconcile Differences Between the House and Senate Versions of the Energy bill; Drones Policy Addressed in 14-month FAA Agreement…
  • Grid Security: FERC Issues Rule Ordering NERC to Develop a New Supply Chain Standard: DOE Provides Cyber Grants to Public Power…
  • Environment and Regulation: White House Works to Bring Solar Energy to Low-income Consumers; House Subcommittee Holds Constructive Yucca Hearing…
  • Tax and Finance: House Republicans Release Tax Reform Blueprint…

 

The House and Senate left Washington, D.C. on July 15 for the Republican and Democratic national conventions and a five-week August recess. Members will return to resume work on Sept 7. The chambers did not officially adjourn but instead are in a “pro forma” session that prevents the President from exercising a “pocket veto” and from making recess appointments.

 

Senate Votes “Aye” to Move to Energy Bill Conference, Names Conferees

 

By a vote of 84-3, the Senate agreed on July 12 to proceed to a House/Senate conference to reconcile differences between the House and Senate versions of the energy bill. Of interest to NEPPA, both Sen. Bernie Sanders (I-VT) and Rep. Peter Welch (D-VT) were appointed to the Conference. Senate Energy and Natural Resources Chair Lisa Murkowski (R-AK) said she hoped all work could be completed during the four-week September work period; however, the bill could also be finished in a post-election “lame duck” session. Staff has already begun informal meetings to resolve as many non-controversial issues as possible before the principals return.

 

Issues NEPPA would like to see included in a final bill are:

 

  • Senate capacity market language that would require RTOs to report on opportunities for “enhanced self-supply” by not-for-profit utilities. While NEPPA would have liked to see this provision strengthened to require RTOs to allow all Load Serving Entities to self-supply in capacity markets, we support the Senate provision as an important first step in providing oversight of RTO market designs; in contrast, the House capacity market language suggests a preference for coal and nuclear generation, which NEPPA does not support;
  • House language requiring a GAO study on wholesale electricity markets that includes an inquiry on self-supply;
  • Improvements to the Federal Energy Regulatory Commission hydropower licensing/relicensing process.

 

NEPPA opposes inclusion of a provision in the House bill authorizing DOE to develop distribution plans for states. This could allow ISO-New England to enlist the DOE in overseeing public power distribution plans.

 

Drones Policy Addressed in 14-month FAA Agreement

 

On July 17, the President signed into law , H.R. 636, the ‘‘FAA Extension, Safety, and Security Act of 2016,’’ which reauthorizes the Federal Aviation Administration (FAA) through September 2017 and includes a number of provisions encouraging the FAA to prioritize authorization of unmanned aircraft system (“UAS” or “drones”) operations for electric utility system inspections and restoration. The bill does not give blanket authorization for drone use for utility restoration, but could certainly expedite their use relative to the tight constraints for operation outlined in recent FAA rules.

 

FERC Issues Rule Ordering on Supply Chain Standard

 

On July 20 the Federal Energy Regulatory Commission (FERC) directed the North American Electric Reliability Corporation (NERC) to develop a new supply chain risk management standard to address risks to information systems and related bulk electric system (BES) assets. The new Critical Infrastructure Protection is intended to address four objectives: software integrity and authenticity; vendor remote access; information system planning; and vendor risk management and procurement controls. The rule will require every affected entity to develop and implement a plan that includes security controls for supply chain management of industrial control hardware, software and services associated with the BES.

 

DOE Provides Grants to Help Improve Public Power Cybersecurity

 

Of interest to some NEPPA members, on June 12, Department of Energy (DOE) Deputy Secretary Elizabeth SherwoodRandall, announced a $15 million cybersecurity grant, to be divided between the American Public Power Association (APPA) and the National Rural Electric Cooperative Association (NRECA). The grant is intended to enhance the culture of security within consumer-owned utilities.

 

With electric grid security and cyber threats continuing to evolve, Secretary Sherwood-Randall stated that the DOE would continue to help utility sector partners strengthen efforts to protect critical infrastructure. DOE’s funding will help public power systems upgrade their power grids as well as their ability to respond efficiently and effectively to current threats.

 

White House Works to Bring Solar to Low-income Consumers

 

On July 19, the White House announced a goal to bring one gigawatt of solar energy to low- and moderate-income families by 2020. The Clean Energy Savings for All Initiative is a collaboration among the Departments of Energy, Housing and Urban Development, Agriculture, Veterans’ Affairs, Health and Human Services, and the Environmental Protection Agency that will include scaling up Property-Assessed Clean Energy (PACE) financing; making it easier for low-income household to access funding for renewable energy investments; providing technical assistance to help more households participate in the clean energy economy; and building an inclusive solar energy workforce.

 

House Subcommittee Holds Yucca Hearing

 

On July 7, the House Energy and Commerce Subcommittee on Environment and the Economy held a hearing on nuclear fuel disposal focused on identifying barriers to implementation of the Yucca Mountain, NV site – a top priority for Subcommittee Chair John Shimkus (R-IL). Unlike prior hearings that were partisan in nature, this hearing focused on how to resolve issues that could lead to a consent agreement with the state of Nevada, although significant state opposition remains. Themes included safety issues associated with transporting waste material, budgeting, and building trust between the state of Nevada and the federal government.

 

House Republicans Release Tax Reform Blueprint

 

On June 27, the House Republican Task Force on Tax Reform, led by Ways and Means Committee Chair Kevin Brady (R-TX), released “A Better Way: A Pro-Growth Tax Code for All Americans” to give House Republicans a “blueprint” for comprehensive tax reform. The proposal contains no direct commentary on municipal bonds or the future of the tax exempt status of municipal bonds. The document does, however, reference the need to eliminate numerous deductions, exemptions, and credits that are viewed as “special interest” provisions.

 

Further, the blueprint identifies two deductions that will not be impacted: the mortgage interest deduction and charitable deductions for individuals. The blueprint is expected to serve as the basis for future discussions on tax reform conducted by the House, mostly in 2017.

7-1-16 NEPPA Newsline

In This Issue:

  • Energy Policy: E&C Launches Review of Federal Power Act with Critique of Markets, “Big Six” Meet on Conference, Private Right of Action Questioned…
  • Cyber and Grid Security: FERC Moves to Redefine CEII After FAST Act, New “Analog Control” Bill Introduced…
  • Environment and Regulation: EPA Releases Clean Energy Incentive Plan…

 

Energy and Commerce Launches Review of Federal Power Act, Organized Markets


On June 10, House Energy and Commerce Committee Chair Fred Upton (R-MI) and Energy and Power Subcommittee Chair Ed Whitfield (R-KY) announced the launch of a long-term review of the Federal Power Act. The Committee plans to hold an introductory oversight hearing in the next few weeks.


Committee staff previously floated the possibility of a Federal Power Act review during a staff panel at the APPA Rally in March. However, in later meetings the same staff indicated that the review would probably not occur if Members were busy with an energy bill conference. The fact that the Committee decided to take on such a wide-ranging subject at this time could indicate they do not expect an energy bill conference to coalesce (see related story below).


Upton and Whitfield kicked off the effort with a pointed letter to Federal Energy Regulatory Commission (FERC) Chair Norman Bay that echoes some of the concerns APPA and others have raised about organized markets: “As these changes occur, the competitive electricity markets — particularly the organized wholesale markets — continue to underachieve,” the two wrote. “Restructured wholesale markets have, in many ways, become mere administrative constructs that are continuously ‘tweaked’ through the regulatory process.”


The letter poses six questions to the Commission:

 

  1. Have the competitive markets fared as expected since restructuring began … particularly in terms of market efficiency, capital investment, reliability, electricity rates, and consumer impacts?
  2. Are the competitive markets equipped to promote, integrate, and adapt to new technologies, new products and services, and state and federal policy changes?
  3. What is the commission’s view as to how non-FERC jurisdictional federal and state actions, such as the federal production tax credit or state renewable energy mandates, impact the operation of wholesale markets generally, and, specifically, in terms of impacts on reliability, resource and technology neutrality, and wholesale power prices?
  4. How do new technologies, programs, incentives, and policy changes … affect the jurisdictional ‘bright line’? Is that line becoming increasingly blurred as a result of such changes?
  5. Does the Federal Power Act continue to be well-suited for today’s electricity sector? Is it well-suited for the electricity system of the future?


While the language and tone of the letter is encouraging, particularly for municipal utilities in organized markets, opening up the Federal Power Act carries with it the potential for changes in law that pose great risk for consumer-owned utilities. However, it is not clear how much the leaders intend to accomplish with few legislative days remaining in the 114th Congress. Both Upton and Whitfield are relinquishing their gavels at the end of the year – Upton is term limited as Energy and Commerce Chair, and Whitfield is retiring.


“Big Six” Meet Again on Energy Bill; Conference Still in Limbo


While the Senate has yet to hold a vote on naming conferees to the energy bill, the top six negotiators – including Energy and Commerce Chairman Fred Upton (R-MI), Ranking Member Frank Pallone (D-NJ), Natural Resources Chairman Rob Bishop (R-UT) and Ranking Member Raúl Grijalva (D-AZ) and Senate Energy and Natural Resources Chair Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) – have now met twice to discuss a path forward. Nothing concrete on process or substance has been decided.


Controversy Continues over Hydropower Improvements


Rep. Jerry McNerney (D-CA), the lead Democrat on hydropower licensing reforms in the House-passed energy bill, requested the Congressional Research Service (CRS) to analyze provisions he authored in response to allegations from the White House and environmental groups about their impact on the Clean Water Act (CWA) and Endangered Species Act (ESA).


CRS found the provisions “are unlikely to be considered a waiver” of the statutes if an agency or tribe cannot meet FERC’s schedule. CRS also determined that the schedules that FERC would set under the bill would adequately account for state environmental processes, and allow state agencies to identify – and seek federal attention to – areas of concern. However, CRS pointed out the House language does not clearly explain what happens if an agency is unable to satisfy those federal laws, even if it gets a 90-day extension in court.


CFTC “Private Right of Action” Questioned


On June 24, Energy and Commerce Chair Fred Upton (R-MI) and Ranking Member Frank Pallone (D-NJ) sent a letter to the Commodity Futures Trading Commission, discouraging the Commission from finalizing an amendment that would allow private rights of action to enforce anti-market manipulation provisions of the Commodity Exchange Act. The Federal Power Act and FERC offer no such private right, and APPA and others have weighed in against the rule. The issue of how much jurisdiction over electricity markets each agency has is a contentious one. The CFTC’s assertion of jurisdiction stems from the Dodd-Frank law.


FERC Issues Notice of Proposed Rulemaking to Implement FAST Act


On June 16, FERC issued a Notice of Proposed Rulemaking to implement provisions of the “Fixing America’s Surface Transportation” (FAST) Act that direct FERC to issue regulations regarding the designation, protection, and sharing of Critical Electric Infrastructure Information (CEII). Comments are due on July 31, 2016.


CEII is defined as “specific engineering, vulnerability, or detailed design information about proposed or existing critical infrastructure” that either contains details about infrastructure that may be used to plan attacks, is exempt from disclosure via the Freedom of Information Act, or gives locations of critical infrastructure.


FERC’s proposal would broaden the scope of CEII to both energy and electric infrastructure. Currently, FERC’s CEII process limits the distribution of sensitive information to people with a “need to know” clearance, to avoid the possibility of its misuse. To comply with the FAST Act, FERC intends to change the scope and purpose of its regulations specifically referring to the “procedures for submitting, designating, handling, sharing, and disseminating CEII submitted to or generated by the Commission.”


Bipartisan Senate Bill Introduced to Promote “Retro” Controls


On June 6, in response to the 2015 cyber attack on Ukraine’s power grid, Sens. Angus King (I-ME), Jim Risch (R-ID), Martin Heinrich (D-NM), and Susan Collins (R-ME) (all members of the Senate Intelligence Committee) introduced the “The Securing Energy Infrastructure Act.” The bill would examine solutions to defend the grid by replacing key devices like computer-connected operating systems with analog and human-operated systems – a “retro” approach that has “shown promise as a safeguard against cyber attacks,” the Senators said in a joint statement accompanying the bill.


EPA Releases Clean Energy Incentive Plan


On June 16, the Environmental Protection Agency (EPA) released its final Clean Energy Incentive Plan (CEIP), a corollary rule to the Clean Power Plan (CPP) that guides how credit will be allocated to states and tribes who invest in zero-emissions generation and solar and energy efficiency measures in low-income communities in the two years before CPP compliance kicks in. The rule will recognize hydropower as an eligible technology for incentives, where the proposal had not.

6-1-16 NEPPA Newsline

In This Issue:

  • Energy Policy: House Volleys Energy Bill, Conference Outlook Murky…
  • Environmental Policy: D.C. Circuit Delays Clean Power Plan Arguments, GOP Opponents Fume…
  • Appropriations: Energy and Water Bill Passes Senate, Fails in House…
  • Cyber Security: Two Hearings Focus on EMP…
  • Markets: CFTC Proposes Private Right of Action Against RTOs...

 

House Volleys Senate Energy Bill, Conference Outlook Murky


On May 25, the House voted to add a large package of House-passed bills – many not directly related to energy – as an amendment to S. 2012, in a largely partisan 241-178 vote that formally begins the conference process.


The amendment, over 800 pages in length, contains the language of H.R. 8, the “North American Energy Security and Infrastructure Act 2015,” as well as the America COMPETES Act reauthorization for science R&D, and a number of federal land, water, wildlife, and conservation measures. It does not include Rep. Joe Kennedy’s (D-MA) “Fair RATES Act,” which previously passed the House.


Of interest to NEPPA members, the additions include several individual bills to extend the Federal Energy Regulatory Commission’s (FERC) deadline for commencement of construction of specific hydroelectric projects, a workforce development bill focused on training “underrepresented groups” for jobs in energy and manufacturing-related jobs as a national priority, and the “Nuclear Energy Innovation Capabilities Act,” which would improve private access to Department of Energy (DOE) labs for advanced nuclear R&D.


Shortly after the vote, a motion to go to conference was approved by voice vote. From New England, Rep. Peter Welch (D-VT) was selected to join the conference committee. The Senate is expected to name conferees after the Memorial Day break. Sources in the House say the conference’s chances of success run about fifty-fift y, given the limited time remaining for legislative business, the number of issues in play, and the fact that the bill is not “must-pass.”


D.C Circuit Delays Clean Power Plan Arguments until Late September


On May 16, the D.C. Circuit Court of Appeals decided to push oral arguments on the Environmental Protection Agency’s (EPA) Clean Power Plan from June 2 to Sept. 27 and to hold the arguments before the full bench of judges, instead of a three-judge panel.


The move has several political implications. On timing, the delay means that the D.C. Circuit would likely not issue its ruling until after the November elections. The delay also makes it more likely that a ninth Supreme Court Justice would have time to be nominated by the next President and confirmed by the Senate before the Supreme Court hears the appeal, likely avoiding what could be a four-four split on the Court.


Meanwhile, Republicans have been pressing EPA on its post-stay activities. House Energy and Commerce Committee Chair Fred Upton (R-MI) and two top lieutenants sent a letter to EPA Administrator Gina McCarthy accusing the agency of creating, “a shadow regulatory structure to implement the Clean Power Plan.” Senate Environment and Public Works Committee Chair James Inhofe (R-OK), who believes that climate change is a hoax, sent a similar letter in March. Two Attorneys General leading the lawsuit against the rule also sent one.


The letters note that the EPA has continued work on the Clean Energy Incentive Program (CEIP) and model trading rules, which were promulgated separately from, but as corollaries to, the Clean Power Plan. The GOP letter writers believe work on those rules, as well as EPA’s statements that it will assist states who independently decide to create emissions reduction plans, are in violation of the Supreme Court’s stay.


In an April 18 response to Inhofe, EPA says, “During the stay, the EPA has made clear that implementation and enforcement of the Clean Power Plan are on hold.” However, it goes on to argue that states may voluntarily regulate greenhouse gases under their own authorities, and that the Clean Air Act authorizes the agency to engage with states to provide technical and financial assistance on air pollution issues. The letter also asserts that action on the corollary rules is not precluded by the stay.


“The EPA has in the past moved forward with preparing for potential implementation of a rule while it has been stayed,” the letter says, “in anticipation that the stay could be lifted.”


Energy and Water Appropriations Bill Passes Senate, House Version Fails


On May 12, the Senate voted 90 to 8 to pass a $37.7 billion FY17 Energy and Water Appropriations bill, the first energy and water appropriations measure to be approved in the Senate in several years. On May 26, however, the House version failed by a vote of 112 – 305. The collapse of the measure is linked to a Democratic amendment banning funding for federal contractors who discriminate against lesbian, gay, bisexual or transgender people, which was countered with Republican riders on Iran and transgender bathroom use.


It is not immediately clear whether House leaders will bring up another version of the Energy and Water bill, move to other appropriations measures, or whether the fracas signals an intractable political impasse that will result in passage of an FY 17 Continuing Resolution instead of individual funding bills. Issues such as Planned Parenthood funding, confederate flags, and other issues have halted appropriations in the past.


Dual Hearings on EMP Threats to Critical Infrastructure


On May 18, the Senate Homeland Security and Government Affairs Committee (HSGAC) held a hearing focused primarily on electro-magnetic pulses (EMP) and geomagnetic disturbance threats to the electric grid, a perennial priority for Chair Ron Johnson (R-WI).


Former broadcaster Ted Koppel testified on his recent book, “Lights Out: A Cyber Attack , a Nation Unprepared, Surviving the Aftermath.” Johnson criticized the federal government for not taking EMP/ GMD threats seriously. Electric sector witness, Scott Aaronson of the Edison Electric Institute (EEI), was also the target of Johnson’s ire for not doing enough to deal with EMP/GMD threats, but delivered an effective rebuttal based on industry efforts and processes in place.


On May 17, the House Homeland Security Committee Subcommittee on Oversight and Management Efficiency held a similar hearing to examine what the federal government is doing to mitigate the threat posed by EMPs to critical infrastructure. The hearing followed the recent release of Government Accountability Office (GAO) report titled “Federal Agencies Have Taken Actions to Address Electromagnetic Risks, but Opportunities Exist to Further Assess Risks and Strengthen Collaboration.”


CFTC Opens Door for Private Right of Action in RTOs


On May 12, the Commodity Futures Trading Commission (CFTC) issued a proposed rule that would extend and revise an exemption for RTO and ISO contracts from the definition of “swap,” but leave open the possibility for the organizations and their participants to be held liable in citizen suits for general fraud and manipulation under the Commodity Exchange Act (CEA). At a February meeting of the Commission’s Energy and Environment Market Advisory Group (which includes Sue Kelly of APPA), participants discouraged CFTC from allowing such suits, arguing that doing so is inappropriate and inconsistent since FERC, the RTOs’ primary regulator, does not permit them.

 

5-1-16 NEPPA Newsline

In This Issue:

  • Energy Policy: Senate Passes S. 2012, Supreme Court Rules against Maryland Capacity Incentives…
  • Environmental Policy: Groups File Amicus Briefs in Clean Power Plan Case…
  • Appropriations: Members of Congress Support Increasing LIHEAP Funds…

 

Senate Passes Energy Bill

 

On April 20, the Senate passed S. 2012, the “Energy Policy Modernization Act of 2015,” by a vote of 85-12, marking the first time since 2007 the Senate has approved a major energy bill.

 

The bill contains numerous policy modernizations organized into five titles.  Of interest to NEPPA, the bill contains provisions reforming the hydropower licensing process to make the Federal Energy Regulatory Commission (FERC) the lead agency, capable of setting timelines for studies and conditions, and a section calling on RTOs to report to FERC on how their capacity markets encourage a diversity of supply – including how they provide enhanced opportunities for self-supply by public power.

 

On April 19, Sue Kelly, President and CEO of APPA sent a letter to Energy and Natural Resources Committee Chair Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) urging support for the bill, saying “APPA is pleased that the Senate is considering energy legislation that addresses a variety of issues impacting the electric utility industry, such as reliability, hydropower licensing reform, energy efficiency, emerging utility workforce challenges, and expedited natural gas pipeline permitting.” 

 

S. 2012 must now be reconciled with the House counterpart energy bill, the “North American Energy Security and Infrastructure Act of 2015,” (H.R. 8) which passed the House in December of last year.  The two bills conflict on several policy issues – of interest to NEPPA, the House bill’s capacity market report encourages support for coal and nuclear generation with no mention of self-supply.  Further, numerous provisions in the Senate bill (many of which were included to secure a Senator’s vote) do not appear in the House bill at all. 

 

Given the limited time left in the session, the upcoming Presidential elections, and the differences in the two versions of the bills, it is unclear whether the chambers will be able to reach agreement and move forward on a final bill.  Nevertheless, Murkowski said she would like to have the bill signed into law before the Senate adjourns for an extended recess on July 15, to avoid pushing the final product into the lame duck. 

 

Supreme Court Strikes Down Maryland Program on New Generation

 

On April 19, the Supreme Court affirmed that a Maryland program meant to encourage the building of new electric generating capacity in the state was preempted by federal law.  In a unanimous 8-0 ruling, the high court said the program intruded on FERC’s jurisdiction over wholesale electricity rates.   While the ruling is narrowly tailored to the “defects” in the Maryland program, the following week the Court passed on reviewing a lower court’s rejection of a similar program in New Jersey.

Both Maryland and New Jersey, frustrated with the failure of the PJM forward capacity market to incent new generation, developed programs to encourage new development through long-term contracts for differences.  The Maryland program allowed developers to receive a fixed price for capacity, avoiding both the potential losses and potential profits associated with the capacity market.  APPA and NRECA submitted joint briefs supporting the programs.

 

Critics said the Maryland program interfered with the wholesale electricity markets, which fall under FERC’s exclusive authority, by circumventing the federal market’s exclusive role in sending market signals to build plants, and skewing its ability to engage in accurate price formation.

 

Justice Ruth Bader Ginsburg wrote, “By adjusting an interstate wholesale rate, Maryland’s program invades FERC’s regulatory turf.”  However, she said, the win for FERC does not shut out states from proactive planning.  “We reject Maryland's program only because it disregards an interstate wholesale rate required by FERC,” she wrote, adding that the decision should not keep states from “encouraging production of new or clean generation” through other measures. “So long as a State does not condition payment of funds on capacity clearing the auction, the State's program would not suffer from the fatal defect that renders Maryland's program unacceptable,” the justice wrote.

 

“APPA sees the [decision] as yet another regrettable setback for restructured states in RTO regions that take seriously their obligations to ensure that their state’s retail customers have reliable, affordable, and environmentally responsible electric service,”  APPA President and CEO Sue Kelly said in a press release following the decision. “We note, however, that the decision is narrowly drafted, and does not impair the ability of public power utilities to serve their own retail customers with owned and contracted-for generation resources.  For this, APPA is appreciative.”

 

The case, Hughes v. Talen Energy Marketing,is the third in a string of cases testing the limits of FERC jurisdiction.  All three have been decided in FERC’s favor.

 

Wide Range of Supporters File Amicus Briefs in Clean Power Plan Litigation

 

Dozens of groups filed amicus curiae (friend of the court) briefs in support of the Environmental Protection Agency’s (EPA) Clean Power Plan before the April 1 deadline.  Environmental groups, political figures, state and local advocacy groups, and major corporations filed supporting briefs.

 

A group of 20 climate scientists submitted a brief providing scientific context and support for the rule.  A group of nearly 200 current and former Congressional Democrats filed a brief in support of EPA’s interpretation of the Congressional intent of the Clean Air Act.  Two former Republican EPA Administrators filed a brief together, and Former Secretary of State Madeline Albright was joined by former Defense Secretary Leon Panetta and former Deputy Secretary of State Bill Burns in pointing out that climate change poses a threat to national security. The National League of Cities; the U.S. Conference of Mayors along with 54 cities, counties and mayors; and a number of groups representing public health, grid experts, consumer groups, and faith groups all filed briefs as well.

 

Amazon.com Inc., Apple Inc., Google Inc. and Microsoft Corp. submitted a brief as “some of the most significant consumers of energy.”   Other companies submitted a brief based on the rule’s sustainability benefits, including Ikea, Mars Inc., Adobe Systems Inc., and Blue Cross and Blue Shield of Massachusetts.

 

Most surprising was a brief from Dominion Resources, a Virginia-based utility with coal and natural gas assets that once criticized the rule.  Dominion’s brief emphasizes that the Clean Power Plan’s market-based approach is preferable to alternative regulatory constructs that might advance if the rule is struck down.

 

House, Senate Members Send LIHEAP Funding Letters

 

On March 24, 161 House Members sent leaders of the House Appropriations Subcommittee on Labor, Health and Human Services, and Education a letter urging that no less than $4.7 billion be allocated to the Low Income Home Energy Assistance Program (LIHEAP) in the subcommittee’s FY17 appropriations bill.

 

Forty-one Senators signed onto a similar letter sent on March 16 to the Senate Subcommittee.  The Senate letter does not specify a spending level but opposes cuts in funding.

 

The letters come in response to the President’s FY17 budget proposal to cut LIHEAP by $390 million from FY16 levels.

 

4-1-16 NEPPA Newsline

In This Issue:

  • Congressional Focus: NEPPA Members Visit Congressional Delegation on Capitol Hill at APPA Rally, Obama Nominates Garland to SCOTUS…
  • Energy Policy: House Passes Fair RATES Act, Energy Bill Stalls in the Senate, DOE QER Listening Dates Set…
  • Cyber Security: Iranians Charged with Cyber Crimes…
  • Municipal Finance: House Members Launch Municipal Finance Caucus….

 

NEPPA Members Travel to Washington, D.C.

On March 7-9, NEPPA members participated in the annual APPA Legislative Rally and met with Senators and Congressional staff to the New England delegation. The group discussed top legislative issues of interest to public power in the region, including reform of the capacity markets, hydropower licensing reforms, transmission rate policy, municipal bonds, and the Clean Power Plan. The group also stressed the importance of local decision-making.

 

President Obama Nominates Merrick Garland to Supreme Court

 

On March 16, President Obama nominated D.C. Circuit Chief Judge Merrick Garland to fill the vacant seat on the Supreme Court.  Garland, seen as a centrist, has more federal experience than any nominee in history and was confirmed to his current post in 1997 by a bipartisan Senate vote of 76-23.  If confirmed, Garland’s moderate politics would still mark a decided shift in the overall bench, since he would replace Justice Scalia’s reliable conservative vote. 

 

Senate Republican leaders, notably Majority Leader Mitch McConnell (R-KY), appear to be holding firm to the position that the nominee should be named by the next President; and thus far have said they will not hold Congressional hearings on the nominee. However, other GOP Senators have said they will at least meet with Garland.


House Passes the Fair RATES Act

On March 15, the House debated and passed H.R. 2984, the “Fair RATES Act,” via voice vote.The bill, introduced  by Rep. Joe Kennedy III (D-MA), makes a technical change to the Federal Power Act related to instances where the Federal Energy Regulatory Commission (FERC) is deadlocked. NEPPA member Bill Bottiggi had previously testified in favor of the bill.

 

Under current law, a 2-2 vote from FERC allows a rate to go into effect under operation of law – and challengers have no recourse to call for rehearing or appeal to a court since there is technically no Order to appeal. The Fair RATES Act would provide that lack of action will be treated as if FERC had issued the order to accept the rate. This would fix what Kennedy has called a “technical flaw in the current regulatory process” that came up after FERC deadlocked on reviewing a particularly high auction result in New England’s mandatory forward capacity market.

 

On that same day, Kennedy continued to call for reforms in the way New England’s capacity market functions. Kennedy, alongside Sen. Edward Markey (D-MA), led the Massachusetts Congressional delegation and other lawmakers from the New England area in urging FERC and ISO-New England to consider laying out further protections for consumers in auctions.

 

The lawmakers expressed concerns that the current policy does not provide enough reliability to justify the rates customers are being charged. Kennedy and Markey noted that New England residents pay the highest energy bills in the United States, and that these rates are set to increase even further due to previous capacity auctions. They advocated for stakeholders and regulators to come together to reform the markets in order to protect customers and ensure that future generations are not paying exorbitant rates for their electricity.

 

Senate Energy Bill Still Seeking Floor Time

As the Senate headed into a two-week Easter recess on March 18, efforts to complete action on the bipartisan Senate energy bill, S. 2012, continued to stall. Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) have worked to find a middle ground on numerous amendments related to the bill, but have yet to overcome all remaining concerns. Current reports indicate Sen. Bill Nelson (D-FL) is holding up consideration of the bill over an amendment that would amend current offshore drilling revenue sharing, which may potentially impact the Florida coast. 

 

It remains to be seen whether a resolution can be reached when the Senate returns. It is possible that Senate leadership may consider filing cloture to circumvent objections by some lawmakers. 

 

Quadrennial Energy Review Meetings Announced

 

The Department of Energy (DOE) recently announced that it will convene a number of public meetings across the country in coming months to gather input from stakeholders concerning the second installment of the Quadrennial Energy Review (QER). The second installment will take the form of a study of the electricity system, from generation to end-use. The first such stakeholder meeting was held in Washington, DC on Feb. 4.

 

The meetings will be held in the following cities: Boston, MA on April 15; Salt Lake City, UT on April 25; Des Moines, IA on May 6; Los Angeles, CA on May 10; and Austin, TX – Date TBD.

 

Iranians Charged in Cyber Attacks

 

On March 24, the Justice Department announced it had indicted seven individuals associated with the Iranian government and charged them with cybercrimes. The allegations, for acts committed between 2011 and 2013, include a “coordinated attack” on 46 banks and other financial institutions, as well as a small dam in Rye, NY, in an apparent attempt to halt operation. 

 

The indictment alleges that the hackers used the attacks on the financial institutions to slow the targets’ computer systems. While there was no physical damage to the dam in New York, the suspects probed the computerized control systems, which, according to the indictment, could have given them access to operate a gate on the dam if it had not been manually disconnected for maintenance.

 

Democratic lawmakers called the charges a sign that Congress must act to bolster the nation’s cyber defenses.

 

Hultgren and Ruppersberger Launch House Municipal Finance Caucus

 

On March 1, Reps. Randy Hultgren (R-IL) and Dutch Ruppersberger (D-MD) launched the House Municipal Finance Caucus to highlight and protect the tax exemption for municipal bonds.

 

In the last eight years, numerous proposals to limit the exemption have been advanced. For example, President Obama’s budgets have repeatedly called for capping the value of the municipal bond tax exemption, along with other tax preferences, at 28 percent. Former House Ways and Means Committee Chairman Dave Camp (R-MI) proposed imposing a 10 percent surtax on municipal bond interest for high earners.

 

In a press release, the two said key issues will include protecting the tax exempt status of municipal debt, understanding how financial regulations treat such debt, and ensuring there is a robust market for municipal securities.

 

3-1-16 NEPPA Newsline

In This Issue:

  • NEPPA’s Bottiggi Testifies at Hearing on "Fair RATES Act," Committee Advances Legislation
  • Senate Energy Bill On Again, Off Again
  • President Obama Releases FY17 Budget Request
  • Supreme Court Halts Clean Power Plan Pending Court Review
  • 17 Governors Sign Clean Energy Accord

 

NEPPA’s Bottiggi Testifies at Hearing on "Fair RATES Act," Committee Advances Legislation

 

Bill Bottiggi, General Manager of Braintree Electric Light Department, testified before the subcommittee on behalf of NEPPA in support of the bill. He described the recent experience, in New England’s forward capacity market auction, that escaped review due to a deadlock.  Despite allegations of manipulation in the capacity auction, a four-member FERC was split on whether the resulting rate – in which capacity costs tripled to $3 billion for the region – was "just and reasonable" under the Federal Power Act. More broadly, Bottiggi expressed concerns about mandatory capacity markets in general and advocated for public power to be able to self-supply capacity.

Subcommittee Chair Ed Whitfield (R-KY) asked about the manipulation allegations, then focused on why the eastern RTOs felt it was necessary to implement mandatory capacity markets while other regions of the country have not. Bottiggi explained that long-term contracts drive new construction outside mandatory capacity markets, as opposed to short-term price signals from the capacity market – a key flaw in the design of these so-called markets. When asked whether mandatory capacity markets were necessary to ensure reliability (as the RTO has claimed), Bottiggi said, "Utilities have been around since the 1800s. The capacity market has been in effect since 2007.  I don’t think the huge windfalls to generators are necessary." 

Sen. Ed Markey (D-MA) introduced a companion bill, S. 2494, immediately following the hearing.

On Feb. 25, the House Energy and Commerce Committee reported H.R. 2984 by voice vote.  In addition to NEPPA, both APPA and NRECA supported the legislation. The bill now moves to the House floor, as part of a suite of non-controversial energy bills that could see action in March.  Committee staff have indicated those measures could be included in a conference version of the energy bill if the Senate approves a bill.

 

Senate Energy Bill On Again, Off Again

 

Prior to the impasse, Senators from both sides of the aisle filed roughly 325 amendments, 38 of which were voted on, and 30 of which were adopted. Key amendments include a measure to support research and development of advanced nuclear technologies, offered by Sen. Crapo (R-ID) (approved by a vote of 87-4); Grid modernization efforts to be coordinated with energy storage, offered by Sen. Jack Reed (D-RI) (approved by a voice vote); and a prize for creating a technology to remove carbon dioxide from the atmosphere and permanently capture it, offered by Sens. John Barrasso (R-WY) and Brian Schatz (D-HI) (approved by a voice vote). Among the amendments not adopted was one to establish a national energy efficiency standard (which APPA and the electric sector opposed), offered by Sen. Al Franken (D-MN), which failed by a vote of 43-52.

 

On Feb. 24, Senators announced a deal to send $100 million in drinking water funds to the city of Flint, Michigan, paving the way for S. 2012, the Senate’s "Energy Policy Modernization Act," to return to the floor as early as next week. However, by the following day, Senators had begun placing "holds" on the aid, reflecting concerns with both the funding and the energy bill.

 

Expecting to move to the energy bill, Senate Leaders are proposing to adopt by voice vote an en bloc package of 30 amendments that have bipartisan support, then proceed to consideration of another eight amendments – all of which would need 60 votes to pass – before voting on final passage. Additional amendments could get votes to appease Senators who have placed holds on the bill.

 

The King/Reid Amendment is among the filed amendments that are not currently included in the list of amendments to be considered. King/Reid would preempt state and local retail ratemaking decisions related to net-metering and distributed energy resources (DER). APPA, NRECA, NARUC and EEI all strongly oppose the amendment as a sweeping federal preemption of state and local decision making.

 

President Obama Releases FY17 Budget Request

 

Of note, the budget request included a significant boost in cybersecurity funding – a total of more than $19 billion. The funds would be used, in part, to implement a new Cybersecurity National Action Plan (CNAP), outlined in a White House release issued the same day.

 

Supreme Court Halts Clean Power Plan Pending Court Review

 

Shortly after issuing the ruling, on Feb. 13, conservative Supreme Court justice Antonin Scalia was found dead at a West Texas hunting resort. Scalia’s passing has policy and political ramifications that are difficult to overstate. If a successor is not confirmed and the court reaches a 4-4 tie on a matter, the lower court’s ruling would stand, or the justices could rehear the case when a ninth jurist is empanelled.


Meanwhile, the case is progressing in the lower court. Litigants filed opening briefs with the D.C. Circuit Court of Appeals this week, and 34 Senators and 171 Republican Members of Congress filed an amicus curiae brief saying that Congress never intended to vest the EPA with authority to promulgate such a sweeping rule.

 

17 Governors Sign Clean Energy Accord

 

Participants include the governors of California, Connecticut, Delaware, Hawaii, Iowa, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington.

 

2-1-16 NEPPA Newsline

In This Issue:

  • Energy Bill on Senate Floor
  • Supreme Court Upholds FERC's Authority to Compensate Demand Response
  • D.C. Circuit Won't Stay Clean Power Plan
  • Spare Transformer Company Files for FERC Declarations
  • Commissioner Clark to Retire from FERC
  • Bill Bottiggi's Testimony on Rep. Kennedy's Fair Rates

 

Energy Bill on Senate Floor

 

On Jan. 27, Senate Majority Leader Mitch McConnell (R-KY) brought S. 2012, the broad-ranging energy policy bill reported by the Senate Energy and Natural Resources Committee last summer, to the floor for consideration by the full Senate.

 

The bill, also known as the "Energy Policy Modernization Act," includes numerous provisions organized under four main titles: infrastructure, supply, workforce development, and accountability. It includes measures to hasten natural gas exports, modernize the grid, and streamline hydropower permitting, among other things.

 

S. 2012 would require ISO-New England to demonstrate how its forward capacity market provides "enhanced opportunities for self-supply," but does not require any changes to market rules to allow self supply, as sought by NEPPA, APPA and NRECA.

 

While a process for amendments and floor time has not been confirmed, the Senate could take up to three weeks on the bill, under an open amendment process whereby any Senator could offer any amendment to the bill. However, this process could easily load the bipartisan bill with "poison pills" and cause it to fail or be vetoed.

 

Senators have been invited to submit amendments, but it is not yet clear what might be offered. NEPPA, APPA, and others are still pushing for a Senator, possibly Sen. Kelly Ayotte (R-NH), to offer the capacity resource choice language developed in advance of the bill’s consideration by the Energy Committee.

 

Amendments that failed in Committee could also be offered again, such as one by Sen. Al Franken (D-MN) to create a federal efficiency resource standard for retail suppliers of electricity and natural gas and/or another by Sen. Angus King (I-ME) to require utility commissions and locally regulated utilities to consider the benefits of distributed generation, which the electric sector opposed in Committee.

 

The electric sector is also concerned that an amendment on electro-magnetic pulse events may be offered that would undermine the current standards development process. There are also likely to be highly partisan amendments to roll back Administration rulemakings and to advance measures to combat climate change.

 

Morgan Meguire will continue to report as amendments are filed and become public.

 

Supreme Court Upholds FERC’s Authority to Compensate Demand Response

 

FERC issued Order 745, the rule in question that required market operators to pay DR aggregators the same price as generators, under a theory that DR affects wholesale rates and may therefore be regulated under the Federal Power Act.

 

Challengers, including APPA and NRECA, asserted that DR is a retail function, to be regulated by state and local governments. The Court rejected that argument, saying, "A FERC regulation does not run afoul of [the Act’s delegation of retail regulation to states] just because it affects the quantity or terms of retail sales. Transactions occurring on the wholesale market have natural consequences at the retail level, and so too, of necessity, will FERC’s regulation of those wholesale matters. That is of no legal consequence."

 

Generators had also questioned the payment level to DR aggregators, given that they, unlike generators, do not need to pay for fuel and steel in the ground. In Order 745, FERC had considered subtracting the energy savings DR participants see (from foregoing the power they would have consumed) from the payment they receive for the same action, but declined to reduce the payments. Although the lower court called that decision "arbitrary and capricious," the Supreme Court roundly rejected challengers’ arguments on that issue, deferring to FERC’s assessment that both generation and DR benefit the wholesale market equivalently and should be paid equally.

 

The Court remanded the case to the D.C. Circuit to determine the fate of DR in capacity markets, but given the ruling on FERC’s jurisdiction under the Federal Power Act, the lower court is likely to maintain FERC control there as well.

 

D.C. Circuit Won’t Stay Clean Power Plan

 

The brief order did not give the Court’s reasoning, beyond stating that petitioners had not met the required showing for a stay. However, under controlling law, petitioners would have had to show that leaving the Clean Power Plan in place would result in irreparable harm. Since compliance would not begin until 2022, the Court was likely unconvinced by this argument.

 

Petitioners have appealed this decision to the Supreme Court, an unusual move, potentially designed to force the high court to rule on the merits of the case before the D.C. Circuit does. The lower court has established an expedited schedule for consideration of the case, with oral arguments scheduled for June 2.

 

Spare Transformer Company Files for FERC Declarations

 

Grid Assurance was formed in June 2015 as a private sector option for a federal spare transformer program, like the one Congress directed the Department of Energy to develop in the energy provisions enacted as part of the 2015 transportation bill, in response to concerns about the length of time it could take to replace critical large transformers damaged by a natural disaster or deliberate attack.

 

Grid Assurance plans to make available spare transformers on a subscription basis, to companies that suffer equipment losses from terrorism, geomagnetic storms, electro-magnetic pulse or other catastrophic events. The company seeks an order from the Commission declaring that the proposed cost-based fees will be considered prudent investments by FERC-jurisdictional utilities, ensuring their recovery from consumers.

 

Commissioner Clark to Retire from FERC

 

Clark’s one term on the Commission will end June 30, but he could stay on until the end of the calendar year.

 

Previous to his service at FERC, Clark chaired the North Dakota Public Service Commission and served in the cabinet of former North Dakota Gov. Ed Schafer (R) as Labor Commissioner.

 

Clark’s departure will leave two open seats on the five-person Commission. Former Commissioner Phil Moeller stepped down in October and has accepted a job as Senior Vice President at the Edison Electric Institute.

 

Bill Bottiggi's Testimony on Rep. Kennedy's Fair Rates

 

A Legislative Hearing on Eight Energy Infrastructure Bills

Tuesday, February 2, 2016 - 10:00am

Location: 2123 Rayburn

Subcommittees: Energy and Power (114th Congress)

 

 

1-1-16 NEPPA Newsline

In This Issue:

  • Congress Passes Tax and Spending Bill Including Cyber Bill
  • House Passes Energy Bill
  • Transportation Bill Becomes Law with Energy Provisions
  • House Panel Holds FERC Oversight Hearing
  • D.C. Circuit Vacates FERC Decision Limiting Municipal Preference

Congress Passes Tax and Spending Bill Including Cyber Bill


Before adjourning for the holidays, Congress passed, and the President signed, a $1.8 trillion package of tax cuts and allocations to fund the federal government and programs FY16. The spending bill does not contain policy riders threatening top Administration regulatory priorities such as the Clean Power Plan or Clean Water Rule (also known as WOTUS) or superseding the regulation for coal combustion residuals.

 

Of interest to electric utilities, the “Cybersecurity Information Sharing Act (CISA)” (retitled the Cyber Security Act) was included in the omnibus package, including technical fixes to definitions and disclosure language advocated by the electric sector. The final text also omits reference to a Department of Homeland Security report on mitigation strategies that industry believed would undermine the voluntary nature of the bill – the Sec. 407 Collins (R-ME) amendment that was in the Senate version of the bill.

 

The bill also includes a five-year extension, modification, and phase-out of the Investment Tax Credit (ITC) for solar power and the Production Tax Credit (PTC) for wind and other renewables. The tax bill extends the PTC as-is for two years, and the spending bill provides 80% of credit value for 2017; 60% for 2018; and 40% for 2019. The 30% temporary ITC would be extended for three additional years (from its current Dec. 31, 2016 expiration), and would then be phased out with a 26% credit for 2020 and a 22% credit for 2021.

 

The Low Income Home Energy Assistance (LIHEAP) program is funded at $3.39 billion. The Northeast Home Heating Oil Reserve program will receive $7.6 million.

 

House Passes Comprehensive Energy Bill


On Dec. 3, the House passed H.R. 8, the “North American Energy Security and Infrastructure Act,” by a mostly partisan vote of 249-171. Of interest to NEPPA members, amendments to weaken the McMorris Rodgers – McNerney hydropower licensing provisions were not made in order. Sec. 1110, which requires a report on how capacity markets encourage baseload power and which NEPPA opposed, was also left unchanged.

 

On Nov. 30, the White House issued a veto threat for H.R. 8, citing problems with the hydropower provisions, among other concerns. Before the bill could reach the President’s desk, however, the Senate would have to act. That chamber is likely to take up its own version of comprehensive energy legislation, S. 2012, which would need to be harmonized with the very different H.R. 8. The timeline for Senate consideration is uncertain, particularly considering the looming Presidential election.

 

Congress Passes Long-Term Transportation Bill with Energy Provisions

 

H.R. 22, the “Fixing America’s Surface Transportation (FAST) Act” was signed by the President Dec. 4. The five-year, $305 billion surface transportation bill includes a title on energy security offered by House Energy and Commerce Chair Fred Upton (R-MI). The Upton amendment includes language resolving environmental and grid reliability conflicts, providing the Energy Secretary broader authority to address grid security emergencies, and requiring the Department of Energy to work with the electric sector on a Strategic Transformer Reserve.


The enactment of the transportation bill, with the energy provisions, is viewed by many as letting the air out of the tires for passage of the broader energy bills, H.R. 8 and S. 1012. If that is the case, NEPPA and others in public power may not have to fight the batter over Sec. 1110 again.


Energy and Power Subcommittee Holds Hearing on FERC Oversight


On Dec. 1, the Federal Energy Regulatory Commission (FERC) Commissioners appeared before the House Energy and Commerce Subcommittee on Energy and Power for a general oversight hearing.

 

In his opening statement, Subcommittee Chair Ed Whitfield (R-KY) outlined some of the challenges FERC is facing, one being the rapidly changing energy picture due to a greater domestic supply of fuels and unprecedented federal regulatory burdens. Full Committee Chair Fred Upton (R-MI) built on the regulatory theme by saying that the EPA has encroached on FERC’s mission with the enactment of the Clean Power Plan. Upton went on to say that it was important that FERC maintain control of its mission and not cede authority to the EPA.

 

Committee Ranking Member Frank Pallone (D-NJ) said, “It is getting closer to the time when we will need to consider fundamental questions about what areas are best suited for the state to regulate and what should be handled by FERC.” He said the committee needs to consider whether to impose conformity on the patchwork of regulated and deregulated states and regional wholesale markets. Over the course of the debate on H.R. 8, Pallone became more concerned about the impacts of mandatory capacity markets.

 

FERC Chair Norman Bay laid out his priorities in his opening statement: to focus on fundamentals in the competitive markets, to continue to find ways of improving the efficiency of markets, and to deliver greater value to consumers. Bay said the Commission also continues to work to promote greater efficiency, competition, and transparency in the wholesale markets, including by reviewing the competitive markets and looking at price formation.

 

Bay further said the reliability of the grid is an important priority for the Commission. This, he said, should include the everyday responsibility for reliability standards and should also include physical security and cybersecurity. “In my view,” Bay said, “it is important for utilities to push beyond the requirements of the standards to implement best practices on cybersecurity.” Bay recently spearheaded a proposal to allow FERC access to NERC reliability data, which has the electric sector nervous.

 

Commissioner Cheryl LaFleur said that competition in the energy markets has required operators across the country to examine rules to ensure reliability is properly valued and sustained. She said the Commission has worked to adjust capacity markets to the new challenges and attract needed investment in new and existing resources. Commissioner Colette Honorable said, regarding capacity markets, that design and operation will continue to be evaluated to find new ways to balance the interests of federal and state policies. “As capacity markets across the country continue to respond to dynamic changes in generation,” Honorable said, “I have appreciated the opportunity to engage with…stakeholders to gain a better appreciation of the diversity of the regions and their robust efforts to support efficient market operations.”

 

D.C. Circuit Vacates FERC Decision Limiting Municipal Preference


On Nov. 20, the D.C. Circuit Court of Appeals struck down a FERC decision granting hydropower licensing rights to a private developer over a municipality because the municipality was not in the vicinity of the hydropower project.

 

The Court ruled that FERC “manufactured ambiguity” of the preference statute when it made its decision on the basis of vicinity, which does not appear in the law. The unanimous opinion stated, “nothing in the text … suggests that Congress’s use of the phrase ‘shall give preference’ is anything other than a mandatory directive to the Commission.”FERC is not expected to appeal the decision or seek rehearing, and will likely apply the Court’s ruling as precedent nationwide.

  

12-1-15 NEPPA E-News Line

In This Issue:

  • Energy Bill Heads for House Floor
  • ENR Leaders Ask GAO to Examine Capacity Markets
  • RI Delegation Asks FERC to Consider Role of DG in Capacity Auctions
  • New Battle Lines Drawn on Clean Power Plan

Energy Bill Heads for House Floor


The House is poised to consider H.R. 8, the “North American Energy Security and Infrastructure Act,” the week of Nov. 30. H.R. 8 contains a number of provisions of interest to NEPPA, including providing the Department of Energy (DOE) with authority to instruct utilities to protect the grid in emergencies and improving the hydropower relicensing process. However, NEPPA has focused on Sec. 1110, a study aimed at promoting baseload generation in capacity markets that would increase costs to consumers without reforming the worst parts of the markets.

 

A Manager’s Amendment makes a number of changes from the version that was reported by the Energy and Commerce Committee Sept. 30, including stripping several funding provisions from the bill, including hydropower production and efficiency incentives, modifying the disclosure provisions of grid security measures, and adding the text of H.R. 2358, the Vegetation Management bill reported by the House Natural Resources Committee. Sec. 1110 remains unchanged, although Rep. Joe Kennedy III (D-MA) has filed an amendment to add consideration of costs to consumers to the list of issues the report must consider.

 

Amendments have also been filed to modify the hydropower provisions. Over 200 water and environmental groups pulled out the stops in opposition to the bipartisan language advanced by Reps. Jerry McNerney (D-CA) and Cathy McMorris Rodgers (R-WA). The groups sent a strongly worded letter to all House Members on Nov. 12, calling it an “unprecedented assault on our nation's rivers and the people and wildlife that depend upon them.”

 

The McNerney-McMorris Rodgers amendment, a result of months of negotiations, would direct the Federal Energy Regulatory Commission (FERC) to consult with agencies and tribes in developing a schedule for all federal approvals of non-federal hydropower applications. It would also encourage the use of existing relevant and reliable studies and information where appropriate, identifying best practices and existing relevant studies.

 

On Nov. 18, five national trade associations, including APPA and the National Hydropower Association (NHA) sent a letter to House leadership to dispel claims that the provisions would undercut environmental statutes. The trade associations’ letter expressed concern over the environmental allegations and outlined in a “white paper” why the charges are false:

 

  • The measures designate FERC as the lead agency for purposes of coordinating reviews and approvals required under federal law, and they direct FERC and all other agencies to work together from the beginning of the process to identify needed environmental studies and resolve scheduling issues. This would create a plan for study, consultation, and submitting applications.
  • Once the FERC licensing application is filed and accepted, and the environmental studies are either completed or well advanced, FERC would be required to work with other agencies in developing a master schedule for all required reviews and authorizations for the project.
  • All regulators and participants—FERC, federal and state agencies, Indian tribes, the applicant, and stakeholders—must abide by the master schedule.
  • If, after applying all of these new requirements for coordination and consultation in developing a master schedule, an agency still cannot meet that schedule, it has the right to petition the U.S. courts of appeal for additional time. If the court does not agree that further delay is justified, the project can move forward without further delay.

 

In closing, the groups said that the hydropower improvements impose a timing element, but do not dictate how federal, state or tribal regulators should exercise their regulatory responsibilities or what they must advocate. NHA is circulating a second letter to House leaders from industry groups supporting the provisions. NEPPA has added its name to that effort, although it remains opposed to the underlying bill.

 

On Nov. 4, the House passed its version of the long-term transportation authorization bill, H.R. 22, with an amendment advanced by Energy and Commerce (E&C) Chair Fred Upton (R-MI) that includes five energy-related provisions from H.R. 8. Unlike the energy bill, the long-term transportation bill is considered a “must pass” bill expected to move forward before the end of the year.

 

The Upton amendment added the following provisions from H.R. 8 to H.R. 22:

 

  1. Emergency Preparedness measures focused on oil and gas supply disruptions;
  2. Safe harbor from environmental liability during grid reliability conflicts (known as the Olson provision);
  3. Department of Energy (DOE) authority to order action to protect the Bulk Electric System in the event of a grid emergency, including information disclosure protection for public power and no mandatory cost recovery authority;
  4. A DOE plan to establish a Strategic Transformer Reserve; and
  5. A report on energy security valuation in international markets.

 

It is uncertain whether the Upton amendment will remain attached to the transportation bill as the chambers move to resolve differences between H.R. 22 and the Senate-passed highway bill.

 

ENR Leaders Ask GAO to Examine Capacity Markets


On Nov. 19, Senate Energy and Natural Resources (ENR) Committee Chair Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) sent a letter to the Government Accountability Office (GAO) asking the researchers to examine capacity markets, including several questions suggested by NEPPA. Among other things, the Senators ask GAO to compare the costs of capacity in regions that procure capacity bilaterally and mandatory capacity market regions, and to identify any inherent market design features (if any) that justify self-supply limitations.

 

RI Delegation Asks FERC to Consider Role of DG in Capacity Auctions


Separately, Sens. Sheldon Whitehouse (D-RI), Jack Reed (D-RI), and Reps. David Cicilline (D-RI) and Jim Langevin (D-RI) asked FERC Chair Norman Bay to evaluate installed capacity calculations to better account for the role distributed generation (DG) resources play in providing capacity. The letter follows FERC action directing ISO-NE to more accurately reflect the role renewables play generally in meeting capacity needs.

 

Resolutions Blocking Clean Power Plan Advance as Battle Gains New Fronts


The largely partisan legislative battle over the Environmental Protection Agency’s (EPA) Clean Power Plan continues, despite multiple lawsuits challenging the final rule. On Nov. 17, the Senate passed two resolutions of disapproval under the Congressional Review Act that would block the Clean Power Plan rules for new and existing power plants. The House Energy and Commerce Committee considered its version of the resolutions on Nov. 18 (the Senate had bypassed the committee process) and is expected to bring them to the floor the week of Nov. 30.

 

The President will veto the resolutions when they come to his desk, but opponents of the Clean Power Plan hope they will send a message to the international community as President Obama attends the climate summit in Paris. Republicans are seeking to demonstrate that the U.S. pledge, based on the reductions from the Clean Power Plan, does not have the support of Congress. They are also insisting on an opportunity for advice and consent on the final accord.

 

11-1-15 NEPPA E-News Line

In This Issue:

  • Kennedy Fights Capacity Market “Reliability” Provision as Energy Bill Goes Partisan
  • FERC Position on Capacity Markets, Self Supply Shifting
  • Elsewhere in Congress: Paul Ryan likely new Speaker, Cyber information sharing bill passes, Clean Power Plan published to immediate attacks

Kennedy Fights Capacity Market “Reliability” Provision as Energy Bill Goes Partisan


On Sept. 29 and 30, the House Energy and Commerce Committee considered H.R. 8, the “North American Energy Security and Infrastructure Act,” a wide-ranging energy bill the Committee has been developing since the beginning of the year. The bill was reported by vote of 32-20 with only three Democrats voting in favor.

 

Although the bill was initially intended to be a bipartisan effort, negotiations between majority and minority members of the Committee broke down over a handful of provisions. A few hours before opening statements were scheduled to be heard, Chair Fred Upton (R-MI) released a Manager’s Amendment that added over 100 pages to the text of the bill, including several provisions Democrats had consistently opposed.

 

Of interest to NEPPA, the Manager’s Amendment included a provision titled “Reliability and Performance Assurance for RTOs,” similar to the Sec. 1108 that public power had opposed in earlier drafts because it would likely result in additional revenues for generators without benefits to consumers. Although the new Sec. 1110 was much weaker than prior drafts, NEPPA, APPA, and Committee Democrats remained opposed to the provision.

 

APPA sent a letter to the Committee, saying they have “significant concerns” about the provision, and said that while “we appreciate the evolution of the language, it is still problematic for load-serving entities (LSEs), including public power utilities, forced to participate in the FERC-blessed mandatory capacity markets, and is silent on the issue of self-supply for such LSEs.”

 

Democrats offered two amendments, one by Rep. Joseph Kennedy III (D-MA) to strike Sec 1110 and the other by Rep. Paul Tonko (D-NY) to significantly modify the provision. Both were rejected on a party line vote. Kennedy spoke at length about the problems in capacity markets and the fact that consumers are seeing little benefit to account for massive increases in costs. Rep. Peter Welch (D-VT) joined the debate, saying that it should be possible to balance reliability needs with costs to consumers.

 

One area of bipartisan agreement was on a compromise developed between Reps. Jerry McNerney (D-CA) and Cathy McMorris Rodgers (R-WA) to improve the current hydropower licensing process. In offering the agreement, Rep. McMorris Rodgers said, “It takes approximately ten years to license a hydropower facility yet a natural gas facility can be up and running in only 18 months. Clearly, there is room for improvement.”

 

Numerous other amendments were considered, on topics ranging from distributed generation to liquefied natural gas, funding for a natural gas pipeline replacement program to address leaking methane, assistance to low-income communities affected by coal plant shutdowns, and the strategic petroleum reserve. The vast majority of amendments were disposed of via party-line votes, with Democrats winning few of the votes.

 

The bill is expected to be on the House floor the week of Oct. 26, stripped of provisions that would authorize additional spending, such as workforce training grants and incentives for small hydro development. The funds were removed after a key conservative action group made the bill a “key vote,” essentially threatening to oppose Republicans who voted for it.

 

FERC Position on Capacity Markets, Self Supply Shifting


On Oct. 1, the Federal Energy Regulatory Commission (FERC) announced a non-public, formal investigation into market manipulation in the Midcontinent Independent System Operator RTO’s 2015/2016 resource planning auction. The auction resulted in a 900 percent increase over the prior year, from $16.75 per MW-day in 2014-2015, to $150 per MW-day for 2015-2016 in some regions. FERC also held a technical conference on the matter on Oct. 20. An informal investigation has been underway since April.

 

Separately, FERC issued an Oct. 9 order largely granting the requests of the New York Power Authority (NYPA), New York Public Service Commission (NYPSC), and New York State Energy Research and Development Authority (NYSERDA) for self-supply exemptions to the buyer-side mitigation (BSM) provisions of the NYISO’s capacity market. FERC found that self-supply resources “have limited or no incentive and ability to artificially suppress … market prices.” The exemption will need to be worked out through NYISO’s stakeholder process.

 

The FERC order said, in part: “if a load serving entity… self-supplies the majority of its needed capacity, the amount of capacity it procures from the ICAP markets will be relatively small. Therefore, uneconomic entry would reduce the cost of procuring this portion by less than the cost of financing the uneconomic entry in the first place. In addition… a self-supply exemption would serve to enable load serving entities to make decisions on the purchase of capacity that best meets their needs and to hedge their exposure to future ICAP obligations based on their reasonable expectations for the future.”

 

The decisions mark a distinct shift from FERC’s response to petitions for review of FCA 8 and rehearing on self-supply exemptions in ISO-NE. While the statutory deadline for reviewing the possibility of manipulation in FCA 8 has lapsed, the Commission’s newfound views on self-supply may mean FERC is more receptive to future requests for similar rights in New England.

 

Paul Ryan Likely Next Speaker of the House


Following a tumultuous few weeks of internecine fighting within the House Republican Conference, Rep. Paul Ryan (R-WI) announced Oct. 20 that he would accept the job of Speaker. if the various Republican factions (the Republican Study Committee, the Tuesday Group, and the more conservative House Freedom Caucus) would unite in endorsing him for the job. As of Oct. 22, the House Freedom Caucus has indicated that a super-majority of its members would back Ryan, but came short of formally endorsing him. Ryan said he was satisfied with that and would still seek the nomination. Outgoing Speaker John Boehner (R-OH) set the date for the Republican Caucus election for Oct. 28, with the floor election on Oct. 29.

CISA Poised to Pass Senate


After years of drafts and negotiations, the Senate passed S. 754, the “Cybersecurity Information Sharing Act” by a vote of 74-21 on Oct. 27. The bill authorizes private entities (including public power) to share cyber threat information with the federal government, and it includes liability protection for entities that share information as well as exemptions from FOIA for shared information. The electric sector coalition helped defeat two amendments to restrict the definition of information that can be shared and to remove FOIA protections, respectively.

 

Clean Power Plan Finalized in Federal Register, States Commence Challenges


The Environmental Protection Agency (EPA) published the suite of rules that comprise the Clean Power Plan in the Federal Register on Friday, Oct. 23. The publication begins the clock on lawsuits challenging the rule, and 24 states have already filed one such challenge. Rep. Ed Whitfield (R-KY) and Senate Majority Leader Mitch McConnell (R-KY) will introduce Congressional Review Act resolutions of disapproval, attempting to block the rules. President Obama has said he will veto such an effort, and few believe Republicans have the votes to overturn that decision. 

 

10-1-15 NEPPA E-News Line

In This Issue:

 

  • NEPPA Engages FERC Chair
  • House Energy Bill Takes Harmful Turn
  • Senate Dems Introduce Alternative “Energy Bill”
  • Elsewhere in Congress: Appropriations, Pope visit, Tax extenders, GMD letter

 

NEPPA Engages FERC Chair Norman Bay: “Your Position is Very Similar to Mine”


On Sept. 23, NEPPA Legislative Committee members (Brian Forshaw, CMEEC; Judy Gove, NHEC; and Paul Heanue, Hingham) met with Federal Energy Regulatory Commission (FERC) Chairman Norman Bay and staff.

 

Since Bay became FERC Chair in April, industry groups have been trying to gauge Bay’s priorities and how he might respond to industry and Congressional pressure. In the meeting, NEPPA learned that Bay was energetic, bright, and focused on consumer outcomes – but is so far swimming against the current at FERC. Hearing NEPPA’s thanks for his favorable positions on consumer issues, Bay joked that he wished his colleagues would vote with him more often.

 

Bay also agreed with NEPPA that more data and analytic information will help cost-benefit analyses result in “just and reasonable” rates. He knows that New England electric rates are the highest in the U.S. and said he understands how that would affect commercial and industrial customer decisions. On capacity markets, Bay asked, “Why hasn’t public power developed more generation as a result of the capacity markets?” He had thought that perhaps they would act to fill the gaps where merchant generators would not.

 

NEPPA members explained the risk of having to pay twice if their generation did not clear the market, to which Bay remarked earnestly, “interesting.” He asked if the environmental rules were a similar disincentive to build, or if public power might join together to fund a strategically located plant. Forshaw explained that the uncertainty of the market rules was the biggest disincentive to such an investment, and it made more sense to work “behind the meter.” Bay understood that logic, but it appeared to be news that the rules were such a hindrance.

 

When given the opportunity to ask questions of the group, Bay said, “I thought public power initially supported the move to competitive markets – what happened?” Forshaw explained that public power, including NEPPA, supported competitive wholesale markets and still does, but as market rules began tipping in favor of generators at the expense of consumers, they began to have problems.

 

Toward the conclusion of the meeting, Bay said, “Your position is very similar to mine. Markets can have benefits but the rules must be well-designed.” NEPPA plans to follow up with an invitation to visit the region, as well as a similar outreach to new Commissioner Colette Honorable, who may be an ally for Bay.

 

House Energy and Commerce Committee Postpones Markup Over Capacity Provision


On Sept 17, minutes before the House Energy and Commerce Committee had planned to commence consideration of “The North American Energy Security and Infrastructure Act of 2015” (H.R. 8), the mark-up was postponed indefinitely given partisan differences over outstanding issues.

 

One area of concern was apparently the potential inclusion of language (section 1108) to codify performance measures in capacity markets and adopt new requirements that protect generators that have on-site fuel supplies, such as coal and nuclear plants. NEPPA is strongly opposed to these measures that lock in exorbitant revenues to generators. Democrats have concerns with the same provision because it would protect coal and nuclear at the expense of cleaner plants – reports indicate this was among the top three disputes that derailed the markup.

 

On Sept. 25, the Energy and Commerce Committee announced the markup would be rescheduled for Sept. 30. Sources suggest that the troubling provision may be included in the bill, or offered as an amendment that would be approved by majority vote, ending the effort to maintain bipartisan support.

 

NEPPA is continuing to work to demonstrate support for an amendment to ensure that public power systems in RTO markets can self-supply resources. Although it appears that the self supply amendment does not have enough support to advance, given strong opposition from electric generators, the amendment could potentially be offered and withdrawn as a way to advance the dialogue on the issue.

 

Senate Democrats Unveil Energy Bill Alternative


On Sept. 22, Senate Democrats released a 437-page “alternative” to the comprehensive energy bill that puts in place a national “carbon savings goal” to reduce greenhouse gas emissions two percent annually by 2025 and creates an Energy Efficiency Performance Standard mandating retail utilities to reduce load by 20 percent by 2030. It also contains the text of Sen. Ed Markey’s (D-MA) GAO study on capacity markets. While the comprehensive bill has no chance of becoming law, it is a marker for where Democrats may try to legislate if they regain the Senate majority in 2016.

 

Of particular interest to public power, the bill includes:

  • Clean energy tax credit bonds for state and local governments and municipal and cooperative utilities;
  • Department of Energy (DOE) emergency authority for cybersecurity threats to the bulk electric system;
  • Classification of DOE as the energy sector specific agency for cybersecurity;
  • Creation of a federal agency working group on commodity markets to focus on speculation;
  • Authority for the Federal Trade Commission to investigate distributed generation interconnections.


Government Shutdown Possible, Boehner Resigns amid Tensions


Hoping to avert a government shutdown Sept. 30, the Senate passed a short-term Continuing Resolution (CR) through Dec. 11, 2015. The CR is mired in partisan politics, largely over government funding for Planned Parenthood. The controversy now moves to the House floor. It is unclear if the House will accept what the Senate passed, or develop an alternative that can appease conservative Republicans and still pass the Senate. Further, on Sept. 25, Speaker John Boehner (R-OH) announced that he would resign at the end of October, adding a new wrinkle. Most pundits believe that this dramatic move will ensure passage of the Senate’s “clean” CR.


Pope Francis Addresses Congress, Calls for Action on Climate


On Sept. 23 and 24, Pope Francis, the global leader of the Catholic Church, visited Washington, D.C. to meet with leaders, commune with followers, and call on Congress to act on key policy issues including immigration and climate change. The address to Congress contained few specific policy recommendations, but instead was a call for moral action on many topics.

 

House Ways and Means Passes Permanent Tax Credits without Renewables


On Sept. 17, the House Ways and Means (W&M) Committee passed a bipartisan tax “extenders” bill making five popular tax credits permanent; no renewable energy tax credits were in the bill. The approach taken by House Republicans to permanently extend provisions with broad bipartisan support while letting others (like the PTC) expire sets up an end-of-session battle on how the House and Senate will reconcile the two packages.

 

Northeast Senators Write FERC on GMD


On Sept. 10 Sens. Ed Markey (D-MA) and Cory Booker (D-NJ) wrote to FERC Chair Norman Bay, expressing “grave concerns” about the pending reliability standard for Phase 2 of Geomagnetic Disturbance (GMD) protection of the electric grid. A copy of the letter can be found here.

 

9-1-15 NEPPA E-News Line

In This Issue:

  • Energy Bill: Senate energy bill passes Committee…
  • Energy Policy: Final Clean Power Plan released…
  • Grid Security: Senate punts consideration of cyber information sharing bill…

 

Senate Energy Bill Passes Committee

 

Over three days (July 28-30), Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) successfully reported the “Energy Policy Modernization Act” from their panel in a 18-4 vote. Nearly 100 amendments were considered.

 

The bill addresses energy efficiency as well as infrastructure issues including grid security, energy supply, and improvements to the hydropower licensing process. It does not include a provision to ensure that public power utilities in regions with Regional Transmission Organizations can self-supply capacity resources, but APPA efforts continue in that regard.

 

Of interest to public power, the Senate Committee considered the following items:

 

ADOPTED:

 

Flake (R-AZ): Protects public power entities from disclosing critical electric infrastructure information under state and local disclosure laws. Unexpectedly, Sen. Cantwell tried to strike the disclosure protection provision, but her amendment failed. APPA supported the Flake amendment, and will work to allay Cantwell’s concerns before the bill moves to the Senate floor in the fall.

 

Capito (R-WV): To ensure that public power systems are covered by liability protection during activities authorized during grid emergencies.

 

King (I-ME): Would direct the Department of Energy (DOE) to study net metering.

 

REJECTED or WITHDRAWN

 

King (I-ME): Would have added interconnection of distributed energy resources to PURPA’s “must consider” requirements, as well as required consideration of compensation criteria for DG resources. Sen. King withdrew the measure, but plans to offer it again on the floor.

 

Risch (R-ID): The provision would have streamlined siting of renewable generation facilities on federal lands.

 

Sanders (I-VT): Would have stated that climate change is real, caused by human activity, and should be addressed. A second amendment would have provided loans and grants to low-income households and underserved areas to install community solar. Both failed.

 

Franken (D-MN): Would have required utility customers to increase their energy efficiency by 1.5% each year. Failed 13-9.

 

Capito (R-WV): Would have expedited and streamlined permitting and siting for oil and natural gas pipelines.

 

Barrasso (R-WY): Would have increased the portion of funds states receive from the LWCF to at least 50% - a 10% increase. Failed 7-15.

 

In addition to reporting the larger energy bill, the Committee also approved the “Energy Savings and Industry Competitiveness Act” (S. 270) by Sens. Rob Portman (R-OH) and Jeanne Shaheen (D-NH) by a vote of 20-2. Even though most of the provisions of S. 720 were incorporated into the larger bill, it was approved separately in case the larger bill fails to move. Separately, on Aug. 11, DOE published new energy efficiency rules for grid-enabled water heaters as a result of the April 30, 2015 passage of the Portman- Shaheen Energy Efficiency Improvement Act of 2015.

 

The bill now moves to the full Senate for consideration after the August recess.

 

EPA Releases Final Clean Power Plan

 

On Aug. 3, the EPA released its final Clean Power Plan. The Plan retains the proposal’s basic structure, under which states will submit implementation plans to reach EPA’s state-by-state emissions rate targets. A state’s goal is determined by applying the Best System of Emissions Reduction – a combination of “building blocks” that result in emissions reduction – to the state’s affected units.

 

The final rule uses a uniform emissions standard for coal- and natural gas-fired plants, which removes some of the disparities between the states relative to the proposed rule. Energy efficiency has been removed from the building blocks, but the gains projected from renewable energy have been increased. Efficiency and other measures can still be used for compliance, but increased use of renewables now accounts for the lion’s share of reductions used to set each state’s target.

 

On timing, the interim compliance deadline of 2020 has been pushed to 2022. EPA has also proposed, for the first time, an incentive program that will provide emissions trading credit for compliance measures taken in 2020 or 2021, before the official compliance period begins.

 

EPA has established two types of compliance plans: an emissions rate standard approach that states will apply directly to affected sources, and a state measures plan that will include various compliance options, such as energy efficiency measures, that would not otherwise be federally-enforceable. Either type of plan allows states to join together in an emissions trading program, and states can engage in interstate trading whether or not they have formally joined interstate compacts. States with “trading ready” plans can trade right away.

 

The Plan cites a number of improvements designed to ensure reliability, including longer lead times, encouraging states to consider reliability, and ongoing involvement of FERC and DOE, which released a memo jointly with EPA committing to meet at least four times a year to monitor reliability issues. The final rule also features a 90-day “safe harbor” for plants that must run to meet reliability standards. If needed, states could amend their plans to account for the need to keep a plant open longer than anticipated.

 

Senate Punts Cyber Bill

 

Prior to the August recess, Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Harry Reid (D-NV) reached agreement to consider the “Cybersecurity Information Sharing Act” (S.758), after the Senate votes to “disapprove” of the Iran nuclear deal. Leadership agreed to consider twenty-one amendments: 10 from Republicans and 11 from Democrats. Efforts by pro-CISA groups continued over August to encourage the Senate to pass S. 754, given strong opposition by privacy groups.

 

Importantly, the Senate leaders agreed to “expedited consideration” the week of Sept 7. The CISA agreement did not include a time agreement, however, meaning that debate could take several days, which may threaten the bill’s survival if it interferes with other business.

 

 

8-1-15 NEPPA E-News Line

In This Issue:

 

  • NEPPA Legislative Committee in High Gear on Energy Bills:
  • Energy Policy: House Subcommittee marks-up energy bill; full Committee consideration in the fall; GAO study, no “Electric Resource Choice” amendment included;
  • Energy Policy: Senate Committee marks up broad energy bill, aiming to finish work before adjourning for summer recess;
  • Tax Policy: Senate Finance Passes Bipartisan Tax Extenders Bill, including renewable incentives; Grid Security: Senate May Consider Cyber Information Sharing bill;

 

NEPPA Legislative Committee in High Gear on Capacity Market Issues

 

  1. The last several months have seen a flurry of communications and legislative activity by the NEPPA Legislative Committee, as the 114th Congress began action on the first broad energy bills debated since 2009. The commitment by House and Senate leaders to develop bipartisan measures provided the first real legislative opportunity for NEPPA members to promote a legislative “fix” to the region’s Forward Capacity Market problems.

 

NEPPA members and their attorneys were part of a small working group that developed an “Electric Resource Choice” amendment (also called self supply) that APPA and its members in organized markets are actively lobbying. The amendment would do the following:

 

  1. In RTO regions that have not yet implemented a mandatory capacity market (MISO, SPP, CAISO), the legislation would prevent such a move unless there is unanimous support by the states in the region. Currently, the decision by the RTO to implement a mandatory capacity market can be approved by the Federal Energy Regulatory Commission (FERC) regardless of whether states, which have jurisdiction over retail rates, support such a move;
  2. In regions that have already adopted a mandatory capacity market (NE-ISO, ISO-NY, PJM), the legislation would prevent the RTO from adopting or continuing to implement existing rates (or practices or procedures affecting rates) that impair the ability of a load-serving entity to meet its capacity obligations through a resource it owns, builds, controls, or for which it has a contract for capacity.

 

Representatives of the NEPPA Legislative Committee came to Washington, D.C. June 17-18 to meet with their congressional delegation, and with key House and Senate energy committee staff, advocating inclusion of the Electric Resource Choice amendment. The meetings included those Members of Congress that sit on the energy committee in each chamber: Reps. Peter Welch (D-VT) and Joe Kennedy (D-MA), and Sens. Elizabeth Warren (D-MA), and Angus King (I-ME).

 

The visits went well, but also underscored the complexity of the issues and conflicting information coming from generators, RTOs and others.

 

Since then, the Committee has convened by conference call every two weeks or so, under the leadership of Committee Chair Mike Kirkwood, Pascoag Utility District, to get legislative updates from Morgan Meguire, share information about regional efforts to address capacity market defects, and strategize about “next steps.”

 

While NEPPA has not yet had success in getting a congressional sponsor for the “Electric Resource Choice” amendment, the Legislative Committee will use the upcoming congressional recess (Aug. 7 – Sept. 4) to continue meeting with delegation Members on this critical issue.

 

House Energy and Power Subcommittee Approves Energy Legislation

 

The House Energy and Power Subcommittee approved a long-anticipated energy package in a July 22 voice vote. The bill contains only those provisions on which bipartisan agreement could be reached; more controversial issues, including hydropower licensing reform, and issues relating to electricity markets, are still being negotiated.

 

To advance the bill before the August recess, Committee leaders agreed not to allow amendments at the Subcommittee session. Amendments on new issues, and other modifications to the mark-up vehicle, will be offered at the full Committee mark-up in September.

 

Republican and Democratic Subcommittee Members expressed appreciation to the Chair and Ranking Member for following “regular order” – that is, circulating draft bill titles and debating them in Subcommittee and full Committee instead of by-passing those forums - and the spirit of cooperation that marked the negotiations.

 

While public power’s “Electric Resource Choice” amendment was not included in the markup bill, Energy and Power Chair Ed Whitfield (R-KY) said he is committed to working with Rep. Joseph Kennedy (D-MA) on “New England market problems” in advance of full Committee action.

 

Included in the bill are:

 

  • A “placeholder” for a yet-to-be-decided “Reliability and Performance Assurance in Mandatory Capacity Markets” provision. The initial draft of the bill contained a provision that directed RTOs to file a tariff amendment designed to achieve a series of reliability and performance goals, many of which appeared to be aimed at ensuring higher profits for generators, which NEPPA does not support;
  • A GAO study on wholesale electric markets addressing whether and how current market rules, practices and structure achieve a series of objectives, including “facilitating the ability of load-serving entities to self-supply their service territory load.” While positive, NEPPA and others continue to seek the stronger action of the Electric Resources Choice amendment.

 

Of interest to the entire electric sector, the Subcommittee-approved bill also contains:

 

  • Emergency authority to the Energy Secretary to order utilities and others to take emergency measures to protect the bulk power system, upon a written presidential directive identifying an “imminent danger” to the electric grid, from a physical, cyber, electromagnetic pulse, or geomagnetic disturbance;
  • Authority to DOE’s Office of Electricity Delivery and Energy Reliability to develop a plan, in consultation with FERC, NERC, and industry, to establish a Strategic Transformer Reserve. The Reserve will store spare large power transformers in strategic locations to “temporarily replace critically damaged…transformers”;
  • A requirement that each electric utility consider – pursuant to the Public Utility Regulatory Policies Act (PURPA) a plan to improve the resilience of its electric infrastructure, including the use of resiliency-related technologies and other approaches designed to improve resilience and reliability. The utility would not have to adopt such a plan, but it must be considered in a public process.

 

Murkowski, Cantwell Advance Senate Energy Package

 

On the heels of the House markup, Senate Energy and Natural Resources (ENR) Committee Chairman Lisa Murkowski (R-AK) and Maria Cantwell (D-WA) released their own bipartisan energy bill, a broad measure titled the “Energy Policy Modernization Act.” The bill is on a fast track, with the Committee in the middle of marking up the bill as this article went to press.

 

Of interest to NEPPA, the bill contains:

 

  • A hydropower regulatory improvements title (Sec 3001) designed to streamline the existing FERC hydropower licensing and relicensing process. The provisions are opposed by the environmental community, which may succeed in weakening them as the bill proceeds.
  • A directive to RTOS to prepare and submit a report to FERC on available capacity resources, including an assessment of whether their respective market rules meet a series of goals, including metrics that could lead to higher generator revenues. Included among the goals are an “enhanced opportunity” for consumer-owned electric utilities and power marketing administrations to “self supply” generating capacity – a nod to the capacity market problems that NEPPA and others continue to point out.

 

The Senate bill also contains more limited DOE grid emergency authority, to be exercised in the event of imminent cyber attacks only.



Senate Finance Passes Bipartisan Tax Extenders Bill, including Renewable Incentives


On July 21, the Senate Finance Committee (SFC) voted 23-13 to report a bipartisan bill to extend 52 expiring tax provisions for two-years (2015-2016). The $97 billion package would extend both the Production Tax Credit (PTC) for wind and the Investment Tax credit (ITC) for solar resources.


The extension of the renewable incentives is estimated by the Joint Committee on Tax to cost over $10.5 billion over 10 years, and was the subject of extensive debate from both sides of the aisle. During the markup, numerous amendments were offered to eliminate, modify or phase-out renewable tax credits; none passed.


The Senate package will now move to the Senate floor for consideration.


House Ways and Means Committee Chairman Paul Ryan (R-WI) has said that House Republicans would prefer a bill making certain tax credits permanent – the PTC did not make it into the package they proposed last year.


McConnell Says CISA to Senate Floor by August

 

On July 12, Senate Majority Leader Mitch McConnell (R-KY) said the Senate will take up S. 754, the “Cybersecurity Information Sharing Act” before August. “What we’re going to do is, before August, take a step in the direction of dealing with the problem [the Office of Personnel Management data breach] with an information sharing bill that I think will be broadly supported,” McConnell said. However, with the Aug. 7 adjournment date only two week away, it is unclear if there is enough time to consider the measure.

 

While the House passed its bill in April, the Senate effort has been delayed for several months.

 

7-1-15 NEPPA E-News Line

In This Issue:

 

  • NEPPA DC Visit: NEPPA representatives came to DC to lobby the Hill on capacity markets…
  • Energy Policy: DOE Secretary testifies on QER and energy bills…
  • Energy Policy: House and Senate to mark-up energy bills in July…
  • Cyber Security: CISA off Senate agenda before July 4th recess…
  • Hydropower: 49 organizations send letter supporting hydropower improvements

 

NEPPA Representatives Lobby the Hill


On June 17, NEPPA representatives came to DC to meet with a number of staff from Northeast offices and from Committees with energy jurisdiction, to urge support for adding public power’s proposed “fix” to mandatory capacity markets.

 

NEPPA attendees included Brian Forshaw, Chief Regulatory and Risk Officer, Connecticut Municipal Electric Energy Cooperative (CMEEC) of Connecticut; Judy Gove, Business and Community Development Manager, New Hampshire Electric Cooperative (NHEC); and Sharon Staz, Former General Manager, Kennebunk (ME) Light and Power (KPLD).

 

The group attended meetings with staff from the following offices Sens. Angus King (D-ME), Jeanne Shaheen (D-NH), Susan Collins (R-ME), Richard Blumenthal (D-CT), Elizabeth Warren (D-MA), Kelly Ayotte (R-NH), Ed Markey (D-MA), and Chris Murphy (D-CT); and Reps. Joseph Kennedy (D-MA) and Peter Welch (I-VT); along with majority and minority staff to the Senate Energy and Natural Resources Committee, and majority staff, House Energy and Commerce Committee (E&C).

 

While the New England delegation is extremely concerned about the FCM’s input on consumers and the regional economy; it remains a “heavy lift” to get the fix added.

 

DOE Secretary Testifies on QER and Energy Bills


On June 2, Secretary of Energy Ernest Moniz testified before the House Energy and Power Subcommittee on the “Quadrennial Energy Review (QER) and Related Discussion Drafts.” Moniz touched on the findings of the Administration’s QER, which highlights the need to modernize our nation’s energy transmission, storage, and distribution infrastructure.

 

The first installment of the QER was released on April 21, 2015, and included several recommendations to meet America’s growing energy infrastructure needs. Whitfield concurred with this, saying in his opening statement that “This detailed study focused on the infrastructure implications of America’s new energy boom, and many of its recommendations overlap with provisions in our draft energy bill.”

 

Whitfield’s thoughts on areas where agreement might be reached include;

 

  • Addressing infrastructure permitting, while maintaining existing environmental and safety standards;
  • Updating workforce training programs to reflect our changing energy sector and the skills needed to create jobs;
  • The need for integration of energy infrastructure and increased cooperation with Canada and Mexico to ensure that energy policy decisions take energy security considerations into account; and
  • Updating the Strategic Petroleum Reserve to fit the energy security challenges of 2015 and beyond.

 

Whitfield also noted areas of disagreement, but said “I believe we can put our differences aside and agree on a range of energy reforms that will benefit the American people for decades to come.”

 

Energy Bill Consideration Expected in July


After completing a series of hearings on drafts and bills addressing energy efficiency, infrastructure, power supply, hydropower (as separate from power supply) and accountability, the House and Senate energy committees now face the challenge of trying to craft a bill that can win bipartisan support.

 

The House Energy and Power Subcommittee planned to hold a markup on its Energy Reliability and Security, and Accountability draft titles the week of June 15; that session was postponed, however, to allow more time for bipartisan discussions to continue, in the hope that the two sides can find some areas of agreement.

 

Senate ENR Chair Lisa Murkowski (R-AK) said she plans to work the panel hard the four weeks between the end of the July 4th recess and the August recess (Aug. 10-Sept. 8) in hopes of getting a bill through Committee.

 

Energy policy of interest to NEPPA under discussion in addition to reforms on capacity markets, include hydropower licensing improvements, DOE emergency authority for grid threats, and interconnection policies for distributed resources.

 

Cyber off Near-Term Senate Agenda


Although the “Cybersecurity Information Sharing Act (CISA)” (S. 754) was thought to be among the items taken up by the Senate before the July 4th recess, trade press reported on June 24 that Majority Whip John Cornyn (R-TX) released his near-term agenda items – which did not include CISA. That means the earliest possible floor debate and vote could come in the four-week, post recess, July work period.

 

Although the House easily passed its cyber bills in April, Senate cybersecurity efforts have been stalled, and most recently are reeling from a blow-up between the parties’ top leaders when Majority Leader McConnell (R-KY) tried to attach CISA to the annual Defense Authorization bill – in effort to limit the amount of amendments offered and thus limit the total debate time. Democrats blocked the effort, along with consideration of FY 16 appropriations bills due to disagreements with the GOP over domestic spending limits.

 

Despite the delay, the recent hacking of the Office of Personnel Management data base has increased pressure on Congress to “do something” on cyber security and may help ensure that CISA goes to the Senate floor before the August recess. It could, however, result in even more amendments aimed at protecting the information shared with the government from further release, which will extend that anticipated debate period.

 

Forty-Nine Organizations Send Letter Supporting Hydropower Improvements


On June 10, forty-nine organizations, including APPA, EEI, NRECA, NEPPA, NHEC, and ENE sent a letter to House and Senate energy committee leaders encouraging the inclusion of hydropower regulatory improvements in energy legislation under development by both Committees.

 

The letter, addressed to Senate ENR Chair Murkowski, Ranking Member Maria Cantwell (D-WA), and House E&C Chair Fred Upton (R-MI) and Ranking Member Pallone (D-NJ), spoke to the benefits of hydropower generation as a clean renewable resource, and noted that its development is often “stymied and delayed by inefficient, duplicative and lengthy approval processes.”

 

6-1-15 NEPPA E-News Line

In This Issue:

 

  • Energy Policy: House and Senate hear testimony on capacity provisions, hydropower, DG; Shaheen-Portman “lite” becomes law…
  • Cyber Security: Chamber urges passage of information-sharing draft as timeline slips…

 

Senate Panel Reviews Bills for Inclusion in Energy Legislation; APPA Testifies

 

On May 19, the Senate Energy and Natural Resources Committee held a legislative hearing on 26 bills introduced for potential inclusion in comprehensive energy legislation. APPA’s President and CEO, Sue Kelly, testified on legislation regarding hydropower, mandatory capacity markets, and other issues. A final hearing will be held on June 9, after which the Committee will move to mark-up a bipartisan bill, with the hope of moving it to the full Senate before the August recess.

 

Capacity markets

 

Kelly expressed measured support for two bills related to forward capacity markets. Sen. Ed Markey’s (D-MA) S. 1272 would order a GAO study of these markets, and Chair Lisa Murkowski’s (R-AK) S. 1222 would require RTOs to report to the Federal Energy Regulatory Commission (FERC) on their markets – which APPA believes could encourage RTOs that do not currently have a capacity market to think about starting one – and amend their filings to provide increased opportunities for self-supply (which APPA supports). Murkowski thanked Kelly for her support of S. 1222 and asked several questions related to the bill.

 

Hydropower

 

Kelly testified in favor of three hydropower bills, including Chair Murkowski’s bill, S. 1236, the “Hydropower Improvement Act,” which would streamline regulatory processes for licensing hydropower projects. In particular, it would designate FERC as the lead agency to set a binding schedule and coordinate all needed federal authorizations and require a resource agency’s conditions to pertain to the actual hydropower project. In addition, the bill would designate FERC Administrative Law Judges to hear trial-type hearings and make a number of improvements to the hearing process. In an effort to reduce the need for duplicative, costly studies, S. 1236 would direct FERC to compile and make public a comprehensive collection of studies and data and to use existing studies if practicable, among other things.

 

Sen. Angus King (I-ME), who has introduced his own bill. S. 1338, to expedite or exempt permitting for small hydro projects under 5 megawatts, said: “Any permitting program that takes seven to 10 years and costs $150 million isn’t a permitting program, it’s an annuity for lawyers and consultants.”

 

In the House, Rep. Cathy McMorris Rodgers’ (R-WA) introduced the “Hydropower Regulatory Modernization Act” and House Energy and Commerce Committee Chair Fred Upton’s (R-MI) also released a narrower discussion draft. These two House efforts mirror the Murkowski bill (S. 1236), and were the subject of a May 13 Energy and Power Subcommittee hearing. APPA submitted written testimony in support of effort to improve the hydro licensing process.

 

Distributed Generation (DG)

 

Seeking inclusion in a different section of the legislation, Sen. King introduced S. 1213, the “Free Market Energy Act,” which would set federal parameters governing DG. The bill would ask state regulators to weigh giving distributed generation customers “just and reasonable” rate treatment. The bill also suggests states consider designating a distribution coordinator to manage distributed resources.

 

Chair Murkowski introduced her own bill on DG, S. 1219, which would require state regulatory bodies and publicly-owned utilities to examine the degree to which DG ensures safe, reliable, efficient interconnection of distributed generation to the grid. The bill would also require state commissions and publicly-owned utilities to examine the effects of net metering and DG on resource planning, resource utilization, the financial health of the utility, and on customers who do not install DG.


House Bill Contains More Controversial Capacity Provision

 

On May 19, the House Energy and Commerce Subcommittee on Energy and Power held a hearing on the Committee’s discussion draft addressing Energy Reliability and Security, featuring witnesses from the Federal Energy Regulatory Commission (FERC), the North American Reliability Corporation, industry, and others.

 

Sec. 1208 would require RTOs with capacity markets to make certain reliability and performance assurances, many of which promote baseload resources at the expense of natural gas. FERC said the provision “would impose on capacity markets a broad overlay of traditional regulatory requirements,” and cautioned that “this approach may reduce the potential for these markets to provide consumers with the benefits achievable through competitive forces and may cause unnecessary conflicts between federal and state regulatory efforts.”

 

Ranking Member Paul Tonko (D-NY) expressed concern that “Sec 1208 places too many constraints on RTO/ISOs in their choice of resources they might use to ensure grid reliability.” APPA’s testimony for the record expressed appreciation for its inclusion, but indicated that, as written, it would not address their concerns regarding mandatory capacity markets. Instead, APPA advocated for a two-pronged approach: barring RTOs without a capacity market from starting one without the consent of the states involved and allowing self-supply in existing capacity markets.

 

Portman-Shaheen Efficiency Bill Signed Into Law

 

On April 30, President Obama signed into law energy efficiency legislation co-sponsored by Sens. Jeanne Shaheen (D-NH) and Rob Portman (R-OH). The Senate approved the legislation in March and the House passed it days later.

 

The bill includes three provisions, including the establishment of a voluntary, market-driven approach to aligning the interests of commercial building owners and their tenants to reduce energy consumption; exempting certain electric resistance water heaters used for demand response from Department of Energy regulation; and requiring that federally-leased buildings without Energy Star labels benchmark and disclose their energy usage data, where practical. The legislation is a slimmed down version of the broader efficiency bill the two senators sponsored last Congress and are still pursuing.

 

Chamber Group Urges Senate Passage of Cyber Bill

 

A U.S. Chamber of Commerce “Cyber Networks Coalition” of 37 groups, including APPA, NRECA, EEI, and LPPC, sent an April 30 letter to all U.S. Senators urging passage of S. 754, the “Cybersecurity Information Sharing Act “(CISA).The Senate Intelligence Committee approved CISA by a bipartisan 14-1 vote in March, and the House passed similar legislation at the end of April.

 

“The coalition is committed to working with lawmakers and their staff members to get cybersecurity information-sharing legislation quickly enacted to strengthen our national security and the protection and resilience of U.S. industry,” the letter said. “Congressional action cannot come soon enough.”

 

Despite a determined effort by Majority Leader Mitch McConnell (R-KY) to move the cybersecurity information sharing measure quickly through the Senate, it appears that the debate has now slipped to June or July.

5-1-15 NEPPA E-News Line

In This Issue:

 

  • Energy Policy: House and Senate hear testimony on capacity provisions, hydropower, DG; Shaheen-Portman “lite” becomes law…
  • Cyber Security: Chamber urges passage of information-sharing draft as timeline slips…

 

Senate Panel Reviews Bills for Inclusion in Energy Legislation; APPA Testifies

 

On May 19, the Senate Energy and Natural Resources Committee held a legislative hearing on 26 bills introduced for potential inclusion in comprehensive energy legislation. APPA’s President and CEO, Sue Kelly, testified on legislation regarding hydropower, mandatory capacity markets, and other issues. A final hearing will be held on June 9, after which the Committee will move to mark-up a bipartisan bill, with the hope of moving it to the full Senate before the August recess.

 

Capacity markets

 

Kelly expressed measured support for two bills related to forward capacity markets. Sen. Ed Markey’s (D-MA) S. 1272 would order a GAO study of these markets, and Chair Lisa Murkowski’s (R-AK) S. 1222 would require RTOs to report to the Federal Energy Regulatory Commission (FERC) on their markets – which APPA believes could encourage RTOs that do not currently have a capacity market to think about starting one – and amend their filings to provide increased opportunities for self-supply (which APPA supports). Murkowski thanked Kelly for her support of S. 1222 and asked several questions related to the bill.

 

Hydropower

 

Kelly testified in favor of three hydropower bills, including Chair Murkowski’s bill, S. 1236, the “Hydropower Improvement Act,” which would streamline regulatory processes for licensing hydropower projects. In particular, it would designate FERC as the lead agency to set a binding schedule and coordinate all needed federal authorizations and require a resource agency’s conditions to pertain to the actual hydropower project. In addition, the bill would designate FERC Administrative Law Judges to hear trial-type hearings and make a number of improvements to the hearing process. In an effort to reduce the need for duplicative, costly studies, S. 1236 would direct FERC to compile and make public a comprehensive collection of studies and data and to use existing studies if practicable, among other things.

 

Sen. Angus King (I-ME), who has introduced his own bill. S. 1338, to expedite or exempt permitting for small hydro projects under 5 megawatts, said: “Any permitting program that takes seven to 10 years and costs $150 million isn’t a permitting program, it’s an annuity for lawyers and consultants.”

 

In the House, Rep. Cathy McMorris Rodgers’ (R-WA) introduced the “Hydropower Regulatory Modernization Act” and House Energy and Commerce Committee Chair Fred Upton’s (R-MI) also released a narrower discussion draft. These two House efforts mirror the Murkowski bill (S. 1236), and were the subject of a May 13 Energy and Power Subcommittee hearing. APPA submitted written testimony in support of effort to improve the hydro licensing process.

 

Distributed Generation (DG)

 

Seeking inclusion in a different section of the legislation, Sen. King introduced S. 1213, the “Free Market Energy Act,” which would set federal parameters governing DG. The bill would ask state regulators to weigh giving distributed generation customers “just and reasonable” rate treatment. The bill also suggests states consider designating a distribution coordinator to manage distributed resources.

 

Chair Murkowski introduced her own bill on DG, S. 1219, which would require state regulatory bodies and publicly-owned utilities to examine the degree to which DG ensures safe, reliable, efficient interconnection of distributed generation to the grid. The bill would also require state commissions and publicly-owned utilities to examine the effects of net metering and DG on resource planning, resource utilization, the financial health of the utility, and on customers who do not install DG.


House Bill Contains More Controversial Capacity Provision

 

On May 19, the House Energy and Commerce Subcommittee on Energy and Power held a hearing on the Committee’s discussion draft addressing Energy Reliability and Security, featuring witnesses from the Federal Energy Regulatory Commission (FERC), the North American Reliability Corporation, industry, and others.

 

Sec. 1208 would require RTOs with capacity markets to make certain reliability and performance assurances, many of which promote baseload resources at the expense of natural gas. FERC said the provision “would impose on capacity markets a broad overlay of traditional regulatory requirements,” and cautioned that “this approach may reduce the potential for these markets to provide consumers with the benefits achievable through competitive forces and may cause unnecessary conflicts between federal and state regulatory efforts.”

 

Ranking Member Paul Tonko (D-NY) expressed concern that “Sec 1208 places too many constraints on RTO/ISOs in their choice of resources they might use to ensure grid reliability.” APPA’s testimony for the record expressed appreciation for its inclusion, but indicated that, as written, it would not address their concerns regarding mandatory capacity markets. Instead, APPA advocated for a two-pronged approach: barring RTOs without a capacity market from starting one without the consent of the states involved and allowing self-supply in existing capacity markets.

 

Portman-Shaheen Efficiency Bill Signed Into Law

 

On April 30, President Obama signed into law energy efficiency legislation co-sponsored by Sens. Jeanne Shaheen (D-NH) and Rob Portman (R-OH). The Senate approved the legislation in March and the House passed it days later.

 

The bill includes three provisions, including the establishment of a voluntary, market-driven approach to aligning the interests of commercial building owners and their tenants to reduce energy consumption; exempting certain electric resistance water heaters used for demand response from Department of Energy regulation; and requiring that federally-leased buildings without Energy Star labels benchmark and disclose their energy usage data, where practical. The legislation is a slimmed down version of the broader efficiency bill the two senators sponsored last Congress and are still pursuing.

 

Chamber Group Urges Senate Passage of Cyber Bill

 

A U.S. Chamber of Commerce “Cyber Networks Coalition” of 37 groups, including APPA, NRECA, EEI, and LPPC, sent an April 30 letter to all U.S. Senators urging passage of S. 754, the “Cybersecurity Information Sharing Act “(CISA).The Senate Intelligence Committee approved CISA by a bipartisan 14-1 vote in March, and the House passed similar legislation at the end of April.

 

“The coalition is committed to working with lawmakers and their staff members to get cybersecurity information-sharing legislation quickly enacted to strengthen our national security and the protection and resilience of U.S. industry,” the letter said. “Congressional action cannot come soon enough.”

 

Despite a determined effort by Majority Leader Mitch McConnell (R-KY) to move the cybersecurity information sharing measure quickly through the Senate, it appears that the debate has now slipped to June or July.

 

 

4-1-15 NEPPA E-News Line

In This Issue:

  • Congressional Focus: Chambers pass Budget Resolutions before two-week break, Reid to retire …
  • Capacity Markets: New England delegation holds Summit on energy prices with FERC’s LaFleur, ISO-NE’s Van Welie…
  • Energy Policy: Shaheen-Portman passes in the dead of night, Federal agencies work together on hydropower …
  • Cyber Security: Multiple bills moving through House, Senate advancing CISA…

 

House and Senate Pass Respective Budget Resolutions

 

The week of March 23, the House and Senate passed respective budget resolutions for fiscal year 2016, which will provide a blueprint for each Committee’s tax and spending funding levels for the remainder of the year. The Senate debate featured dozens of votes on wide-ranging policy items. Hundreds of amendments were filed, including many on energy and environmental issues, but only some received a vote.

 

The bills are not legally binding and do not become law, but they do have legislative significance. Aside from getting Members on the record, budget resolutions include “reconciliation” instructions, which provide procedural “fast-track” benefits that can be used to move controversial tax and spending legislation.

 

The following day, in a surprise to many, Senate Majority Leader Harry Reid (D-NV) announced he would not run for reelection. He has endorsed Sen. Chuck Schumer (D-NY) to replace him as the party’s leader.

 

New England Delegation Members Host Summit on Electricity Prices


On March 24, Reps. Joe Kennedy III (D-MA), Richie Neal (D-MA), Sens. Ed Markey (D-MA) and Sheldon Whitehouse (D-RI), and more than a dozen other New England Members of Congress met with Federal Energy Regulatory Commission (FERC) Chair Cheryl LaFleur and ISO-New England CEO Gordon Van Welie.


Members expressed frustration at rising electricity prices in the region, pointing to the particularly high prices in last year’s capacity auction (FCA8). Many lawmakers signed letters to FERC asking them to review the outcome of the auction for manipulation, which split the Commission and left the prices in effect. Although the meeting was reported to be “collegial,” staff expressed dissatisfaction with LaFleur and Van Welie’s responses.


NEPPA is working with APPA on potential legislative solutions to the capacity market problems.


Senate Passes Targeted Shaheen-Portman Efficiency Bill Including Water-Heater Fix

 

Before dawn on Friday morning (March 27), and just before the Senate adjourned for the Easter recess, Sens. Rob Portman and Jeanne Shaheen passed a trimmed-down version of their bipartisan energy efficiency bill, the “Energy Efficiency Improvement Act of 2015” (S.535). The bill now heads to the House, where the language has passed previously.

 

Of specific interest to consumer-owned entities, the bill includes an exemption from Department of Energy (DOE) efficiency standards that go into effect in April 2015 for large, grid-enabled electric-resistance water heaters. A number of public power systems use large, electric-resistance water heaters in demand response programs, helping them to store energy and reduce peak demand, for the benefit of their customers.

 

S. 535 passed by unanimous consent after years of work by the two Senators. It also includes provisions to implement a program titled the “Better Buildings Act of 2015” to develop model commercial leasing provisions and best practices to promote cost-effective water and energy efficiency measures in federal buildings. Lastly, the bill contains provisions to ensure disclosure of energy information for commercial buildings and create a database of .public energy-related information on commercial and multifamily buildings.

 

S. 535 was cosponsored by Sens. Kelly Ayotte (R-NH), Michael Bennet (D-CO), Susan Collins (R-ME), Al Franken (D-MN), Cory Gardner (D-CO), and Joe Manchin (D-WV).

 

Sens. Portman and Shaheen will work to advance their broader “Energy Savings and Industrial Competitiveness Act of 2015” (S. 720), which promotes industrial efficiency as well as the development and updating of national model building energy codes for residential and commercial buildings. S. 720 encourages state and local adoption of building energy codes that meet or exceed the national codes, among other things.

 

Energy, Interior and Army Corps Renew Five-Year Partnership to Advance Hydropower

 

On March 24, three federal agencies – the Departments of Energy, Interior, and the Army Corps of Engineers – revised and extended for five years a Memorandum of Understanding (MOU) that commits the agencies to a specific, ambitious action plan for hydropower, building upon the previous MOU signed on March 24, 2010.

 

The goal is to continue collaboration with other federal agencies, the hydropower industry, the research community, and numerous stakeholders, to:

  • Improve the accuracy and reduce costs of water flow measurement technology;
  • Evaluate new superconducting generator technology that could significantly reduce the size and weight of generators for new hydropower projects;
  • Further develop low-impact, low-cost hydropower technologies suitable for demonstration and deployment at non-powered dams and conduits, (where there is potential to increase U.S. hydropower generation by more than 17,500 gigawatt hours per year);
  • Develop design tools to improve the environmental performance of hydropower turbines for responsible deployment; and
  • Further assess climate change risks to U.S. hydropower generation and water infrastructure.


House Moving on Cyber Bills; Senate Committee Reports Bipartisan Info-Sharing Bill

 

On March 20, House Homeland Security Committee Chair Michael McCaul (R-TX) released a draft information sharing bill, the “National Cybersecurity Protection Advancement Act,” which is expected to be marked up on April 14. On March 26, the House Select Committee on Intelligence unanimously reported a separate information sharing and liability protection cybersecurity bill, titled the “Protecting Cyber Networks Act (PCNA).” Both House bills use liability language crafted by the House Judiciary Committee. The bills are expected to advance to the floor in late April. In the Senate, the Intelligence Committee approved S. 754, the “Cybersecurity Information Sharing Act (CISA)” on March 12, by a vote of 14-1, with Sen. Ron Wyden (D-OR) voting the lone no.


The electric sector cyber security coalition is reviewing the draft bills now to ensure that public power is protected in each measure. All three bills provide liability protections to companies who monitor their networks, engage in defensive measures and share cyber threat information through approved government portals and with each other, as long as they scrub personal information from the data. However, the bills are far from identical and will have to be reconciled – if their respective Chairmen can successfully move the bills through the House and Senate floors. Further, the White House has declined to formally weigh in on what it might support.

 

 

3-1-15 NEPPA E-News Line

In This Issue:

 

  • Congressional Focus: President sends FY16 Budget request to Hill…
  • Capacity Markets: New England Members press FERC on FCA8, Energy bill coming soon…
  • Energy Policy: FERC Hosts Conference on EPA Rules, Portman-Shaheen Reintroduced…
  • Cyber Security: McConnell to move CISA…

 

Obama Rolls Out 2016 Budget Request

 

On Feb. 2, the Obama Administration rolled out its $4 trillion Fiscal Year 2016 Budget Request. Although it has no chance of becoming law given the Republican Congress, it outlines White House policy priorities. One controversial aspect of the President’s budget is that it would exceed the appropriations caps resulting from the 2011 budget deal, with additional spending paid for by increasing taxes on the wealthy and on capital gains.

 

Department of Energy – The Department of Energy request is $29.9 billion, up from its current $27.3 billion level. Included in that amount is the first installment of a ten-year, $4 billion infrastructure fund for states that make emissions reductions exceeding the Clean Power Plan’s targets.

 

Environmental Protection Agency – The Environmental Protection Agency (EPA) would receive $8.66 billion, an increase of $500 million over current levels. Of that total, $239 million goes to climate initiatives, with $25 million to assist states craft compliance plans for pending power plant regulations. Programs that would see cuts include clean water and drinking water state revolving funds, which would see a reduction of $54 million.

 

Tax Policy – The budget would make perma¬nent the Production Tax Credit and the Investment Tax Credit for renewable energy, among others. As expected, the Administration proposal again includes a 28% cap on the deductibility of interest on tax-exempt municipal bonds.

 

New England Lawmakers Ask FERC to Reopen Capacity Market Investigation

 

On Jan. 30, Sen. Ed Markey (D-MA), Rep. Joe Kennedy (D-MA), and 16 other members of the New England congressional delegation sent a letter to the Federal Energy Regulatory Commission (FERC) asking it to reopen an investigation into ISO New England’s February 2014 Forward Capacity Auction (FCA8), in which capacity prices tripled and did not meet demand. Last year, the Commission, by a 2-2 vote, failed to agree on whether to look into market manipulation complaints, leaving in place the dramatic rate increases in FCA8.

 

Commissioners Tony Clark and Norman Bay had called for the Commission to reject the auction results, saying there was “evidence suggesting the exercise of market power.” Chair Cheryl LaFleur and Commissioner Philip Moeller, on the other hand, said because market rules were followed, the resulting rates were “just and reasonable.” With a tie-breaking seat vacant, FERC issued no order, allowing the FCA8 results to stand.

 

The delegation letter said, “Now that the FERC can benefit from the counsel and participation of all five members, we urge the Commission to evaluate the FCA8 rates pursuant to the Federal Power Act,” they said in the letter. (Colette Honorable was recently confirmed and sworn in as the fifth commissioner).

 

Chair Cheryl LaFleur replied on Feb. 18, saying that the law would not allow the Commission to revisit the issue, and reiterated her belief that the rates which resulted from FCA8 were just and reasonable.

 

Energy Committee Chairs Signal Movement on Energy Legislation

 

House Energy and Commerce (E&C) Committee Chair Fred Upton (R-MI) and Senate Energy and Natural Resources (ENR) Committee Chair Lisa Murkowski (R-AK) have each expressed intent to move energy legislation this session, addressing energy supply, infrastructure, efficiency, and accountability.

 

On Feb. 9, Upton released a document titled “The Architecture of Abundance: A Legislative Framework,” to provide a roadmap for energy legislation. A draft bill is expected in March.

 

In the Senate, Murkowski and Ranking Member Maria Cantwell (D-WA) will hold a series of “listening sessions over the next two weeks, inviting APPA, EEI and other electricity trade groups to tell Senators what they would like to see, and what they would not like to see in an energy bill. Murkowski hopes to be able to bring a bipartisan bill before the Committee before the Memorial Day recess.

 

FERC Hosts First Technical Conference on Clean Power Plan

 

On Feb. 19, FERC hosted a day-long technical conference on EPA’s Clean Power Plan. Representatives from EPA and the Department of Energy, as well as industry leaders including Sue Kelly of APPA, testified on three panels. (For statements of all witnesses, click here.)

 

Testifying on the panel on reliability issues, Kelly told the FERC Commissioners to take an active role in the deliberations at EPA and in the process overall. “Don’t be chopped liver,” she admonished. The panelists discussed the concept of a “reliability safety valve” and what that might look like. FERC Chair Cheryl LaFleur noted that she had seen at least five different “flavors” of what a safety valve might be, ranging from utilities appealing to FERC for more time, to FERC stepping in and insisting that plants run for reliability purposes.

 

During the second panel, on infrastructure issues, representatives from transmission and pipeline companies and renewable advocates agreed that FERC must have an active role in advancing infrastructure projects to accommodate the shift in the generation mix. Panelists welcomed the opportunity afforded by the Clean Power Plan to take a look at streamlining the federal permitting process, especially with respect to the time outside agencies take to process required permits.

 

The final panel focused on how the Plan will impact FERC-jurisdictional markets. Panelists discussed what would happen if one state decided to price carbon into their plants but another state didn’t, and how a state would comply with the plan when it needed to purchase power from a market where carbon was not accounted for equally by each state’s generators. The Commissioners seemed perplexed by the complexity of the issue and noted they were just beginning to scratch the surface.

 

Portman, Shaheen Reintroduce Energy Efficiency Bill

 

Sens. Rob Portman (R-OH) and Jeanne Shaheen (D-NH) have reintroduced their energy efficiency bill, “Energy Savings and Industrial Competitiveness Act,” which includes a provision maintaining the ability of utilities to use grid-enabled water heaters for demand response, as S. 535. A shorter version of the bill was added by amendment to the Keystone XL pipeline bill, which was vetoed by the President.

 

McConnell to Move Cyber Information Bill

 

Senate Majority Leader Mitch McConnell (R-KY) has said that he would like to move a cyber security information-sharing bill to the Senate floor soon. The bill, which is circulating as a discussion draft, is based on the “Cybersecurity Information Sharing Act (CISA)” approved by the Senate Intelligence Committee last year.

 

Other committees of jurisdiction, including the Senate Judiciary, Commerce and Homeland Security committees will also have an opportunity to weigh in on the bill, although it is not yet known how much latitude the Leader will give them to make changes in the CISA bill. The Senate ENR Committee has not indicated interest in adding grid-specific provisions to the bill.

 

2-1-15 NEPPA E-News Line

In This Issue:

 

  • APPA Legislative Rally: Mark Your Calendars….
  • Congressional Focus: President Delivers SOTU Address; Keystone XL Debated…
  • Energy Policy: Portman-Shaheen Efficiency Provisions Advance, Energy Committees Lay Out Agenda, New England Picks Up 2 Seats on Senate Energy…

 

APPA Legislative Rally

 

The APPA 2015 Legislative Rally will be held March 9-11 in Washington, D.C. APPA’s welcoming reception is the evening of March 9, with the Legislative and Resolutions Committee meeting on Tuesday morning, followed by a Keynote luncheon address before NEPPA members head to Capitol Hill to meet with their Congressional delegation.

 

NEPPA will hold a conference call on Feb. 18 at 2:00 to brief attendees on federal issues. All Capitol Hill meeting attendees should participate. Morgan Meguire will prepare talking points and leave-behinds, which will focus on capacity market reforms, natural gas infrastructure, cyber and physical security, greenhouse gas regulations, among others. The NEPPA Legislative Committee will outline and review the key policy issues on a Feb. 4 call. Unlike prior years, no breakfast briefing will be held at the Rally itself.

 

Obama Delivers Sixth State of the Union Address

 

President Obama gave his sixth State of the Union Address on Jan. 20 to defend his record, propose new policies aimed at strengthening the middle class, tout an improving economy, and to call on Republicans to back his agenda.

 

Without specifics, he also called for Congress to enact cyber security legislation, pushed plans to bolster the economy and the middle class, and derided skeptics of human responsibility for climate change. He promised to fight congressional efforts to roll back his climate policies.

 

Obama criticized congressional backers of legislation to force approval of the Keystone XL pipeline, the prime energy focus of Capitol Hill, and instead called for a “bipartisan infrastructure plan to create jobs and make this country stronger.”

 

Expectedly, Republicans were not pleased. “President Obama tonight spoke about expanding our economy and attaining energy security, but time and again, he has actively blocked the responsible development of our domestic energy resources,” House Natural Resources Committee Chairman Rob Bishop (R-UT) said.

 

Keystone Pipeline First Big Energy Battle of 114th Congress

 

Following through on promises by GOP leaders, Congress has been debating amendments to a bill (S.1) to authorize construction of the Keystone XL pipeline. The permitting measure easily passed the House, but may be the Senate’s biggest energy policy debate in years. Even though the White House threatened a veto, the Keystone debate has set up votes on many energy-related issues.

 

So far, Democrats have gotten votes on two amendments putting Republicans on the record regarding climate change. One amendment, a sense of the Senate acknowledging that climate change is real, from Sen. Sheldon Whitehouse (D-RI), passed with one dissenting vote from Sen. Roger Wicker (R-MS). Another sense of the Senate, that climate change is significantly caused by human activity, was defeated 50-49. Notably, a modification filed by Republican Sen. John Hoeven (R-ND) that removed the word “significantly” picked up nine more votes (still shy of the 60 needed to pass, under the chamber’s agreement on amendments).

 

Sens. Portman and Shaheen Return to Energy Efficiency Effort

 

On Jan. 20, Sens. Rob Portman (R-OH) and Jeanne Shaheen (D-NH) won overwhelming, bipartisan (94-5) support for adding their energy efficiency amendment to S. 1, the Keystone bill. Of particular interest to public power and rural electric cooperatives, the amendment would exempt certain electric resistance water heaters used for demand response from pending DOE regulations.

 

The Senators also re-introduced the amendment as a stand-alone bill, the “Energy Efficiency Improvement Act” (S. 128). This two-track strategy allows S. 128 to advance on its own, given that the President has threatened to veto the Keystone bill. The amendment and S. 128 both contain four targeted provisions that the House passed last Congress as part of a broader energy efficiency bill.

 

The four-part amendment would also establish voluntary commercial building standards requiring federal agencies to coordinate with the Department of Energy, the Office of Management and Budget, and the Environmental Protection Agency (EPA) to develop best practices, measurement, and verification techniques. Lastly, it would require federally-leased buildings without Energy Star labels to benchmark and disclose their energy usage data, where practical.

 

Energy Committees Outline Policy Plans; New Englanders Placed on Key Committees

 

Lisa Murkowski (R-AK), the now Chair of the Senate Energy and Natural Resources (ENR) Committee, outlined the Committee’s priorities as grid innovation, nuclear waste policy, oil and gas development, and federal agency oversight. She also suggested consideration of a comprehensive energy bill aimed at “strengthening supply, modernizing infrastructure, supporting efficiency, and ensuring federal accountability.”

 

Sen. Maria Cantwell (D-WA) the panel’s Ranking Democrat, laid out a different set of priorities, including Federal Energy Regulatory Commission (FERC) market manipulation authority, diversification of energy resources, and protecting consumers from unnecessary price spikes.

 

Of particular interest to NEPPA members, there are now three New England members – Sens. Elizabeth Warren (D-MA) and Angus King (I-ME), now join Bernie Sanders (I-VT) – on the ENR Committee. That is not by mistake, given increased energy costs in NE and concerns about lack of adequate infrastructure and flawed “markets.”

 

On the House side, Energy and Commerce Chair Fred Upton (R-MI) said the Committee will be “pursuing smart environmental regulation,” including vigorous oversight of EPA and other agencies. Separately, the Committee is expected to consider legislation, potentially in a comprehensive bill, on issues that may include hydropower licensing reform, gas/electric coordination, oversight of capacity markets, and/or grid security.

 

1-1-15 NEPPA E-News Line

In This Issue:

 

  • Congressional Focus: Lame Duck Session Concludes, New FERC Commissioner Approved…
  • Capacity Markets: New York Delegation Pushes Back on Hudson Capacity Zone…
  • Energy Policy: Hydropower Sees Boost, NEPA Guidance Released…
  • Reliability: Energy and Commerce report slams Clean Power Plan, FERC Announces Reliability Conferences, 1.6 Million Comment on Plan…

 

Funding Bill, Extenders, Nominees Approved Before Adjournment, TRIA Expires

 

Following House passage of the FY 2015 appropriations omnibus to fund the federal government through the end of Sept. 30, 2015, the Senate on Dec. 13 passed the bill in a rare weekend session to avoid a government shutdown.

 

The measure’s final 56-40 bipartisan vote saw opposition from conservative Republicans who had tried and failed to include language in the bill to defund the President’s executive action on illegal immigration, as well as from liberal Democrats, led by Sen. Elizabeth Warren (D-MA), who objected to its inclusion of policy riders weakening the Dodd-Frank law and increasing political contribution limits.

 

Separately, the Senate passed (76-16) a one-year, retroactive extension of 54 tax breaks that expired in January 2014, including the Production Tax Credit. President Obama is expected to sign the legislation, which has a 10-year cost of about $42 billion. Frustration over the short-term extension was deep, with many on both sides criticizing the bill while voting for it as the only deal on the table at the end of the year.

 

Prior to adjourning, the Senate approved a handful of the President’s nominees for key posts, including Colette Honorable to the Federal Energy Regulatory Commission (FERC). Honorable, an Arkansas regulator, had gained bipartisan support during her nomination process, including from fossil fuel and clean energy groups.

 

However, efforts to renew the federal “backstop” for insurers in the event of a terrorist attack died in the Senate. The Terrorism Risk Insurance Act (TRIA) program, which expires on Dec. 31, provides for shared public and private compensation for certain insured losses resulting from a certified act of terror. Reauthorization of the program is supported by a broad coalition of business entities that have reason to believe their property could be subject to a terrorist attack, including electric utilities.

 

As the House debated its TRIA reauthorization bill, Rep. Michael Grimm (R-NY) added an unrelated Dodd-Frank provision to clarify that swaps where one of the counterparties is an end-user would not be required to post margin for trades. Public power supported this provision in the past; however some Senate Democrats – notably Sen. Warren – opposed its addition to the unrelated TRIA measure. Retiring Sen. Tom Coburn (R-OK) blocked the bill on its own merits, preventing its passage.

 

Senate Republican leaders hope to take up legislation early in the 114th Congress. An earlier TRIA bill passed the Senate on a 93-4 vote in July.

 

In the 114th Congress, two New England Senators will join the Energy and Natural Resources Committee: Sen. Angus King (I-ME) and Sen. Elizabeth Warren (D-MA). Rep. Joe Kennedy III will join the House Energy and Commerce Committee.

 

FERC Must Provide Ratepayer Impact on NY Capacity Zone

 

In the flurry of activity at the end of the 113th Congress, Sen. Charles Schumer (D-NY) and Reps. Chris Gibson, (R-NY) and Sean Patrick Maloney, (D-NY) successfully included in the federal spending bill a provision requiring FERC to give quarterly reports on the Hudson Valley “Electric Capacity Zone” that will include analyses of the effect on ratepayers.

 

Electricity providers in the region said the new Hudson Valley capacity zone translates to a 6 percent increase on residential bills and a 10 percent increase on industrial bills. FERC approved the new electric capacity zone, which went into effect on May 1, among fierce opposition from elected officials, local municipalities and the state’s Public Service Commission. Rep. Maloney said, “Finally getting some accountability from FERC is an encouraging first step, but make no mistake, this fight continues.” Three state utilities are advocating a repeal of the zone in a federal appeals court.

 

In a press release after passage Sen. Charles Schumer, said, “We cannot let FERC make unilateral decisions that result in unwarranted rate hikes for already hard-hit Hudson Valley ratepayers.”

 

CEQ Releases New NEPA Guidance

 

On Dec. 18, the White House Council on Environmental Quality (CEQ) released guidance for agencies to follow when conducting environmental assessments of potential projects and actions under the National Environmental Policy Act (NEPA). The guidance does not carry the force of law, but will be open for public comment for 60 days before being finalized.

 

The guidance suggests agencies should take climate change impacts into account if the project or action will cause a significant increase in greenhouse gas (GHG) emissions, focused on those actions that will result in an annual release of more than 25,000 tons of GHG. The guidance would ultimately leave to federal agencies’ discretion what qualifies as a “significant” increase in emissions, however. Additionally, for the first time, this proposal includes land and resource decisions – unlike previous drafts that were never made final.

 

Energy and Commerce Leaders Release Scathing Critique of Clean Power Plan

 

On Dec. 16, Majority staff for the House Energy and Commerce Committee released a report that question’s the EPA’s authority to promulgate greenhouse gas limits through that agency’s Clean Power Plan.

 

The report highlights five “preliminary conclusions” from the hearings and discussions on the Plan since its introduction in June, including fundamental legal questions about the EPA’s authority to regulate in this area and, assuming such authority, the scope of that authority, and it goes on to recap hearings the Committee has held, including statements from industry witnesses testifying that EPA’s “building blocks” are unachievable in realistic market conditions.

 

FERC Announces Technical Conferences on Clean Power Plan

 

On Dec. 9, FERC announced plans to hold a series of technical conferences on potential reliability impacts of the EPA’s proposed Clean Power Plan. A National Overview conference will kick off the series at FERC headquarters Feb. 19, 2015. Subsequent regional conferences will be held in Washington, DC; St. Louis, MO; and Denver, CO.

 

FERC’s announcement came following a letter from Senate Energy and Natural Resources Committee Ranking Member Lisa Murkowski (R-AK), House Energy and Commerce Committee Chairman Fred Upton (R-MI), and Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) regarding the lack of a formal consultation process between FERC and EPA in the development of the Clean Power Plan and other major rules impacting electric reliability, and also after FERC Commissioner Phil Moeller sent a letter to EPA Administrator Gina McCarthy expressing concerns about the Plan’s impact on reliability.

 

1.6 Million Comment on EPA’s Clean Power Plan

 

The EPA reported receiving nearly 1.6 million comments on its Clean Power Plan. Many comments are available at regulations.gov. The scope of comments ranged from anonymous one-sentence statements, to several hundred-page analyses by stakeholders such as APPA, NRECA, and other utility stakeholders.

 

The three major utility trades took different approaches to their comments, with NRECA submitting the most critical assessment. The group urged withdrawal of the rule, and, if the agency will not withdraw the rule, significant changes to the timelines (e.g., giving states at least five years to develop implementation plans) and assumptions EPA made in setting the targets.

 

APPA also questioned the rule’s legal underpinning and called for withdrawal and re-proposal of a more workable alternative. The Edison Electric Institute, which represents investor-owned utilities, took the most conciliatory tack. Their comments focus on adjusting the assumptions in each building block, crediting early action, and removing the interim goals. The comments also note that EPA may not have the legal authority to promulgate the rule.

 

Among the most positive comments were from the Regional Greenhouse Gas Initiative (RGGI) states, which submitted joint comments supporting the building blocks and encouraging EPA to allow RGGI to serve as compliance equivalents for the states it serves.

 

12-1-14 NEPPA E-News Line

In This Issue:

 

  • Election Overview: Lame Duck Session, FERC Nomination Hearing on Colette Honorable…
  • FERC & Capacity Markets: NE Senators Blast FERC on Lack of Oversight; Sen. Schumer Take Aim at NY Capacity Markets; FERC Requests RTO’s to File “Fuel Assurance” Reports…
  • Energy Policy: Senate Bill on Demand Response in RTO Markets, Sen. Whitehouse Introduces Carbon Tax…
  • Reliability: Republican Leaders Question FERC on Reliability Impacts of EPA’s Power Plan; NERC Highlights Winter Reliability Concerns…

 

Election Overview; Lame Duck; FERC Nominee

 

President Obama and congressional Democrats suffered a resounding defeat in the Nov. 4 mid-term elections, which ushered in a new Republican Senate majority (53-44) and a stronger GOP House (244-188). One Senate seat is yet to be determined with incumbent Democratic Senator Mary Landrieu (LA), Chairman of the Senate Energy and Natural Resources Committee (ENR), in a Dec. 6 run-off against her Republican challenger, Congressman Bill Cassidy (R). In the House, three unresolved races remain.

 

Immediately following the election, GOP leaders in the House and Senate acknowledged it will be important for them to show that they can govern, and avoid partisan brinksmanship, if they expect to maintain the Senate and win the White House in 2016.

 

Congress will reconvene for the remainder of its “Lame Duck” session on Dec. 1 and will remain in session through the weekend of December 13, at the latest.

 

The scope of legislative activity is focused on three major bills: defense authorization legislation, a federal funding bill, and tax “extender” legislation that will continue some expired and expiring tax benefits for businesses, including renewable energy tax credits. Negotiations on the extenders bill will determine whether some of these provisions will be extended permanently or continue through only 2014 or through both 2014 and 2015.
In addition, Senate ENR will hold a confirmation hearing for Federal Energy Regulatory Commission (FERC) nominee Colette Honorable on Dec. 4. If confirmed, she will replace John Norris, who left FERC in Aug. 2014.

 

NE Senators Blast FERC on Lack of Oversight of Capacity Auction

 

On Nov. 17, Sen. Richard Blumenthal, (D-CT) and Bernie Sanders (I-VT) sent a strongly worded letter to FERC Chair Cheryl LaFleur regarding FERC’s “failure to adequately address allegations of market manipulation” during ISO New England’s forward capacity auction in February 2014, “costing New England consumers an estimated $1.4 billion or $110 annually per customer if such allegations are found to be true.” The two urged FERC to immediately hold a hearing related to an ISO-NE forward capacity auction #8 held earlier this year. (Final letter was sent to NEPPA.)

 

Sen. Schumer Takes Aim at NY Capacity Market


Sen. Chuck Schumer (D-NY) reportedly plans to introduce legislation that will require FERC to complete and publish a cost-benefit analysis before moving any further forward with a planned Hudson Valley capacity zone. The bill is expected to block FERC from putting federal funding toward the capacity zone if the cost-benefit analysis shows that it will result in increases for ratepayers, which Schumer said any study is likely to conclude.


Earlier this year, FERC-approved a new “capacity” zone in the lower Hudson Valley. On Sept. 15, Schumer, along with Sen. Kirsten Gillibrand (D-NY) and Reps. Chris Gibson (R-NY), Eliot Engel (D-NY), Sean Patrick Maloney (D-NY), and Nita Lowey (D-NY), asked FERC to reverse its decision. The New York lawmakers said that the zone has resulted in a “significant and unwarranted price increase” for lower Hudson Valley electric consumers. “Estimates indicate that the annual increase in electric prices associated” with the zone will reach approximately $280 million, they said.


FERC Requests RTO’s to File “Fuel Assurance” Reports


On Nov. 19, FERC issued an order that requires the RTOs to file reports on the status of their efforts to address “fuel assurance.” The RTOs have 90 days to file reports, followed by 30-day public comment period. FERC provided guidance in the order on the types of options that could be pursued.


For example, in the capacity markets, RTOs/ISOs could “provide greater price incentives for capacity resources to be available, and impose stiff penalties for failure to perform” or “could take a more administrative approach” and “specifically require that capacity resources have certain fuel arrangements in place to be eligible to provide resource adequacy.” (See News Release and Decision)

 

Senate Bill on Demand Response in RTO markets

 

On Nov. 20, Sen. Heinrich (D-NM), a member of the ENR Committee, introduced (S. 2947) a bill that would reverse a May ruling by a federal appeals court that rejected FERC Order No. 745 regarding demand-response compensation to consumers in RTO markets.

 

Order 745 was designed to allow wholesale electric markets to pay retail electric consumers for “demand response” during certain periods. EPSA, APPA, and NRECA took the FERC compensation issue to court over the Commission’s expanding jurisdiction and won. In May, the Court vacated the rule in its entirety, in a 2-1 decision saying demand response was a retail function.

 

S. 2947 would reverse the U.S. Court of Appeals ruling that said FERC did not have the authority to promote demand response at the retail level as an alternative to the increased generation of power. Senator Heinrich's bill would provide FERC with this authority under the Federal Power Act.

 

Sen. Whitehouse Introduces Carbon Tax Legislation


On Nov. 19, Sen. Whitehouse introduced legislation that would put a price on carbon emissions – throughout all sectors of the economy. Sen. Whitehouse told the media that he was optimistic about gaining Republican support for the bill, explaining “they will need to appeal to voters if they want to take the White House and maintain Senate seats in 2016.”


The bill, known as the “American Opportunity Carbon Fee Act,” would require businesses that emit more than 25,000 tons of carbon dioxide a year to pay a fee of $42 per metric ton starting in 2015. The fee would increase annually by an inflation-adjusted rate of two-percent. Revenue from the program, which could exceed two trillion over the course of 10 years, would be returned to the public through a variety of options, including infrastructure investments, tax cuts, or transition assistance to workers and businesses in energy-intensive and fossil-fuel industries.


Given GOP resistance to consider climate legislation in recent years, it remains to be seen how Sen. Whitehouse’s bill will advance in this 114th Congress.


Top Republicans Voice Reliability Concerns to FERC on Clean Power Plan


On Nov. 24, Senate ENR Ranking Member Lisa Murkowski (R-AK), House Energy and Commerce Chair Fred Upton (R-MI) and Energy and Power Subcommittee Chair Ed Whitfield (R-KY) sent FERC Commissioner Cheryl LaFleur a letter requesting information on grid reliability.


The letter states, “EPA lacks the mission and the expertise to determine what is necessary to maintain the reliability of the nation's electric grid,” and asks for details on any meetings or communication between EPA and FERC regarding the Clean Power Plan.


The letter also requests that FERC hold a technical conference with officials from the Department of Energy, National Association of Regulatory Utility Commissioners (NARUC), affected asset owners and other stakeholders to discuss the reliability challenges associated with the pending regulations.


The Republican letter came in response to a report released by the North American Electric Reliability Corporation (NERC) on the EPA’s Clean Power Plan that identified multiple reliability concerns.


NERC Highlights 2014-2015 Winter Reliability Concerns


A separate NERC report, issued Nov. 21 said prolonged cold weather events may cause increase in generator unavailability due to natural gas and coal constraints. The report, which detailed its 2014-2015 winter reliability assessment, highlighted “a continuing trend in recent NERC long term reliability assessments and the topic of two published NERC special assessments is the increase of gas-fired generation coupled with the reduction in fuel diversity across the overall resource portfolio,” NERC said.

 

NERC said that while the extent of this trend varies from region to region, the concerns are high priority in areas where: (1) power generators rely on interruptible gas pipeline transportation; (2) natural gas interstate pipelines are constrained to meet demand beyond what has been contracted and committed; and (3) gas use for power generation is increasing.

 

“Announcements for new pipeline capacity from 2014 through 2016 show infrastructure enhancements to pipelines in the Northeast, but these projects do not alleviate the constraints across the New England interface. Therefore, from a natural gas availability perspective, similar conditions as last year can be expected. For New England, this includes the potential for natural gas interruption to gas-fired generators and a reliance on backup fuel (generally oil) to meet peak demand,” NERC said.