LEGISLATIVE UPDATES

In this edition:

• Must-Pass Legislation: Congress passes a short-term continuing resolution; House Republicans call for a Farm Bill vote; Senators file 1,100+ amendments for the FY25 National Defense Authorization Act…
• Tax Policy: Speaker Mike Johnson (R-LA) indicates openness to maintaining certain IRA tax provisions…
• Disaster Relief: President Biden weighs an emergency session of Congress as FEMA’s funds dwindle from Hurricane Helene…
• Energy Policy: House passes chips factory permitting bill; Senate ENR Committee examines fusion energy technology…

Congress Passes “Clean” CR, Averting a Government Shutdown

On Sept. 25, in its final action before adjourning for the final weeks of campaigning before the November elections, Congress passed a short-term continuing resolution (CR) to fund the government until Dec. 20.  President Biden was quick to sign the stopgap funding measure, which funds the government largely at current levels and does not include any partisan riders, supplemental emergency funding, or Farm Bill extensions.  Although some lawmakers expressed concern over the CR’s lack of additional disaster relief funding, the funding measure passed with bipartisan support by a vote of 341-82 in the House, and 78-18 in the Senate.  With a “clean” CR, every major funding battle remains up in the air for FY25, and Speaker Mike Johnson (R-LA) has indicated that the House will not approve a “Christmas omnibus” in the lame duck period.  Negotiations on topline funding levels are expected to ramp up after Election Day on Nov. 5, with the outcome of the elections likely to influence whether lawmakers want to address funding issues in December or kick final decisions to the new Congress.  Adding to the already challenging negotiations, lawmakers will also need to raise the debt ceiling, which was suspended until January 1, 2025, under the 2023 Fiscal Responsibility Act.

House Republicans Call for Farm Bill Vote

On Sept. 26, 140 House Republicans (a majority of the House Republican Conference) sent a letter to GOP leadership calling for a vote on the 2024 Farm Bill before Congress adjourns at the end of the year.  Lawmakers are under pressure to act on the bill to reauthorize agricultural, conservation, forestry, and rural energy programs that would expire at the end of the fiscal year on Sept. 30.  The Farm Bill is typically reauthorized every five years, and the previous authorization is already running on a one-year extension after an initial expiration last year.  A short expiration would not have a major impact on farmers, but advocates say programs would be more seriously disrupted if no Farm Bill is in place by early 2025.  The letter highlights House Agriculture Committee Chair G.T. Thompson’s (R-PA) version of the Farm Bill, which was reported by the committee in May, and says passing that bill “or similar legislation” should be a priority after the November elections.  Still, challenges remain with continued partisan disagreements among lawmakers over directing Farm Bill conservation funds toward actions to combat climate change, among other things.

Senators File 1,100+ Amendments for the FY25 NDAA 

Senators have filed over 1,100 amendments for the FY25 National Defense Authorization Act (NDAA), with lawmakers hoping to use the must-pass legislation to advance their policy priorities given the little time remaining in the 118th Congress.  Of those amendments, around 100 are focused on energy and the environment.  Republican amendments include proposals to increase liquefied natural gas exports to friendly countries and expand mining on federal lands, and Democratic amendments focus on abandoned mine remediation and addressing increasing energy demand from AI and data centers.  Although the majority of the proposed amendments will likely not be voted on, they serve as a marker of lawmakers’ priorities on climate, the energy transition, and natural resources.  Prime contenders for success include Sens. Joe Manchin (I-WV) and John Barrasso’s (R-WY) energy permitting reform bill, as well as the 2024 Water Resources Development Act (WRDA).  Measures to use AI for federal energy permitting processes, extend Defense Production Act authorization for clean energy manufacturing, create a revenue-sharing system for offshore energy, and more are also among the initiatives that may be attached to the Senate’s FY25 NDAA.  The House passed its version of the NDAA in June, which contained several provisions targeting the Biden administration’s executive orders on climate, as well as measures to boost critical mineral procurement, support nuclear power, and improve military installations’ resilience.  The two chambers will ramp up negotiations to pass a compromise version of the FY25 NDAA following the November elections.

Speaker Johnson Indicates Support for Preserving Some IRA Energy Tax Credits  

While talking with reporters on Sept. 17, Speaker Mike Johnson (R-LA) stated that he is open to preserving some of the energy tax credits authorized in the Inflation Reduction Act.  The comments followed a broader speech Johnson gave on the economy and upcoming 2025 tax package negotiations at an event hosted by the conservative non-profit think tank, America First Policy Institute.  Johnson declined to comment on which specific provisions he would want to preserve but stated that “[Congress] has got to use a scalpel and not a sledgehammer, because there’s a few provisions in there that have helped overall.”  Johnson’s comments also come on the heels of a letter sent by 18 House Republicans last month highlighting their support for the IRA energy tax credits, claiming that prematurely repealing them would stop ongoing infrastructure projects and undermine investments.

FEMA Faces Funding Shortfall as Disaster Costs Rise

The Federal Emergency Management Agency (FEMA) is facing another funding shortfall in the face of recent disasters in the U.S., most recently Hurricane Helene.  President Biden has issued a Major Disaster Declaration in Florida, North Carolina, and South Carolina, in addition to Emergency Declarations in those states and Alabama, Georgia, Tennessee, and Virginia.  The short-term continuing resolution (CR) passed by Congress on Sept. 25 provided some funding for FEMA’s Disaster Relief Fund; however, it did not include the additional funding requested by the Biden administration for disaster response.  Without an infusion of funding, FEMA will likely have to go back to “Immediate Needs Funding” — which forces the agency to prioritize lifesaving operations while pausing long-term recovery projects from past disasters – as it was before the CR was passed.  FEMA is projecting a nearly $3 billion deficit by February and a $22.6 billion deficit by next September, in part from a backlog of deferred payouts.  Current estimates project that Hurricane Helene will cost up to $160 billion in damages and economic loss.  As costs and damages mount, President Biden is also considering calling Congress back to Washington for an emergency session to approve new disaster relief funding.

House Passes Chips Factory Permitting Bill

On Sept. 23, the House approved S. 2228, the “Building Chips in America Act of 2023,” by a vote of 257-125.  The bipartisan legislation aims to ease permitting laws to help support the construction of semiconductor factories in the U.S., exempting certain chips plants from environmental review.  During debate, House Natural Resources Committee Chair Bruce Westerman (R-AR) criticized the bill as a “carve-out” for a single industry and called for broader National Environmental Policy Act reform to expedite permitting processes for energy, infrastructure, broadband, and other projects as well.  Energy and Commerce Committee Ranking Member Frank Pallone (D-NJ) and Rep. Summer Lee (D-PA) also argued that the legislation would lead to polluted sites.  Ultimately, the bill passed on a bipartisan basis, with 79 Democrats joining 178 Republicans in support of the bill.  Having been passed by unanimous consent in the Senate last year, the bill now heads to President Biden, who has indicated he will sign the bill.

Senate Committee Holds a Hearing on Fusion Energy Technology

On Sept. 19, the Senate Energy and Natural Resources Committee held a hearing focused on fusion energy technology.  The hearing saw both lawmakers and advocates highlight fusion as a promising zero-carbon energy source, with fusion boosters calling for a federal “fusion advantage initiative” to capitalize on its potential.  Lawmakers also expressed a desire to ensure that China does not gain a competitive supply chain advantage for fusion technology – an angle that might help fusion advocates build bipartisan support for the technology, although some lawmakers still expressed skepticism that fusion has not yet proved it can be commercially viable.  In the nearer-term, advocates hope to see lawmakers expand the Inflation Reduction Act’s 45X tax credit for domestic production of materials related to clean and renewable energy to include fusion, as well as an increase in Department of Energy funding for fusion energy research, which was increased to $790 million in FY24.

In this edition:

• Appropriations: The stage is set for negotiations on a stopgap funding measure…
• Energy Policy: Podesta suggests permitting reform could come together during Congress’ lame duck session…
• Tax Policy: Republican lawmakers express support for IRA energy tax credits; Treasury releases a NPRM to expand the Clean Electricity Low-Income Communities Bonus Credit Program…
• NERC: NERC and NEMA sign an MOU aimed at enhancing bulk power system reliability…
• Grants: DOE Announces Round 2 of GRIP Program Grant Awards…

Lawmakers Set the Stage for Negotiations on a Continuing Resolution

House Speaker Mike Johnson (R-LA) is reportedly preparing a stopgap funding measure ahead of the Sept. 30 deadline for Congress to fund the government for FY25.  Johnson’s plan includes a six-month Continuing Resolution (CR), to avoid a lame-duck omnibus package fight before the holidays as well as punt final spending decisions into the new year and to a new Congress.  In addition, the CR is expected to include a one-year extension of Farm Bill programs, since neither chamber’s multi-year reauthorization package has made it to the floor, nor will differences be reconciled by the Sept. 30 deadline.  The CR is also expected to include some GOP policy riders, including a House-passed proof-of-citizenship voting measure, which is expected to be dead on arrival in the Senate.  As attention shifts to what will be included in a stopgap funding measure, the White House has released its 30-page “anomalies” request listing the extra funding that the Biden administration is seeking amid otherwise unchanged budgets under a CR.  Among other things, the list requests language to prevent the transfer of unobligated funds from the Civil Nuclear Credit (CNC) program so that the Department of Energy can initiate a third round of CNC program funding, language to permit the Forest Service to obligate Wildland Fire Management funding for suppression operations, and language to extend Good Neighbor Authority for forest landscape restoration work.  As lawmakers return from August recess, the stage is set for debate on what will ultimately be included in a CR, and for how long funding will be extended, with just three weeks for Congress to pass a CR and avoid a government shutdown.

Podesta Suggests Permitting Reform Legislation Could Happen This Year

At an Aug. 13 event hosted by center-left policy think tank Third Way on the U.S. clean energy transition, White House climate adviser John Podesta suggested that permitting reform legislation could come together this year, after the November elections.  On July 31, the Senate Energy and Natural Resources Committee approved Chairman Joe Manchin (I-WV) and Ranking Member John Barrasso’s (R-WY) “Energy Permitting Reform Act,” which aims to update permitting rules to accelerate energy infrastructure development, by a vote of 15-4, sending the bill to the floor.  Sens. Manchin and Barrasso both expressed optimism about the bill and its anticipated impact, despite previous efforts to pass permitting reform legislation having stalled in Congress.  Podesta, whose team provided some technical assistance for the bill, noted that there were some elements of the bill that he liked and some that he sees as “problematic,” although he did not offer specifics and declined to say whether President Biden would sign the bill if it were approved by Congress in its current form.  Podesta also predicted the “real negotiating will happen in a lame duck session,” with Congress focusing instead on FY25 appropriations and other must-pass legislation upon its return from August recess, and stated that the White House will “continue to dialogue with [Congress].”

Republican Lawmakers Ask Johnson Not to Target IRA Energy Tax Credits for Repeal

In an Aug. 6 letter to House Speaker Mike Johnson (R-LA), eighteen House Republicans led by Rep. Andrew Garbarino (R-NY) urged the Speaker not to target Inflation Reduction Act (IRA) clean energy tax credits if Republicans win a governing majority in the 119th Congress.  The lawmakers criticized the IRA as a whole but highlighted the growth in the energy sector spurred by clean energy tax credits, and noted that “Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing.”  More than a dozen other Republicans reportedly privately supported the contents of the letter but did not sign on, including Rep. Brett Guthrie (R-KY), who is vying against Rep. Bob Latta (R-OH) for the top Energy and Commerce GOP spot in the next Congress.  The letter is the latest example of a growing rift within the Republican Party, with lawmakers who want a full repeal of the IRA on one side and those whose districts are benefitting from IRA investments on the other.  The letter also comes as Republicans are discussing how to pay for and pass a 2025 tax package, with Speaker Johnson directing committee chairs to begin making recommendations for a bill to be advanced through budget reconciliation – the process Democrats used to bypass the Senate filibuster and pass the IRA and Republicans used to pass the 2017 Tax Cuts and Jobs Act.

Treasury Releases NPRM to Expand Clean Electricity Low-Income Communities Bonus Credit Program

On Aug. 30, the Treasury and the Internal Revenue Service (IRS) released a Notice of Proposed Rulemaking (NPRM) to expand the types of clean energy technologies eligible for the Inflation Reduction Act’s (IRA) 48E(h) Clean Electricity Low-Income Communities Bonus Credit Program.  Beginning in 2025, energy tax credits will transition from a technology-specific approach to a technology-neutral approach. The NPRM provides guidance on how the bonus credit program, allocated competitively, will expand to include more clean energy technologies beyond solar and wind (which currently qualify) in economically distressed areas.  The expansion would offer tax incentives of up to 20 percentage points for the production tax credit or up to 30 percent for the investment tax credit (if prevailing wage and apprenticeship rules are also met) for geothermal, hydropower, nuclear, and other low-carbon technology projects under 5 megawatts located in low-income communities, on tribal lands, or in affordable housing complexes.  Combustion and gasification technologies, including carbon capture projects, would not qualify for the bonus credit program.  To target investments in high energy burden areas, the bonus credit program will make at least 50 percent of the allocations to tax-exempt entities, including public power and rural electric cooperatives. Treasury and the IRS are accepting comments on the NPRM until Oct. 3, 2024.

NERC and NEMA Sign MOU to Enhance Bulk Power System Reliability

On Aug. 26, the North American Electric Reliability Corporation (NERC) and the National Electrical Manufacturers Association (NEMA) announced they have signed a memorandum of understanding (MOU) establishing a framework for ongoing cooperation to facilitate the exchange experience, information, and select data.  The MOU aims to enhance the coordination of activities between NERC and NEMA related to the reliability, resilience, and security of the North American bulk power system.  NERC’s focus, as an Electric Reliability Organization, is on assuring the efficient reduction of risks to grid reliability and security, while NEMA is an American National Standards Institute-accredited standards developing organization representing a broad spectrum of stakeholders involved in electrical product innovation and technology.  As the need for grid modernization increases with the growing energy demand, the collaboration between NERC and NEMA will support bulk power system reliability and enable more effective responses to emerging challenges and opportunities.

DOE Announces Round 2 of GRIP Program Grant Awards

On Aug. 6, the Department of Energy (DOE) announced that $2.2 billion will be awarded to eight electric transmission and microgrid projects across 18 states under the Grid Innovation Program (Topic Area 3) grants for the second round of the Grid Resilience and Innovative Partnerships (GRIP) program.  The award announcement comes as the Biden administration has been pushing for greater transmission buildout to meet clean energy transition goals, meet increasing energy demand, and bring Inflation Reduction Act projects online.  In combination with the nearly $3.5 billion awarded in first-round GRIP program grants, these grants are estimated to add approximately 1,000 miles of transmission lines and 50,000 megawatts of capacity to the grid.  Among the projects receiving GRIP program funding is the Power Up New England project, led by the Massachusetts Department of Energy Resources in collaboration with the states of Connecticut, Maine, New Hampshire, Rhode Island, and Vermont.  Power Up New England is projected to reduce wholesale energy supply costs for New England customers by about $1.55 billion, and will create new offshore wind interconnections in Massachusetts and in Connecticut, enabling 4,800 MW of offshore wind.  In the press release, DOE also noted that it will announce second round selections for GRIP’s Grid Resilience Utility and Industry Grants (Topic Area 1) and Smart Grid Grants (Topic Area 2) later this year.

In this edition:

• Legislation: Senate appropriators advance several FY25 appropriations bills to the floor; Senate ENR advances permitting reform bill…
• Tax Policy: Senate Finance examines federal tax policies to aid local economic development…
• FERC: Judy Chang is sworn in as a FERC Commissioner…
• Regulations: OIRA releases the federal government’s spring Unified Agenda…
• Elections: The stage is set for a Harris-Walz and Trump-Vance face-off in November…

Senate Appropriations Committee Advances Several FY25 Appropriations Bills

The Senate Appropriations Committee has been working in earnest to send its FY25 appropriations bills to a floor vote, having now advanced eleven of the twelve bills for floor consideration – with Homeland Security still awaiting full committee markup and approval.  On July 25, the committee approved four appropriations bills, including its $44.6 billion Interior-Environment appropriations bill.  Whereas the House version of the bill (which was passed by the lower chamber late on July 24) slashes funding for the Environmental Protection Agency (EPA), the Senate version would slightly increase funding for both EPA and the Interior Department.  Senate Appropriations advanced four more of its FY25 appropriations bills on Aug. 1, including its $61.5 billion Energy-Water appropriations bill (with over $2 billion more in funding than the House version), which was reported unanimously.  The Senate Energy-Water bill would boost the Department of Energy’s (DOE) funding by nearly $300 million from FY24 levels, including, among other things, a $360 million increase for the Office of Science, $34.5 million for technology transfer and commercialization efforts, $200 million to strengthen the security of the energy sector and resilience of the electric grid, and $70 million for the Office of Indian Energy Policy and Programs.  The bill would also keep funding for DOE’s energy efficiency and renewable energy programs in line with current fiscal year levels at $3.46 billion, as well as provide roughly $1.68 billion for nuclear energy research and development, including $800 million in repurposed supplemental emergency funding for the advanced reactor demonstration program and nuclear fuel development.  The Senate has yet to pass any of its funding bills on the floor, whereas the House has approved five of its FY25 appropriations bills.  However, House GOP leaders have faced problems passing several of their remaining bills, leading them to cancel votes on the chamber’s Energy-Water bill and several others before adjourning early for August recess.  With major differences in top-line spending totals, the two chambers will face challenging negotiations when returning from August recess, and Congress is already having discussions about passing a Continuing Resolution (CR) when lawmakers return to the Hill, as there will only be a few weeks remaining with the fiscal year ending on Sept. 30.

Senate Energy and Natural Resources Committee Advances Permitting Reform Bill

On July 31, the Senate Energy and Natural Resources (ENR) Committee approved S. 4753, the “Energy Permitting Reform Act,” by a vote of 15-4. Among the four nay votes include Sen. Bernie Sanders (I-VT). The long-awaited legislation, negotiated by ENR Chairman Joe Manchin (I-WV) and Ranking Member John Barrasso (R-WY), aims to update permitting rules to accelerate energy infrastructure development, incorporating Democratic priorities such as expanding interstate transmission lines to connect new renewable energy sources to the grid, as well as Republican-backed provisions that would allow for increased access to oil, gas, and coal on federal lands.  While more than 60 amendments were being floated leading up to markup, members did not offer all their amendments, or introduced them but later withdrew them as the panel leaders wanted to keep the legislation as intact as possible for committee passage.  Among the amendments that passed included the manager’s amendment, and an amendment from Sen. Steve Daines (R-MT) to apply the 150-day statute of limitations for lawsuits to certain forestry projects, in addition to energy projects covered by the bill.  Lawmakers also spent considerable time discussing the bill’s hydropower provisions, including an amendment by Sen. Daines to confirm hydropower as a renewable resource (which failed 8-11).  During this discussion, Sen. Manchin reiterated his support for hydropower generally, but noted that the hydropower title came together at the last minute; he emphasized the need to “get the language right” and committed to working with panel members ahead of a floor vote.  Sen. Lisa Murkowski (R-AK) also offered several amendments on hydropower licensing reform but withdrew them following Manchin’s commitment.  Sens. Manchin and Barrasso both expressed optimism about the bill and its anticipated impact, despite previous efforts to pass permitting reform legislation having stalled in Congress, but the bill still faces a difficult path forward if it is brought to the Senate floor for consideration and debate.

Senate Finance Examines Federal Tax Policies to Aid Local Economic Development

On July 30, the Senate Finance Committee held a hearing on ways federal tax policies could aid in local economic development.  Among the witnesses included was Lashea Lofton, Deputy City Manager for the City of Dayton, Ohio, who testified on the importance of maintaining the tax exemption of municipal bonds and restoring advance refunding of tax-exempt bonds, which was repealed in the 2017 Tax Cuts and Jobs Act.  Lofton noted that tax-exempt bonds issued by state and local governments and nonprofit entities have financed over three-quarters of our nation’s infrastructure.  Chairman Ron Wyden (D-OR) noted that the tax code gives a lot of tools to build a strong economy and that the “tax-exemption for municipal bonds is a key tool, helping local governments finance priorities like infrastructure and utility projects,” and that he opposes Republican efforts to repeal the tax exemption.  With much of the 2017 tax law expiring next year, lawmakers on the Senate Finance panel are already having private negotiations on the upcoming tax package, with efforts expected to ramp up following the November elections.

Commissioner Chang Sworn in, Bringing FERC to Full Commissioner Complement

On July 15, the third and final of President Biden’s recently confirmed Federal Energy Regulatory Commission nominees, Judy Chang, was sworn in as a FERC commissioner.  Chang fills the seat of former Commissioner Allison Clements, whose term ended June 30.  Commissioners David Rosner and Lindsay See, Biden’s other two nominees to the Commission, were sworn in June 17 and June 28, respectively.  Commissioners Chang and See joined FERC for their first meeting as commissioners at the Commission’s July 25 Open Meeting, although they refrained from voting on any matters (as Commissioner Rosner did at FERC’s June open meeting), as is typical of commissioners during their first meeting as officials.  With Commissioner Chang’s swearing in, FERC has its full panel of five commissioners for the first time since former Chair Richard Glick’s departure in 2022, with FERC Chair Willie Phillips leading the Commission with a 3-2 split favoring Democrats.

OIRA Releases Spring Unified Agenda

On July 5, the Office of Information and Regulatory Affairs (OIRA) released the spring Unified Agenda, a semi-annual regulatory schedule for all federal agencies.  Many of the Biden administration’s major rules were finalized in recent months to shield them from potential Congressional Review Act nullification, and the next major wave of regulations is not expected until after the elections.  Of interest to electric utilities, regulations covering greenhouse gas emissions from existing natural gas-fired power plants are expected to be proposed in December, with no target date for a final rule.  A rule implementing the methane fee for oil and gas facilities, instituted under the Inflation Reduction Act, is expected to be finalized in December as well, among other anticipated rules and regulations.  Target dates in the Unified Agenda tend to be approximate – and often fall behind – but they do offer insight into where agencies are expected to put their resources in the coming months.

President Biden Drops Out of the 2024 Presidential Election; President Trump Accepts Republican Nomination at RNC

In a statement released July 21, President Joe Biden announced that he is dropping out of the 2024 presidential election, writing that he believes it is in the best interest of the Democratic Party and the country “to stand down and to focus on fulfilling [his] duties as President for the remainder of [his] term.”  The announcement followed weeks of mounting pressure for Biden to drop out of the race, including from many Democratic lawmakers.  Biden also endorsed Vice President Kamala Harris to become the Democrats’ presidential nominee.  That endorsement has helped Harris to secure enough delegates for the nomination during the Democratic National Convention being held in August. The Republican National Convention was held July 15-18 in Milwaukee, Wisconsin, where President Trump formally accepted the Republican nomination for the presidential election and announced Sen. J.D. Vance (R-OH) as his pick for Vice President.  Harris has also announced her pick for Vice President, Minnesota Governor Tim Walz (D), setting the rest of the stage for the November presidential election.  Broader political dynamics of the 2024 elections will continue to shift as these events continue to unfold in the coming months.

In this edition:

• Supreme Court: Supreme Court overturns the Chevron doctrine…
• FERC: Senate confirms all three FERC nominees; FERC holds its June Open Meeting…
• Legislation: Congress passes ADVANCE Act; the House passes the FY25 NDAA; House Appropriations Subcommittees report FY25 Energy-Water and Interior-Environment appropriations bills…
• Regulations: IRS releases labor rules for IRA energy tax credits…
• Transmission: NERC Unveils Plans for Interregional Transfer Capability Study

Supreme Court Overturns Chevron Doctrine

In a 6-3 decision released June 28, the Supreme Court overturned the Chevron doctrine, upending a foundational tenet of administrative law jurisprudence.  The Chevron doctrine directed courts to defer to agencies’ reasonable interpretations of ambiguous laws.  With this decision, courts will have more say in interpreting statutes, and Congress will face more pressure to draft laws with specificity.  Among other things, the ruling means agencies will have less flexibility in accounting for new circumstances over time, without Congress first revising the law.  For example, the Clean Air Act, which the Environmental Protection Agency (EPA) has used to justify several rules aimed at cutting carbon emissions, was last updated in 1990—before greenhouse gases were as widely recognized as pollutants.  The ruling might also threaten the Federal Energy Regulatory Commission’s (FERC) recent transmission planning and cost allocation rule, Order 1920, as FERC’s authority over transmission planning was upheld based in part on Chevron in a 2014 ruling by the D.C. Circuit Court.  The full extent of the Supreme Court’s ruling’s impact will unfold over the next several years, as other previous cases relying on Chevron remain in place.  However, recently enacted federal rulemakings without an explicit green light from Congress could be at risk.

FERC Holds Its June Open Meeting Following Confirmation of New Commissioners

The Federal Energy Regulatory Commission (FERC) held its June Open Meeting on June 27.  At the meeting, FERC approved revised requirements to enhance generators’ resilience against severe winter storms, and initiated an Advance Notice of Proposed Rulemaking (ANOPR) on a dynamic line rating framework aimed at using the technology to optimize grid power flow, among other things.  The meeting was attended by Commissioner David Rosner (the first of the three newly-confirmed commissioners to be sworn in, although he did not vote on any matters) and marked Commissioner Allison Clements’ last meeting before her departure from the Commission.  Commissioner Lindsay See was also sworn in on June 28.  Once Commissioner Judy Chang is sworn in as well, FERC will have a full panel of five commissioners for the first time in months, with Chair Willie Phillips leading FERC with a 3-2 split favoring Democrats.

Congress Passes the ADVANCE Act

On June 18, the Senate passed the “Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act,” using the “Fire Grants and Safety Act,” reauthorizing legislation for federal firefighter programs, as a legislative vehicle.  The legislation passed 88-2, with Sens. Ed Markey (D-MA) and Bernie Sanders (I-VT) as the only “no” votes, citing cost and safety concerns with nuclear power.  Among other things, the ADVANCE Act aims to speed up the Nuclear Regulatory Commission’s (NRC) licensing practices and promote next-generation nuclear reactors.  Climate and nuclear advocates lauded the bill’s potential to push new nuclear reactors over the line to commercialization and help the U.S. meet rising energy demands while still reducing greenhouse gas emissions.  Advanced nuclear designs struggle with the high cost of demonstration and deployment projects, to which advocates say providing a regulatory framework to build the first reactors will help lower costs to subsequently build more.  As the House has already passed the legislation, it now goes to President Biden for his signature.

IRS Releases Final Labor Rules for IRA Clean Energy Tax Credits

On June 18, the Treasury Department and Internal Revenue Service (IRS) released final prevailing wage and registered apprenticeship (PWA) rules for clean energy tax credits under the Inflation Reduction Act (IRA).  In general, clean energy developers, including consumer-owned utilities, can claim an increased tax credit equal to five times the base incentive for clean energy projects if they pay workers a prevailing wage (determined by the Department of Labor based on the average wage for similarly classified workers in an area) and have a certain percentage of work done by workers in registered apprenticeships (10% for projects beginning before 2023, 12.5% for projects beginning in 2023, and 15% for projects beginning in 2024 and beyond).  To claim the increased credit, developers must preserve records to show compliance with the PWA requirements.  The Biden administration is also developing a mechanism to report violations to the IRS, which can result in correction and penalty payments.  The final rules are set to take effect 60 days after publication in the Federal Register, which could make them vulnerable to a challenge depending on the outcome of the November elections.

House Subcommittees Report FY25 Energy-Water and Interior-Environment Bills

On June 28, the House Energy-Water Appropriations Subcommittee reported its FY25 Energy-Water appropriations bill.  Among other things, the bill cuts the Department of Energy’s (DOE) budget to $49.9 billion ($312 million below FY24 levels), including $1.96 billion for Energy Efficiency and Renewable Energy (a $1.5 billion cut), and $1.79 billion for Nuclear Energy (a slight increase from FY24). The bill also blocks the implementation of several Biden administration climate programs; includes new R&D efforts to support critical mineral production technologies; and dramatically increases funding for advanced reactor demonstration projects by pulling funds from the civil nuclear credit program, the carbon transport program, the Loan Programs Office, and the energy infrastructure reinvestment financing program.  The House Interior-Environment Appropriations Subcommittee also reported its FY25 Interior-Environment appropriations bill on June 28, including $14.69 billion for the Department of the Interior ($42.1 million below FY24 levels) and $7.36 billion for the Environmental Protection Agency ($1.8 billion below FY24 levels).  The bill would also prevent funds from being used to enforce EPA’s greenhouse gas rules and other regulations.  House leaders tentatively plan for a full committee markup on July 9, and floor votes during the weeks of July 22 and 29.

House Passes Its FY25 NDAA

On June 14, the House passed its version of the FY25 National Defense Authorization Act (NDAA).  Despite reporting from the House Armed Services Committee on a relatively bipartisan basis, Democratic opposition grew as the House approved amendments on the floor, including one to block the implementation of President Biden’s climate orders.  Other amendments were also included that would support Department of Defense (DOD) efforts to procure critical minerals, encourage DOD to embrace nuclear energy, and more.  The Senate Armed Services Committee reported its version of the FY25 NDAA on June 12 and will likely hold a floor vote this summer.  A final NDAA bill is not expected until after the November elections.

NERC Unveils Plans for Interregional Transfer Capability Study

The North American Electric Reliability Corporation (NERC) unveiled plans for its Interregional Transfer Capability Study (ITCS) at a June 27 ITCS Advisory Group meeting.  As part of last year’s debt ceiling deal, Congress directed NERC to conduct a study on interregional transfer, including the conditions that are key for the reliable supply and delivery of electricity.  NERC’s “ITCS Overview of Study Need and Approach” provides the foundation for the larger, congressionally directed study, in which NERC will identify locations between transmission planning regions where enhanced transfer capability would strengthen reliability.  NERC has said its six Regional Entities and each transmitting utility across North America are being consulted for the study, and NERC will also be collaborating with transmission owners and operators, and planners, state/provincial/federal partners, utilities, and trade groups.  The final study will include a transfer capability analysis, a report on additions and recommendations, and an analysis of transfer capabilities between the U.S. and Canada.  NERC plans to file the final study with the Federal Energy Regulatory Commission by Dec. 24, 2024.

In this edition:

• Legislation: House Committees advance FY25 NDAA and 2024 Farm Bill; Congress passes FAA reauthorization…
• Regulations: FERC finalizes its long-awaited transmission planning and cost allocation rule; IRS releases guidance on IRA tax credits…
• Nominations: Senate ENR Committee advances FERC nominees for a floor vote…

FERC Finalizes Its Transmission Planning and Cost Allocation Rule

On May 13, the Federal Energy Regulatory Commission (FERC) voted 2-1 to adopt Order 1920, its long-awaited transmission planning and cost allocation rule.  Order 1920 requires transmission operators to conduct long-term planning for regional transmission facilities, establish processes to identify facilities for potential selection in the regional plan, consider seven specific benefits when considering a facility, and produce a 20-year regional transmission plan. Additionally, the rule directs planners to seek agreement among states in setting cost allocation formulas for multistate power lines.  Order 1920 has seen mixed reactions and will likely face legal challenges.  The Transmission Access Policy Study (TAPS) Group, of which NEPPA is a member, had advocated for giving investor-owned and public power utilities the right of first refusal (ROFR) for jointly owned transmission projects, but FERC declined to adopt this proposal. Lawmakers’ reactions were generally split along party lines, with Democrats generally favoring the actions in the rule and Republicans expressing concerns about the breadth of cost allocation.

Separately, FERC also unanimously approved Order 1977, implementing the backstop transmission siting authority granted in the Infrastructure Investment and Jobs Act.  The Order clarifies that FERC may issue permits to construct or modify electric transmission facilities in a national interest corridor if a state has denied a siting application.  It also establishes an “Applicant Code of Conduct,” in which an applicant must show good faith efforts to engage with landowners.

Senate ENR Committee Advances FERC Nominees

On June 4, the Senate Energy and Natural Resources Committee advanced all three FERC nominees for consideration by the full Senate.  Despite some pointed questions at a prior hearing, the panel advanced each nominee with broad support; Democrat David Rosner and Republican Lindsay See were each advanced on a 16-3 vote, while Democrat Judy Chang was advanced on a 15-4 vote.  If all three nominees are approved by the Senate, FERC would have a full panel of five commissioners, with FERC Chair Willie Phillips leading the Commission with a 3-2 split favoring Democrats.

Treasury and IRS Release IRA Tax Guidance

On May 16, the Treasury Department and Internal Revenue Service (IRS) released additional guidance on domestic content requirements for clean energy tax credits, providing clarity on safe harbor designations for various manufactured products for clean energy projects, as well as Department of Energy-provided default cost percentages to determine domestic content eligibility.  Under the Inflation Reduction Act (IRA), tax-exempt entities must meet domestic content requirements to be eligible for elective payment beginning in 2026, and the guidance released so far only details a waiver process through 2024.  Several Democrats urged IRS and the Biden administration to finalize IRA domestic content rules in a May 23 letter, noting that the uncertainty surrounding the rules in 2025 and beyond is “hindering the ability of community-owned utilities to make informed decisions on new clean energy investments.” Additional guidance is expected soon.

On May 29, IRS released proposed guidance on tech-neutral energy tax credit eligibility.  The IRA transitions from existing technology-specific credits to a tech-neutral approach with the Clean Electricity Production Credit (45Y) and Clean Electricity Investment Credit (48E) for projects placed into service in 2025 and beyond.  The proposed guidance identifies technologies that would categorically qualify as zero-emissions technologies, and clarifies how energy storage technologies and interconnection-related property costs would qualify for the investment credit.  Treasury is seeking comments on issues related to life-cycle analysis and the emissions rate for facilities equipped with carbon capture and sequestration (CCS) technologies, among other things, leaving open questions on how facilities using biomass, renewable natural gas, and CCS might access the credits.

House Committees Approve NDAA, Farm Bill

On May 22, the House Armed Services Committee approved its version of the FY25 National Defense Authorization Act (NDAA), which authorizes $849.8 billion for the Department of Defense (DOD) and $33.3 billion for Department of Energy (DOE) national security programs.  Among the climate and energy related amendments approved at markup were measures requiring a DOD briefing on using the Defense Production Act to bolster the domestic power and distribution transformer supply chain.  The Senate Armed Services Committee is set to mark up its version of the NDAA soon.

Separately, on May 24, the House Agriculture Committee approved its version of the 2024 Farm Bill.  The five-year, $1.5 trillion bill authorizes several Department of Agriculture (USDA) programs, and increases USDA conservation program funding by reallocating unobligated conservation program funds from the Inflation Reduction Act, removing requirements targeting climate change.  The panel adopted several amendments, including measures to create categorical exclusions under the National Environmental Policy Act for vegetation management in electric utility rights-of-way, as well as for communication uses (e.g., broadband installation) on previously analyzed national forest system lands, among others.  Senate Agriculture Committee Chair Debbie Stabenow (D-MI) released a farm reauthorization bill framework earlier this month and is still negotiating with Ranking Member John Boozman (R-AR) on bill text.

Congress Passes FAA Reauthorization

On May 15, Congress passed a 5-year reauthorization of the Federal Aviation Administration (FAA) that includes a provision to require the FAA to propose a rulemaking for Beyond Visual Line of Sight (BVLOS) operations by unmanned aircraft systems (UAS or drones).  According to the bill, the rule must establish acceptable levels of risk, standards for UAS pilots, and an approval process for UAS.

In this edition:

• Appropriations: Tom Cole (R-OK) is named House Appropriations Chair…
• Regulations: EPA releases a series of rules targeting power plant pollution; DOE releases final distribution transformers rule; DOE issues a final rule to streamline transmission permitting; FERC sets date to consider its transmission rule…
• Energy Policy; Lawmakers reach deal on nuclear energy legislation…
• Tax Policy: House GOP announces tax teams…

Lawmakers Turn to FY25 Appropriations with Changes in Committee Leadership

Lawmakers are turning attention to FY25 appropriations, with some changes in key committee leadership.  In the House, Rep. Tom Cole (R-OK) was selected on April 9 as Appropriations Committee Chair.  Cole stepped down as Transportation-HUD Appropriations Subcommittee Chair to take the helm of the full Appropriations Committee, for which he was replaced by Rep. Steve Womack (R-AR).  In the Senate, Sen. Patty Murray (D-WA), who has been the interim Energy-Water Appropriations Subcommittee Chair since Sen. Dianne Feinstein’s (D-CA) death, was named the permanent chair of the subcommittee.  These shifts in committee leadership come as the FY25 federal appropriations process is ramping up.  Several budget hearings have already been held, and several more are anticipated in the coming weeks as lawmakers hope to avoid the tumult that characterized the FY24 process.

EPA Releases Rules Targeting Pollution by Power Plants

The Environmental Protection Agency (EPA) released a series of regulations targeting fossil-fuel power plants on April 25, including a final rule on greenhouse gas (GHG) emissions.  The GHG rule requires existing coal-fired power plants and new natural gas plants to adopt carbon capture technology by 2032 to reduce emissions by 90 percent – those that do not adopt the technology (or a comparable means of reduction) must retire by 2039.  The final rule also drops the option to co-fire with clean hydrogen, and reduces the threshold for plants to be considered “baseload” to plants that run 40 percent of the time, rather than 50 percent as initially proposed.  Other final rules issued April 25 include power plant mercury standards, wastewater limits, and coal ash controls – all of which will contribute to pressures on coal plants in particular.  EPA estimates that the rules, with Inflation Reduction Act investments, will cut the power sector’s GHG emissions to 62 percent below 2022 levels by 2035.  

Efforts to overturn the rules have already begun, with Senate Environment and Public Works Committee Ranking Member Shelley Moore Capito (R-WV) announcing she will be introducing a Congressional Review Act resolution to overturn the rules, which she criticized as “threaten[ing] access to affordable, reliable energy.”  If passed, President Biden will more than likely veto the resolution.

DOE Releases Final Distribution Transformers Rule 

The Department of Energy (DOE) released its final rule on energy efficiency standards for distribution transformers on April 4.  The final rule walks back several aspects of the proposed rule released in February 2023, which drew bipartisan pushback from industry and labor leaders as well as members of Congress.  For instance, under the final rule, only about 25 percent of transformers on the market will need to use amorphous steel cores, whereas the proposed rule would have effectively required nearly all transformers to do so.  The final rule also extends compliance deadlines from 2027 to 2029.  Several industry groups indicated that the final rule was an improvement over the proposal, although many – including the National Electrical Manufacturers Association – reiterated concerns that it would exacerbate supply chain challenges.  Environmental groups also charged that the final rule is too weak and falls short in cutting emissions.  Following the rule’s release, House Energy and Water Appropriations Subcommittee Ranking Member Marcy Kaptur (D-OH), one of the lawmakers who wrote DOE with concerns over the proposed rule, stated, “The final rule strikes the appropriate balance between lowering energy costs for consumers, protecting national security, and supporting electrical grid resiliency.”     

DOE Issues Final Rule to Streamline Transmission Permitting 

On April 25, the Department of Energy (DOE) issued a final rule on federal transmission permitting processes.  The rule establishes the Coordinated Interagency Transmission Authorizations and Permits (CITAP) Program, which aims to streamline federal environmental reviews as well as siting and permitting processes for new transmission projects.  Under the Program, DOE will coordinate with federal agencies to consolidate environmental reviews and authorizations into a single National Environmental Policy Act environmental review document.  The rule also sets a permitting decision deadline of two years after an application is filed – which is about twice as fast as current averages.  The rule is part of the Biden administration and DOE’s “holistic, multifaceted approach” to facilitate grid expansion and clean energy development.  The rule does not apply to projects seeking backstop siting permits, which are under the jurisdiction of the Federal Energy Regulatory Commission. 

FERC Sets Date to Consider Transmission Rule 

On April 19, the Federal Energy Regulatory Commission (FERC) announced plans to hold a special meeting on May 13 to consider its long-awaited regional transmission planning and cost allocation rule.  FERC published its Notice of Proposed Rulemaking in April 2022, and has since held multiple technical conferences and received several letters from lawmakers urging final action on the proposal.  The Biden administration see the rule as essential to meet its renewable energy transition goals of a nearly carbon-free electric grid by 2035, which the Department of Energy says hinges on expanding the electric transmission system by two-thirds or more.  The vote comes as FERC has just three of its five commissioner seats filled, so the rule will only need two votes to be finalized.  If finalized, the rule is expected to face legal challenges. 

House GOP Announces “Tax Teams” Ahead of Tax Law Negotiations

On April 24, House Ways and Means Chair Jason Smith (R-MO) and Tax Subcommittee Chair Mike Kelly (R-PA) announced 10 separate “tax teams” tasked with taking a deep dive on provisions from the 2017 Tax Cuts and Jobs Act (TCJA), set to expire at the end of next year.  In the TCJA, public power was able to maintain the tax-exempt status of municipal bonds used to finance infrastructure projects, but lost the ability to issue tax-exempt advance refunding bonds that can make projects more affordable by refinancing when rates are favorable.  The tax teams will have some overlap in subject matter focus, with issue areas including the “new economy,” supply chains, manufacturing, and community development, among others.  Some teams may look to repeal various Inflation Reduction Act (IRA) energy tax credits and programs or undo the tax exemption for municipal bonds to help offset costs and pay for a major tax package.  Congress attempted to pass tax reform legislation earlier this year but was unable to reach a consensus before the end of this year’s filing season.  Negotiations will likely resume toward the end of the year – when Congress usually considers a tax extenders package – although lawmakers expect intense negotiations ahead and will likely not reach an agreement on a major tax package until 2025.

Lawmakers Reach Deal on Nuclear Energy Legislation

On April 16, news outlets reported that House and Senate lawmakers have reached a verbal deal on nuclear energy legislation, after weeks of closed-door negotiations between leaders from the House Energy and Commerce (E&C) and Senate Environment and Public Works (EPW) committees.  The agreed-upon package includes a compromise between H.R. 6544, the “Atomic Energy Advancement Act,” proposed by House E&C Subcommittee Chair Jeff Duncan (R-SC) and Ranking Member Diana DeGette (D-CO) and S. 1111, the “Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act,” proposed by Senate EPW Chair Tom Carper (D-DE) and Ranking Member Shelley Moore-Capito (R-WV).  The deal focuses on speeding up the Nuclear Regulatory Commission’s licensing process and streamlining regulations to promote next-generation reactors. A provision previously included in the bills that would extend Price-Anderson liability limits was passed in separate legislation earlier this year.  Text has yet to be released as lawmakers and staff look for a legislative vehicle to move the deal forward.  At this point, the exact path forward for the compromise legislation is unclear, but lawmakers are “trying to get it done as soon as possible.”

In this edition:

• Appropriations: Congress funds the remainder of FY24 as President Biden releases FY25 budget request…
• Energy Policy: EPA seeks input on its decision to remove existing gas plants from the final power plant rule…
• Tax Guidance: IRS releases IRA guidance…
• FERC: Senate ENR questions FERC nominees; FERC holds its March Open Meeting…

FY24 Funded, Attention Turns to FY25

On March 23, President Biden signed a second FY24 spending package into law, averting a partial government shutdown and funding the government through Sept. 30.  Of interest to utilities, the bill contains a policy rider to prohibit a ban on gas stoves and $4.025 billion for the Low-Income Home Energy Assistance Program (LIHEAP).  The first batch of funding bills, including the Energy-Water and Interior-Environment bills, was passed earlier in the month.

On March 11, President Biden released his FY25 Budget Request.  The Budget documents, which are viewed as a mere “request” by members of Congress who wield the constitutional power of the purse, kicked off a series of hearings with administration officials providing testimony on the President’s spending priorities.  The President’s Budget includes slightly increased funding for DOE and the Federal Energy Regulatory Commission (FERC). The budget also requests $11 billion for the EPA, nearly 20% more than was agreed to in FY24.

On March 20, DOE Secretary Jennifer Granholm testified before the House Appropriations Committee on the agency’s FY25 budget request.  During the hearing, lawmakers raised concerns over DOE’s liquefied natural gas (LNG) pause.  Secretary Granholm did not provide a specific date at which the pause would end, but she did echo her previous comments that the pause would wrap up within the year.  Republicans have sought ways to reverse the ban, including passing a stand-alone bill and floating a deal to tie an end to the pause to Ukraine aid.  Granholm also noted that the proposed conservation standard for distribution transformers had been “altered” in response to industry comments to ensure continued domestic production.

EPA Requests Public Input After Dropping Existing Gas Plants from Final Power Plant Rule 

On March 27, EPA opened a docket for public input on its decision to remove existing natural gas units from its pending rule on greenhouse gas emissions from power plants, instead splitting those units out into a separate rulemaking that will be proposed later this year.  The request for public comment, which closes May 28, seeks additional input on the technologies EPA should consider as part of the Best System of Emission Reduction (BSER) in addition to the carbon capture and sequestration (CCS) and hydrogen co-firing proposed in May 2023, what market mechanisms EPA should use, compliance flexibilities, interactions between existing source and new source standards, among other things.

Senate Panel Questions FERC Nominees

On March 21, the Senate Energy and Natural Resources Committee held a hearing on President Biden’s nominees to FERC: Democrats David Rosner, a FERC staffer currently on detail to the Senate Energy and Natural Resources Committee; Judy Chang, former Undersecretary of Energy and Climate for Massachusetts; and Republican Lindsay See, currently serving as Solicitor General for the State of West Virginia.  Of the three, Chang received the most scrutiny from Republicans at the hearing for her past role in promoting clean energy policies in Massachusetts state government, although environmental groups made a late pitch for Democrats to oppose Rosner’s candidacy because of his advocacy for natural gas in a prior position he held at the Bipartisan Policy Center.  Most senators focused their questions on reliability issues, which all candidates said was “job number one” for the Commission.  Sen. Lee (R-UT), expected to ascend to the top Republican spot on the panel in the next Congress, asked the nominees to confirm their commitment to a “beneficiary pays” model of cost allocation—which nominees expressed support for, at least in principle.

FERC Holds its March Open Meeting

FERC held its open meeting March 21 and upheld its Order 2023, which imposes stricter deadlines and penalties on transmission owners to complete studies for interconnection requests to address interconnection backlogs and accelerate the addition of wind and solar power to the grid.  FERC also opened an inquiry into pipeline practices and whether companies are inflating practices by bundling favorable and unfavorable pipeline capacity.  Additionally, FERC established a Federal-State “Current Issues Collaborative,” following the final meeting of the Joint Federal-State Task Force on Electric Transmission, and released its State of the Markets 2023 staff report discussing emerging issues in natural gas and electricity markets and energy market conditions.

Treasury and IRS Issue IRA Guidance

On March 5, the Treasury Department and the Internal Revenue Service (IRS) issued final regulations on elective payment for clean energy tax credits.  The final guidance clarified the definition of “applicable entity” for a rural electric cooperative to include both tax-exempt and taxable entities, finalized details for the pre-filing registration process, clarified how to determine the taxable year for entities that do not have a filing requirement, and provided a rule on how to combine grants and forgivable loans with tax credits.  The final guidance does not address domestic content rules – that guidance is expected to be published later this year.  In related news, the Treasury and IRS also issued a notice of proposed rulemaking (NPRM) that would add exceptions to elective pay eligibility for applicable entities that co-own and operate projects with other entities.

On March 22, IRS issued additional guidance for determining eligible “energy communities” and projects for a 10 percent bonus tax credit under the IRA.  There are three categories of energy communities: brownfield sites, certain areas based on unemployment rates, and census tracts where a coal mine closed after 1999 or where a coal-fired electric generating unit was retired after 2009.  The guidance also provides additional clarity on the nameplate capacity attribution rule for offshore wind facilities to include additional property such as supervisory control and data acquisition (SCADA) equipment to qualify for the increased credit amount.

Finally, the Treasury Department held a series of public hearings March 25-27 on draft rules on hydrogen tax credits, which would require producers using electrolysis to show they are using new, emissions-free power sources instead of existing generators for hydrogen production.

In this edition:

• Appropriations: Lawmakers Reach Another Stopgap Spending Deal…

• Energy Policy: House Passes Bill to Undo Administration’s LNG Export Pause; EPA Will Drop Existing Gas Plants from Final Power Plant Rule; DOE and NARUC Propose Cybersecurity Baselines for Utilities

• Elections: Senator Mitch McConnell (R-KY) to step down from GOP leadership; House E&C Chair Cathy McMorris Rodgers (R-WA) is not seeking reelection…

• FERC: FERC adopts two cold weather reliability standards, moves forward with LNG reviews, and more at its Feb. 15 open meeting; New FERC Nominees Announced After Clements Declines a Second Term

Lawmakers Reach Another Stopgap Spending Deal
Congressional leaders reached a deal on Feb. 28 for a fourth FY24 Continuing Resolution (CR). Leaders had mostly reached consensus on six appropriations bills—Agriculture-FDA, Energy-Water, Military Construction-VA, Transportation-HUD, Interior-Environment and Commerce-Justice-Science—which will be funded through March 8 under the new CR. Funding for federal agencies included in the remaining six appropriations bills will be extended until March 22. This short-term patch will allow both chambers to move the first few bills individually the week of March 4.

House Passes Bill to Undo Administration’s LNG Export Pause
The House passed the “Unlocking our Domestic LNG Potential Act“ on Feb. 15 by a vote of 224-200, with nine Democrats crossing party lines to vote for the bill. H.R. 7176 would repeal President Biden’s pause on new liquefied natural gas (LNG) export approvals and remove requirements for the Department of Energy to conduct public interest reviews of new facilities, instead providing permitting and approval authority to the Federal Energy Regulatory Commission. The pause has drawn the ire of many congressional Republicans and some moderate Democrats who argue that it weakens the position of the U.S. and its allies against adversaries such as Russia, China, or Iran. Others, however, argue the opposite – that repealing the pause would increase sales to foreign adversaries. The White House has expressed strong opposition to the legislation, but President Biden has not yet threatened a veto. The Senate is not expected to consider the bill. Meanwhile, Sens. Bill Cassidy (R-LA), Tim Scott (R-SC), and 15 other Republicans have introduced a companion bill, but the Senate version similarly faces an uphill battle to reach the 60-vote threshold necessary to overcome a filibuster.

EPA Will Drop Existing Gas Plants from Final Power Plant Rule
On Feb. 29, Environmental Protection Agency (EPA) Administrator Michael Regan announced the agency will remove existing gas units from its pending rule on greenhouse gas emissions from power plants, instead splitting those units out into a separate rulemaking that will be proposed later this year. The final rule is expected sometime in April, and the new proposal may not be released until after the November elections. The announcement drew mixed reactions, splitting environmental groups between those who supported the change as strengthening the overall rule and those who lamented the delay as out of step with the urgency of climate change. Joe Goffman, EPA’s top air regulator, had indicated in prior days that the EPA may offer some flexibility for electric utilities to give them sufficient time to adapt to the power plant rule currently under consideration. Goffman stated that “the time horizon [is] part of a larger fabric of flexibility,” and told the audience that they may be “surprised” by the final rule when compared to what was initially proposed.

DOE and NARUC Propose Cybersecurity Baselines for Utilities
On Feb. 22, the Department of Energy (DOE) and the National Association of Regulatory Utility Commissioners (NARUC) published a report on proposed cybersecurity baselines for electric distribution systems and distributed energy resources. The cybersecurity baselines, which is phase 1 of a 2-phase initiative, are intended to be a resource to help mitigate cybersecurity risk and enhance grid security. Recommendations include mitigating known vulnerabilities, third-party validation of cybersecurity controls, supply chain vulnerability disclosures, and vendor cybersecurity requirements, among other things. The second phase, which is currently underway, will focus on the development of implementation strategies and adoption guidelines. The cybersecurity baselines are aimed at developing uniform cybersecurity baselines instead of creating a patchwork of cybersecurity requirements across the country.

McConnell Will Not Seek Another Term as Senate GOP Leader
On Feb. 28, Sen. Mitch McConnell (R-KY) announced that he will not run for another term as Senate Republican leader. The longest-serving party leader in Senate history, having held the post since 2007, McConnell has been an ardent supporter of coal and environmental deregulation, and is well known for his role in reshaping the federal judiciary, among other things. Speculation around who will replace McConnell has already begun, with expected contenders including Minority Whip John Thune (R-SD), former Minority Whip John Cornyn (R-TX), and John Barrasso (R-WY), chair of the Senate Republican Caucus and Ranking Member of the Senate Energy and Natural Resources Committee.

E&C Chair Cathy McMorris Rodgers Not Seeking Reelection
Rep. Cathy McMorris Rodgers (R-WA), Chair of the House Energy and Commerce (E&C) Committee, announced Feb. 8 that she will not seek reelection this year. The first woman to lead the E&C Committee, Chair Rodgers has been a strong advocate for hydropower and nuclear power, and has frequently led efforts to provide oversight of President Biden’s energy and climate policies. Rodgers joins a growing list of E&C Republican members who have announced their departures at the end of the current congressional term—a few of the most senior Republicans on the committee, including Reps. Bob Latta (R-OH) and Brett Guthrie (R-KY), have already begun vying to be the next chairman, while other potential candidates may emerge.

FERC Holds its Feb. 15 Open Meeting
The Federal Energy Regulatory Commission (FERC) held its monthly meeting on Feb. 15. During the meeting, the Commission approved two cold weather reliability standards, one requiring grid balancing authorities to prepare plans to avoid natural gas infrastructure outages during planned load shedding, and the other more clearly specifying balancing authorities’ responsibilities in extreme cold weather. FERC also moved forward with its liquefied natural gas (LNG) reviews—finding that FERC’s LNG export reviews are not affected by the Department of Energy’s pause—and gave the Director of Office of Enforcement the authority to authorize staff to engage in settlement negotiations without asking the Commission. FERC did not take up its regional transmission planning and cost allocation rule; however, Chairman Willie Phillips stated that the Commission intends to move forward on the pending rule in the “very near future.”

New FERC Nominees Announced After Clements Declines a Second Term
FERC Commissioner Allison Clements announced Feb. 9 that she will not be seeking a second term. A climate advocate and major backer of transmission reform, Clements’ departure would leave FERC with three vacancies—and short of the three-person quorum that the five-member Commission needs for regulatory actions. As such, the White House named Willie Phillips as permanent Chair and on Feb. 29, announced three nominees to fill the vacancies: Democrats David Rosner, a FERC staffer on detail to the Senate Energy and Natural Resources Committee, and Judy Chang, former undersecretary of energy and climate for Massachusetts, and Republican Lindsay See, currently serving as Solicitor General for the State of West Virginia. FERC has been expected to act on its long-awaited transmission reform proposal before Clements’ departure, which could be as early as June now that nominees have been named.

In this edition:

• Appropriations: Appropriations Committee leaders reach an agreement on topline 302(b) allocations; Senate negotiators release supplemental spending legislation…
• Tax: The House passes $78B bipartisan tax bill, sending it to the Senate…
• Energy Policy: Bipartisan transformer legislation introduced in the House and Senate, DOE announces LNG export pause, Senate confirms Joe Goffman as OAR assistant administrator…
• FERC: FERC approves ISO New England’s capacity auction delay, faces pressure to finalize cost allocation rule…

Appropriations Committee Leaders Reach Spending Agreement; Release Energy and Environment Toplines

After weeks of negotiations, House and Senate Appropriations Committee leaders reached an agreement late January 26 on 302(b) allocations for each of the twelve FY2024 appropriations bills, enabling appropriators to move forward in their efforts to make final decisions about exact funding levels for all federal programs.   Appropriations leaders also released details of the Energy-Water and Interior-Environment spending bills on January 31, offering further insight into how federal energy and environment programs will be funded this fiscal year.  The new topline spending levels show a slight boost to the Department of Energy’s funding, with about a $1.7B increase in non-defense funding, and “modest” cuts to funding for the Department of the Interior and Environmental Protection Agency.  Lawmakers still must reach agreements on final spending details and several contentious policy riders in order to finalize the appropriations bills.  Under the current Continuing Resolution, Congress has until March 1 to pass four of the twelve appropriations bills, and until March 8 to pass the remaining eight to maintain federal funding and avoid a government shutdown.

Senate Releases Supplemental Funding Legislation

Senate negotiators released details of a long-awaited deal on supplemental national security spending on Feb. 4, including aid to Israel and Ukraine as well as funding for immigration and border security and $2 billion for uranium processing and other national security-related funding.  The White House has also made a separate $50 billion domestic budget request—including $23.5 billion for disaster response, $2.2 billion for domestic uranium enrichment, $1.6 billion for the Low-Income Home Energy Assistance Program (LIHEAP), and $220 million for wildland firefighters’ salaries—however the domestic request remains on the backburner as Congress finishes work on the national security and border deal.  Outcomes for the supplemental spending and border legislation are unclear as resistance from congressional Republicans and some Democrats has raised concerns that the bill has reached a dead end, but Senate Majority Leader Chuck Schumer (D-NY) has expressed plans to continue moving forward with initial procedural votes.  Speaker Mike Johnson (R-LA) has stated that the supplemental spending bill is “dead on arrival” in the House, and Senate leaders are already pivoting to a “Plan B”.

House passes $78B Tax Bill in Bipartisan Vote; Bill Heads to Senate 

Late in the evening on January 31, the House passed bipartisan tax legislation, the “Tax Relief for American Families and Workers Act” (H.R. 7024), by a vote of 357-70.  The $78 billion tax package would expand the Child Tax Credit, restore three business tax credits, expand tax relief for losses from natural disasters and wildfires, and boost the low-income housing tax credit, among other things.  Passage in the Senate remains uncertain, though, as Finance Committee Ranking Member Mike Crapo (R-ID) has not signed off on the tax package and Senate Republicans have called for hearings and changes to the legislation.  As the 2023 tax filing season opened Jan. 29, the Internal Revenue Service Commissioner Danny Werfel has urged taxpayers to not wait to file and noted that the agency has “deep experience in assessing and reviewing” retroactive tax law changes.  The IRS plans to “make necessary systems updates by around six weeks after the date of enactment” if Congress approves the tax package.

Bipartisan Transformer Bills Introduced

On Jan. 31, Reps. Mike Kelly (R-PA) and Chris Deluzio (D-PA) introduced H.R. 7171, the “Distribution Transformer Efficiency and Supply Chain Reliability Act,” a companion bill to S. 3627 previously introduced by Sens. Sherrod Brown (D-OH) and Ted Cruz (R-TX).  Both bills come in response to the proposed Dec. 2022 Department of Energy (DOE) rulemaking to update efficiency standards for distribution transformers, now pending review from the Office of Information and Regulatory Affairs within the Office of Management and Budget.  The legislation would prevent DOE from finalizing any rulemaking establishing an energy efficiency standard for certain transformers that is greater than a trial standard level 2 (TSL 2), effectively barring DOE’s proposed rulemaking, which would establish a higher energy efficiency level (TSL 4) from taking effect.  The legislation would also provide a 10-year phase-in window to help address supply chain challenges and allow manufacturers to meet the new standards.  The American Public Power Association (APPA) and the National Rural Electric Cooperative Association (NRECA) are in support of the legislation.

FERC Approves ISO New England’s Capacity Auction Delay

On January 3, the Federal Energy Regulatory Commission approved a 1-year delay to ISO New England’s 19th Forward Capacity Auction (FCA). Originally scheduled for February 2025, FCA 19 will now take place in 2026. This delay was approved to provide more time to develop a revised capacity accreditation methodology to account for the changing resource mix in the region. The delay does not affect FCA 18, which is scheduled to take place in February 2024.

DOE Announces LNG Export Pause 

On January 26, the Department of Energy (DOE) announced a temporary pause on pending approvals of liquefied natural gas (LNG) exports to review the economic, environmental, and shipping impacts of proposed projects.  DOE’s announcement comes as environmentalists have put pressure on the agency to curtail LNG exports, citing its climate risk and significant methane emissions.  Meanwhile, LNG supporters say a pause will cause major disruptions to energy markets, which will impact electricity prices and threaten grid reliability.  DOE officials noted that the pause determinations on pending applications may take “some months” and would apply to non-Free Trade Agreement countries.  Once its analysis is completed, DOE plans to hold a comment period, which may further prolong the LNG export freeze.  Lawmakers on both sides of the aisle have sent letters urging President Biden to end the pause to ensure U.S. competitiveness with Russia’s exports.  DOE Secretary Jennifer Granholm defended the move as necessary to “understand and evaluate long-term effects [of LNG export facilities] on local communities and our global climate,” and noted on a call discussing the policy change that the agency may allow exceptions for national security needs.  Both the House and Senate energy committees have scheduled hearings on the matter.

FERC Responds to Pressure to Finalize Cost Allocation Rule 

On January 29, Federal Energy Regulatory Commission (FERC) Chairman Willie Phillips sent a response letter to a group of 20 Democratic Senators who wrote him earlier this month calling for FERC to finalize its rule reforming transmission planning and cost allocation requirements.  FERC issued a Notice of Proposed Rulemaking (NOPR) in April 2022 that would require long-term transmission planning processes and for transmission providers to seek agreement on a cost allocation method for transmission costs and has since held multiple technical conferences on the subject.  In his letter, Chairman Phillips reassured lawmakers that finalizing the rule is a top priority and indicated that the Commission will address how to ensure transmission planners both prioritize transmission facilities that improve grid reliability and allocate costs in a manner consistent with the cost causation principle.  Chairman Phillips did not indicate when FERC might vote to finalize the proposed rule.  With only three Commissioners currently seated at FERC, it is unclear whether the Commission will issue a final rule prior to the Commission being restored to 5 members.

EPW Dems Want FERC to Back Off EPA GHG Rule 

On January 25, Democrats on the Senate Environment and Public Works Committee sent a letter to the Federal Energy Regulatory Commission (FERC) warning the Commission against asserting its authority too broadly so as to undermine the Environmental Protection Agency’s (EPA) proposed power plant rule. The letter follows EPA staff’s remarks at the 2023 FERC Annual Reliability Technical Conference, declining to confirm that the existing electric grid is prepared to meet demand with the phase-out of fossil fuels as outlined in the proposed rule.  Republicans on the panel have argued for greater FERC engagement with EPA, which they say has not performed “serious and credible analysis” on how compliance will impact electric generating units and the grid’s reliability and resilience.  This letter is the latest in a series of letters Committee members have sent as the EPA moves closer to issuing a final rule.

Joe Goffman Confirmed as OAR Assistant Administrator 

Late Jan. 31, the Senate voted 50-49 to confirm Joe Goffman as assistant administrator of EPA’s Office of Air and Radiation (OAR), with Sen. Joe Manchin (D-WV) crossing party lines to vote against the nomination.  Goffman has served as OAR’s acting assistant administrator since Jan. 2021, and was formally nominated in Mar. 2022.  Prior to assuming this role, Goffman served as the associate assistant administrator for climate and senior counsel for OAR, and helped develop EPA’s Clean Power Plan rules.

In this edition:

• Transformers: Biden administration targets April for final transformers rule, House looks to block it…
• Pole Attachments: FCC finalizes pole replacement order…
• Tax: IRS and Treasury release guidance, proposals, portals implementing IRA…
• Energy Policy: House Dems Introduce transmission bill, NERC warns of rolling blackouts, Senate ENR looks at advanced nuclear challenges…

Unified Agenda Reveals Timetable for Finalizing Transformers Rule, House Looks to Block It

On Dec. 6, the Biden administration released its fall agenda for upcoming energy regulations, revealing that the Department of Energy (DOE) is planning to finalize its proposed conservation standard for distribution transformers by April 2024.  The rule, which would require certain transformers to have amorphous steel cores instead of the traditional grain-oriented electrical steel, comes despite repeated warnings from utilities, advocacy groups, members of Congress, and other stakeholders that the rule would greatly exacerbate the existing supply chain crisis. On the same day, the House Energy and Commerce Committee advanced several energy bills including the “Protecting America’s Distribution Transformer Supply Chain Act,” which would block DOE from implementing any new conservation standards for distribution transformers for five years.  The bill passed on a partisan vote of 24-22.

FCC Finalizes Pole Replacement Order

At its monthly meeting Dec. 13, the Federal Communications Commission (FCC) adopted a Fourth Report and Order, Declaratory Ruling, and Third Further Notice of Proposed Rulemaking (NPRM) that would reform pole replacement rules, seek comment on ways the Commission defines timelines for large pole attachment applications, and facilitate the approval process for pole attachment applications, among other things.  Chairwoman Jessica Rosenworcel stated that the Commission is looking for ways to “ensure that the investment Congress made … is fully modern and meets this moment” under Section 224 of the Communications Act.  Consumer-owned utilities are exempt from FCC pole attachment regulations under Sec. 224, however over the past decade, this exemption has been continuously eroded.  Initial comments to the NRPM are due 30 days after publication in the Federal Register.

Treasury, IRS Release Multiple Guidance Documents, Open Direct Pay Portal

In the final weeks of 2023, the Treasury Department and Internal Revenue Service (IRS) released several long-awaited items.  In a high-profile notice of proposed rulemaking, the Treasury Department released initial guidance on eligibility for the hydrogen production tax credit that will require producers using electrolysis to show they are using new, emissions-free power sources.  Initially, producers will be able to match clean power production with hydrogen production on an annual basis, but must show an hourly match after 2028.  Some hoped the proposal would boost the overall availability of hydrogen by allowing existing sources to power production facilities.  Instead, the guidance requests comment on using existing clean sources like nuclear power.  In addition, the IRS proposed regulations concerning domestic content requirements, including the phaseout and waiver processes, and new battery sourcing rules for electric vehicles.  IRS also opened a “pre-registration portal” for entities that intend to take direct pay tax credits (now known as elective pay).  Pre-registration is required before filing for a payment.

House Dems Release Clean Energy and Transmission Bill as Top Priority

In a bid to lay a marker for Democrats’ energy and permitting priorities, Reps. Sean Casten (D-IL) and Mike Levin (D-CA) led 76 House Democrats in introducing the “Clean Electricity and Transmission Acceleration Act.”  The bill would make several permitting changes at the Federal Energy Regulatory Commission (FERC) and DOE, and it would give FERC exclusive siting authority for “national interest” transmission lines. The bill would also direct FERC to allocate costs of large-scale regional, interregional, and offshore transmission projects “roughly commensurate with benefits” of the project, but does not define those benefits or lay out a process by which FERC should allocate the costs.  FERC would also be required to determine the existing electricity transfer capacity between grid regions and establish minimum levels of transfer capabilities between regions, ensuring that minimum is above 30% of load for most regions.

NERC Warns of Rolling Blackouts Due to Plant Retirements

The North American Electric Reliability Corporation (NERC) released its 2023 Long-Term Reliability Assessment report on Dec. 13, finding that many parts of the U.S. are at risk of rolling blackouts as more coal plants retire and as clean energy sources are slow to be connected to the grid.  The report also found that most regions of the country face growing risks of inadequate power supply during periods of extreme temperatures over the coming decade due to rising energy demands and aging power grids.  The analysis comes amid the debate between the electric sector and climate advocacy groups over EPA’s proposed greenhouse gas emissions regulations for coal- and gas-fired generation plants, and whether DOE and state regulators should slow down retirements of fossil fuel generation for grid reliability.

Senate ENR Reviews Challenges for Advanced Nuclear

On Nov. 30, the Senate Energy and Natural Resources Committee held a hearing on opportunities and challenges for advanced nuclear.  Witnesses included the Director of the Idaho National Lab, which was to be the site of the recently cancelled Carbon Free Power Project (CFPP); Jeffrey Merrifield, former commissioner for the Nuclear Regulatory Commission; and a representative from Dow Chemical (now slated to be the first customer of an advanced reactor).  Utility risk aversion was a major theme of the hearing despite the lack of a utility witness on the panel, with Merrifield suggesting that utilities could form a “cost sharing pool” to build a series of reactors together in order to lower the financial risk and burden.

In this edition:

• Congress: Congress passes another Continuing Resolution extending government funding to Jan. 19 and Feb. 2…
• Appropriations: House and Senate reach tentative agreement on the top line spending number for FY24…
• Energy: House E&C Committee passes a series of grid, nuclear, and hydropower bills; EPA considers relief mechanism for power plant emissions rules…
• Infrastructure: DOE issues a Notice of Proposed Rulemaking to streamline NEPA reviews for transmission, storage, and solar projects…

Congress Passes Continuing Resolution Averting Government Shutdown

During the week of Nov. 17, Congress passed a Continuing Resolution (CR) to extend government funding for FY23 Energy-Water, Agriculture, Transportation-HUD, and Military Construction-VA appropriations bills until Jan. 19 with the rest of the 12 areas of appropriations expiring two weeks later on Feb. 2.  The two-tiered CR would extend farm bill programs until September 2024 and does not include any spending cuts or supplemental appropriations for disaster aid or for the conflicts in Israel and Ukraine.  The CR passed in the House on Nov. 15 by a vote of 336-95 and in the Senate on Nov. 15 by a vote of 87-11, buying time for the two chambers to negotiate topline spending levels and conference their respective FY24 appropriations bills.

House Freedom Caucus Agrees to Fiscal Responsibility Act’s FY24 Appropriations Top Line Numbers

Several House Conservatives, who had previously demanded lower top line spending numbers for FY24 appropriations bills, agreed to the $1.59 trillion top line number established in the Fiscal Responsibility Act (FRA) on Nov. 29.  Freedom Caucus Chair Scott Perry (R-PA) told reporters that “$1.59 [trillion] is too expensive for many of us, but we realized that $1.47 [trillion] is not going to happen,” which was the caucus’ preferred top line.  While there is now general agreement between the two chambers for the overall spending amount, the reconciliation process for each of the twelve spending bills is still expected to be difficult, as the House versions are written below the FRA’s level and include riders that would cut spending for certain federal programs, including clean energy and environment programs at the Department of Energy and Environmental Protection Agency.  The Senate’s bills, meanwhile, are written above the FRA level.

House E&C Committee Advances Several Energy, Grid Bills

On Dec. 5, the House Energy and Commerce Committee advanced several energy bills including the “Protecting America’s Distribution Transformer Supply Chain Act,” which would block the Department of Energy (DOE) from implementing any new conservation standards for distribution transformers for five years.  The bill passed on a partisan vote of 24-22, as did the “Guaranteeing Reliable Infrastructure Development (GRID) Act,” which would require the Federal Energy Regulatory Commission (FERC) to review regulatory actions from other agencies that may hinder grid reliability.  The committee also advanced the “Hydropower Clean Energy Future Act,” with some bipartisan support (by a vote of 28-19), as well as a package of nuclear energy bills dubbed the “Atomic Energy Advancement Act,” that would streamline licensing processes and reduce licensing fees from the Nuclear Regulatory Commission (NRC) for the construction of new reactors.  The package advanced with strong bipartisan support by a vote of 47-2.

EPA Considers Relief Mechanism for Greenhouse Gas Power Plant Rule

The Environmental Protection Agency (EPA) is floating the concept of a reliability relief mechanism for its greenhouse gas rules for power plants as it begins accepting comments on an Initial Regulatory Flexibility Analysis (IRFA).  EPA had previously accepted comments on a Small Business Advocacy Review for the rule in which many utilities and grid managers submitted concerns that carbon capture and sequestration (CCS) or hydrogen co-firing technology is not yet commercially viable for large-scale implementation, and that the rule could result in premature closure for some power plants and impact grid reliability. These concerns may have a disproportionate effect on small utilities.  EPA is now soliciting comments on a number of issues, including whether the agency should include specific mechanisms to address grid reliability needs during special circumstances such as extreme weather, generator outages, and permitting delays.  Although the agency is looking at relief mechanisms across the board, it is also considering carveouts for small entities, particularly rural electric cooperatives.  EPA is accepting comments on the flexibility analysis until Dec. 20.

DOE Issues NOPR to Streamline NEPA Reviews for Transmission, Storage, Solar

The Department of Energy (DOE) has issued a Notice of Proposed Rulemaking (NOPR) to streamline National Environmental Policy Act (NEPA) reviews by adding a categorical exclusion for certain energy storage systems and revising categorical exclusions for upgrading and rebuilding transmission lines and solar power systems. Projects that fall under a categorical exclusion do not have a “significant effect” on the environment and do not require an environmental assessment or environmental impact statement. The announcement comes after Congress and the Federal Energy Regulatory Commission (FERC) have been working to streamline the permitting review process for transmission and clean energy projects. The deadline for public comments is Jan. 2, 2024.

In this edition:

• Congress: Mike Johnson is elected Speaker of the House…
• Appropriations: House passes FY24 House Energy-Water Appropriations bill…
• Energy: Senate ENR holds a hearing on DOE’s vetting processes for awarding grant and loan funding…
• Infrastructure: House E&C Subcommittee on Energy, Climate and Grid Security advances “Protecting America’s Distribution Transformer Supply Chain Act;” International Energy Agency reports urgency for global transmission buildout…

Mike Johnson Elected Speaker of the House

On Oct. 25, the House of Representatives elected Rep. Mike Johnson (R-LA) as Speaker of the House by a vote of 220-209, bringing an end to the three week period of uncertainty that followed the removal of Speaker Kevin McCarthy (R-CA).  Following his swearing in, Speaker Johnson laid out an ambitious agenda that includes resuming votes on FY24 appropriations bills and a disaster aid package for Israel.  Johnson has committed to advancing single appropriations bills and stated in an Oct. 23 memo that he expects FY24 spending negotiations to go well into next year.  He would only pursue another stopgap measure that “expires Jan. 15 or Apr. 15 to ensure the Senate cannot jam the House with a Christmas omnibus,” The memo states.  On energy policy, Speaker Johnson has a long history of working with the oil and gas industry, which is a large energy and economic stakeholder in his district in Louisiana.

House Passes FY24 Energy-Water Appropriations Bill

The House approved its fifth FY24 funding measure, the Energy and Water Development appropriations bill, on Oct. 26 by a partisan vote of 210-199.  Overall, the bill would provide $56.958 billion in discretionary spending, nearly $3 billion below President Biden’s FY24 request for these federal agencies and programs.  A number of amendments were adopted that would block the Department of Energy (DOE) from implementing energy efficiency standards, and several controversial policy riders were included on this bill.

The provision that would block DOE from using funds to implement new conservation standards for distribution transformers was kept in the bill after an amendment to remove it was withdrawn.  Nearly $5 billion of rescissions to the Inflation Reduction Act were included, however. To appease hard-line conservative Republicans, the bill also saw cuts of $1 billion in renewable energy accounts before it even reached the floor for consideration. A number of amendments to cut or block additional energy efficiency programs failed following an effort led by Conservative Climate Caucus Chair John Curtis (R-UT) to educate his fellow Republicans on the merits of the programs.

With significant top-line spending and policy differences between the Republican-led House and the Democrat-led Senate versions, the bills will need significant time and effort to be reconciled and conferenced. Congress will need to pass another Continuing Resolution to keep the government operating if the two chambers are unable to pass conferenced versions of each FY24 bill by Nov. 17.

Senate ENR Holds Hearing on BIL and IRA Decision-Making Processes

On Oct. 19, the Senate Energy and Natural Resources Committee held a hearing on the Department of Energy’s (DOE) decision-making process to award loans and grant funding authorized by the Bipartisan Infrastructure Law and Inflation Reduction Act.  The witnesses on the panel were David Crane, Undersecretary for Infrastructure, Jigar Shah, Director of the Loan Programs Office, and Teri Donaldson, Inspector General of DOE.  Donaldson reported to the committee that she was “gravely concerned” that DOE is at risk of fraud and financial mismanagement due to the quick distribution of billions in grant funding being awarded, and that the agency risks unintentionally giving out money to companies controlled by China and Russia.  In response to Donaldson, Committee Chair Joe Manchin (D-WV) criticized DOE for “throwing caution to the wind.”

Sen. Alex Padilla (D-CA) asked Crane how DOE ensures that a “wide array” of applicants receive consideration.  Crane pointed out that the recipients from the first round of funding from the Grid Resilience and Innovation Partnerships (GRIP) program included 58 projects in 44 states, and that for the second round, DOE would share a “gap analysis of needs left undone” by the first round.  When asked if DOE would provide feedback to unsuccessful applicants so that they may be more competitive in the future, Crane noted that DOE received a high volume of applications and acknowledged the frustration from those who are unsuccessful, but agreed that DOE “would do its best to provide feedback.”

House E&C Panel Advances Distribution Transformer Supply Chain Act, Nuclear Energy Bills

On Oct. 24, the House Energy and Commerce Subcommittee on Energy, Climate and Grid Security advanced the “Protecting America’s Distribution Transformer Supply Chain Act,” which would block DOE from finalizing any proposed rules to increase conservation standards for distribution transformers for five years, as well as a series of 12 bills that would help streamline the licensing, permitting, and deployment processes for advanced nuclear reactors. The bills will now go to the full committee for consideration and if approved, will be eligible for consideration on the House floor.  Notably, the nuclear bills advanced on a bipartisan basis, while the transformers bill was approved on a party-line vote.

In this edition:

• Congress: McCarthy is removed as Speaker of the House…
• Government Spending: Congress passes Continuing Resolution averting a government shutdown; FY24 House Energy-Water Appropriations bill receives 61 amendments from the Rules Committee
• Grid Reliability: House E&C Committee holds a hearing on grid reliability and the distribution transformer shortage…
• Transmission: Sen. Hickenlooper introduces the Big WIRES Act to increase interregional transfer capability…

NEPPA Holds Annual Fly-In in Washington 

NEPPA held its annual fly-in to Washington on September 19-20. Members traveled to DC to meet with congressional offices representing all six New England states.  NEPPA also met with Royce Kim who serves as the New England Regional Specialist with the Department of Energy’s (DOE) Office of Intergovernmental and External Affairs.  The DOE meeting was also attended by Michael Pesin from the Office of Electricity, who gave the group an update on the work of the “tiger team” on transformers. The groups advocated for issues including distribution transformer shortages, grid reliability during winter storms, and joint ownership of transmission infrastructure by consumer-owned utilities.

Congress Passes Continuing Resolution Averting Government Shutdown

After repeated attempts to pass government funding bills that would unite the House Republican conference, Speaker Kevin McCarthy (R-CA) turned to a “clean” Continuing Resolution (CR) to keep the government funded, looking to pass the bill with Democratic votes instead of a unified GOP majority.  The gambit worked – the measure funding 47 days of government operations along with disaster aid, but nothing for Ukraine, passed by a vote of 335-91 in the House and followed with an 88-9 vote in the Senate. In response to McCarthy’s move to pass a bipartisan CR, Rep. Matt Gaetz (R-FL) filed a motion to vacate the Speaker chair.

McCarthy Ousted as Speaker 

On Oct. 3, the House of Representatives voted to remove McCarthy from his position as Speaker of the House by a vote of 216-210, with all Democrats and eight Republicans voting in favor.  Along with Rep. Gaetz, Reps. Andy Biggs (R-AZ), Ken Buck (R-CO), Tim Burchett (R-TN), Eli Crane (R-AZ), Bob Good (R-VA), Nancy Mace (R-SC) and Matt Rosendale (R-MT) voted to vacate. Rep. Patrick McHenry (R-NC), McCarthy’s hand-picked successor, was named Speaker pro tempore, where he will serve until a new Speaker is elected.

McCarthy, who despite the vote might have been the most likely candidate to win concessions from either the right or left to return to the Speakership, announced that he would not run again. Several House Republicans have begun testing the waters to see if they could unite the conference, including Speaker pro tempore McHenry, Majority Leader Steve Scalise (R-LA); and Judiciary Committee Chairman Jim Jordan (R-OH), among others. There is no requirement that the Speaker be a sitting Member of Congress, but any eventual Speaker will need to win 218 votes from within the chamber. The House adjourned for the remainder of the week and will not reconvene until next week.

House Rules Committee Prepares FY 24 Energy-Water Appropriations Bill, Adds Proposed Spending Cuts 

On Oct. 2, the House Rules Committee made in order 61 amendments to the FY24 Energy-Water Appropriations bill with a slew of cuts for consideration on the House floor, including an overall reduction of the bill’s topline number by $1.5 billion to match FY22 spending levels. Other cuts include striking funding for the Department of Energy (DOE) Office of Clean Energy Demonstrations and repealing $5 billion from programs authorized under the Inflation Reduction Act (IRA). An amendment was adopted to reduce the DOE Office of Energy Efficiency and Renewable Energy (EERE) budget by $1 billion, although two others were made in order from Rep. Morgan Griffith (R-VA) that would decrease EERE’s budget by $1.1 billion and increase DOE’s Fossil Energy and Carbon Management program budget by $600 million. Rep. Chip Roy (R-TX) added a separate amendment that would eliminate funding for EERE entirely. Rep. Veronica Escobar’s (D-TX) amendment to allow DOE to use funds to increase efficiency standards for distribution transformers, striking the original language in the bill that would block funding, was also made in order.  Full floor consideration of the bill was set to begin on Oct. 3, but was postponed due to the vote to vacate McCarthy as Speaker.   

House E&C Panel Holds Hearing on Grid Reliability, Transformer Shortage

On Sept. 13, the House Energy and Commerce Energy, Climate, and Grid Security Subcommittee held a hearing on grid reliability and efficiency that included a review of the “Protecting America’s Distribution Transformer Supply Chain Act,” legislation that would block the Department of Energy (DOE) from implementing any new conservation standards for distribution transformers for 5 years.  Gene Rodrigues, Assistant Secretary for Electricity from the Office of Electricity at DOE, was asked why DOE would propose rules that put grid security and domestic steel manufacturers at risk and responded that the transformer standard is “just a proposal” that the agency was required to take up under a consent decree.  Rodrigues noted industry concerns about grid reliability “are why DOE expressly asked stakeholders for comment on timelines required for compliance with the proposed standard, as well as comments on the availability of key components.”  Bob Paulling, CEO of the Mid-Carolina Electric Cooperative, also testified in the hearing on behalf of NRECA and said, “the utility industry needs manufacturers to be 100% focused on increasing output, not adapting to new, government mandated efficiency requirements that are not technologically feasible nor economically justified.”

Legislation to Address Inter-Regional Energy Transmission Introduced

On Sept. 15, Sen. John Hickenlooper (D-CO) and Rep. Scott Peters (D-CA) officially introduced the “Building Integrated Grids With Inter-Regional Energy Supply (BIG WIRES) Act.”  The bill would require grid regions to have an interregional transfer capability of 30 percent of their peak electricity load and would direct the Federal Energy Regulatory Commission (FERC) to oversee the construction of an interregional transmission system.  While Democrats are generally supportive of more transmission buildout to accompany the connection of more renewable energy, several Republican members have expressed concern about the siting and cost allocation issues associated with developing new lines.  Following the bill’s introduction, Sen. Kevin Cramer (R-ND) told reporters that the 30 percent transfer capability requirement would be “impossible” and “impractical.”  Nevertheless, the bill has emerged as a potential spur to further talks on permitting reform, an issue that stagnated over the summer months. 

In this edition:

• Energy: Electric utilities submit comments on the EPA’s proposed GHG emissions requirements for fossil fuel power plants…
• Infrastructure: Senate Democrats send letter to DOE urging finalization of proposed distribution transformer conservation standards; DOE issues proposed rule to streamline permitting for major transmission lines…
• Appropriations: Speaker McCarthy plans for stopgap funding bill extending to early December…

Utilities Submit Comments on EPA’s Proposed Power Plant Emissions Rules

Electric utilities, advocacy groups, and other stakeholders submitted comments on the August 8 deadline to the Environmental Protection Agency’s (EPA) proposed rule to require certain fossil fuel power plants to reduce greenhouse gas emissions with carbon capture sequestration or co-fire with low-GHG hydrogen.  The American Public Power Association (APPA) submitted comments requesting that the EPA analyze how the proposed rule would affect electric reliability and noted that carbon capture and hydrogen co-firing technologies are “not mature enough to be considered the best system of emissions reduction.”  The National Rural Electric Cooperative Association’s (NRECA) comments echoed these concerns and also said that the agency “lacks the legal authority” to require operators of coal-fired power plants to install these technologies at the risk of prematurely closing them.  Senators from both sides of the aisle have weighed in, with a Republican-led letter arguing that the technologies are not adequately demonstrated and another from Democrats urging EPA to finalize a strong rule.  Several environmental groups commented that more plants should be subject to the rule.

Senate Dems Request Transformer Conservation Rule be Finalized

Ten Senators sent a letter to Energy Secretary Jennifer Granholm requesting the Department of Energy (DOE) finalize its proposed distribution transformer conservation standard and extend the implementation date beyond 2027 to “allow Congress and the U.S. electrical steel market time to address the current shortage, increase domestic electrical steel production, and facilitate compliance with the proposed standard.”  The letter was led by Sen. Peter Welch (D-VT) and signed by eight other Senate Democrats as well as one Independent, Sen. Bernie Sanders (I-VT).  The letter comes after several other letters were sent in past months from members of Congress as well as APPA and NRECA urging Secretary Granholm to reconsider implementing new standards due to the current shortage.  DOE’s distribution transformer rule is expected to be finalized in May 2024.

DOE Issues Proposed Rule to Streamline Federal Transmission Permitting

DOE has issued a Notice of Proposed Rulemaking (NOPR) to streamline the federal permitting process for major transmission lines down to two years.  Federal permits are often required for transmission lines that traverse federal lands, impact an endangered species, or cross a major body of water, among others, and can take several years.  The proposed rule would establish the Coordinated Interagency Transmission Authorization and Permits (CITAP) Program to be managed by DOE’s Grid Deployment Office, which would coordinate with other relevant agencies depending on the scope of each project.  DOE would be the lead agency conducting environmental impact statements and other federal reviews for transmission projects into one single environmental review document instead of requiring permits from multiple federal agencies.  The CITAP Program would not replace any state or local government permitting or siting authorities, but would only streamline and accelerate the federal decision making and review process.  DOE is accepting comments on the proposal for 45 days after publication in the Federal Register.

Speaker McCarthy Aims to Avoid End-of-Year Appropriations Crunch

In a conference call with the House GOP conference on August 14, Speaker Kevin McCarthy (R-CA) said that when the House returns from recess in September, he will bring a stopgap funding bill to the floor to extend government funding past the Sept. 30 deadline but “no later than early December.”  Speaker McCarthy said that he has told Senate Majority Leader Chuck Schumer (D-NY) that the patch would not go near the holidays in an effort to avoid an end of year legislative calendar crunch.  Speaker McCarthy added that the House will continue to consider FY24 appropriations bills when it returns, where only 1 out of 12 bills have been approved so far.  The Senate is also expected to begin floor consideration of all 12 spending bills next month, which were all approved by the full committee just before the August recess.  If the 12 bills are not passed by Dec. 31, the Fiscal Responsibility Act will impose a 1% across-the-board cut to all discretionary spending, incentivizing Congress to prioritize the appropriations process and come to a compromise on the differences in the topline spending numbers.

In this edition:

• Appropriations: The Senate Appropriations Committee finalizes its FY24 Energy-Water spending bill for floor consideration…
• Infrastructure: Senate Democrats send letter to DOE to finalize distribution transformer conservation standards; Senate ENR holds a hearing on federal transmission permitting; House E&C Committee holds a hearing on threats to grid infrastructure…
• Energy: Senate EPW/House E&C Committee leaders call for modifications to NRC’s small modular reactor framework; FERC finalizes its generator interconnection rule…

Senate Appropriations Committee Advances FY24 Energy-Water Bill

The Senate Appropriations Committee approved the FY24 Energy and Water Development bill on July 20, readying the bill for floor action after the August recess.  The Senate panel put out a very different bill from the pared-down version advanced by the House a few weeks ago, promising difficult conference negotiations ahead of the Sept. 30 fiscal year deadline. The Senate’s bill included $50.1 billion ($1.2 billion more than the House’s $48.9 billion) for the Department of Energy, including $17.3 billion for non-defense programs.  The bill includes increases from FY23 for the Office of Science ($8.43 billion) and Energy Efficiency and Renewable Energy ($3.686 billion), and steady funding for the Office of Cybersecurity, Energy Security, and Emergency Response ($200 million).  $1.921 billion was included for the Bureau of Reclamation, $121 million more than the House’s version.

Democratic Senators Send Letter to DOE to Finalize Transformer Efficiency Rule, Extend Implementation Date

Ten Senators sent a letter to Energy Secretary Jennifer Granholm requesting the Department of Energy (DOE) finalize its proposed distribution transformer conservation standard and extend the implementation date beyond 2027 to “allow Congress and the U.S. electrical steel market time to address the current shortage, increase domestic electrical steel production, and facilitate compliance with the proposed standard.”  The letter was led by Sen. Peter Welch (D-VT) and signed by eight other Senate Democrats as well as one Independent, Sen. Bernie Sanders (I-VT).  The letter comes after several other letters were sent in past months from members of Congress as well as the American Public Power Association (APPA) and the National Rural Electric Cooperative Association (NRECA) urging Secretary Granholm to reconsider implementing new standards due to the current shortage.  DOE’s distribution transformer rule is expected to be finalized in May 2024.

Senate ENR Holds Hearing on Transmission Permitting Reforms

On July 26, the Senate Energy and Natural Resources Committee held a hearing on permitting reform for transmission, pipelines, and energy production on federal lands.  In his opening statement, Committee Chair Joe Manchin (D-WV) stated that the reforms included in the debt ceiling bill, the “Fiscal Responsibility Act,” are not enough and that further needed reform “includes responsibly addressing issues that are slowing down or blocking energy infrastructure critical for energy security and reliability.”  Chair Manchin highlighted a provision in his bill, the “Building American Energy Security Act of 2023” that would remove the requirement for the Department of Energy (DOE) to designate a transmission corridor of the national interest before FERC can use its backstop siting authority—a change that could help reduce the average nine-year permit approval timeline for large, interstate transmission projects.  Sen. John Barrasso (R-WY), Ranking Member of the committee, contended that the biggest threat to reliability is the premature retirement of coal, natural gas, and nuclear power plants, and that any permitting changes for transmission “can’t be just another subsidy.”  Sen. Barrasso added that Congress should not try to “force electric customers in rural inland states to subsidize transmission for the benefit of coastal states.”

Senators, House Members Request Modifications to NRC’s Proposed Licensing Framework for Advanced Nuclear Reactors

Bipartisan leaders of the Senate Environment and Public Works Committee and the House Energy and Commerce Committee sent a letter to the Nuclear Regulatory Commission (NRC) urging the agency to review and modify its proposed rule establishing a framework for advanced nuclear reactor licensing, also known as the Part 53 Rulemaking.  In March 2022, the NRC proposed a licensing framework for advanced nuclear reactor technologies, establishing regulations to enable the deployment of advanced reactors.  However, many in Congress have stated the regulations are “unusable” and have called on the NRC to propose a framework that more closely aligns with the bipartisan Nuclear Energy Innovation and Modernization Act (NEIMA) enacted in 2018.  The letter also included the signatures of 18 Senators and 42 House members and lists several requests for the NRC to address and resolve concerning the rule.  In related news, the House Energy and Commerce Energy, Climate, and Grid Security Subcommittee held a hearing on July 18 to debate a series of nuclear energy bills, with many that would make regulatory streamlining and rollbacks for the NRC.  The committee also considered the “Nuclear for Brownfields Site Preparation Act,” which would lessen permitting requirements for sites that formerly housed fossil fuel operations.

FERC Finalizes Generator Interconnection Rule

On July 27, the Federal Energy Regulatory Commission (FERC) unanimously approved the “Improvements to Generator Interconnection Procedures and Agreements” final rule to help accelerate the connection of renewable and storage projects to the electric grid.  Grid operators and electric utilities will be required to study proposed projects in a “first-ready-first-served” cluster process rather than individually, and projects that are further along in the development process will be prioritized.  Grid operators and utilities can also be subject to deadlines and penalties if they fail to process connection requests on time.  The final rule also requires project developers to submit deposits and obtain certain land or building rights in order to be studied and approved, but they will not be required to have a contract with the utility to be considered.

House E&C Panel Holds Hearing on Threats, Regulatory Burdens for Electric Grid

On July 18, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing on emerging threats to electric infrastructure and grid reliability, with panel discussion ranging on issues from physical attacks, cyberattacks, and climate change impacts, as well as potential regulatory burdens.  In his opening statement, Subcommittee Chair Morgan Griffith (R-VA) highlighted the ongoing risk of cyberattacks from Russia and China that could disrupt U.S. infrastructure, but also raised concern with the Environmental Protection Agency’s proposed greenhouse gas emissions standards that could prematurely shut down coal and natural gas-fired power plants and “jeopardize reliable baseload power.”  Chairman Griffith also voiced his support for the “Protecting America’s Distribution Transformer Supply Chain Act,” which would block the Department of Energy (DOE) from implementing new conservation standards for distribution transformers for five years, as the transformer shortage also poses a threat to system reliability.  Among the witnesses was Manny Cancel, senior vice president of the North American Electric Reliability Corporation (NERC), who testified that the organization is focused on ensuring reliability, and that “retiring assets that would put the grid in a compromised state is not recommended.”  When asked by Rep. Jan Schakowsky (D-IL) what Congress can do to help ensure grid resilience, Cancel said that it should make sure that regulations “are not duplicative and that they are harmonized across the federal government” and that they need to “strike the balance between assessing the risk and having a cost-effective mindset.”

In this edition:

• Energy: Sen. Barrasso and Rep. Hudson introduce bills to block DOE from implementing new distribution transformer conservation standards; House E&C Committee holds FERC oversight hearing…
• Congress: House Appropriations Committee advances FY24 energy-water bill, Senate sets topline spending numbers…
• Tax and Finance: The Internal Revenue Service releases guidance for the Inflation Reduction Act’s elected pay provisions…

Barrasso, Hudson Introduce Legislation to Block DOE’s Distribution Transformer Conservation Standards

On June 15, Senate Energy and Natural Resources Committee Ranking Member John Barrasso (R-WY) and Rep. Richard Hudson (R-NC) introduced companion bills, the “Protecting America’s Distribution Transformer Supply Chain Act,” in the House and Senate, which would block the Department of Energy (DOE) from changing distribution transformer energy conservation standards for at least five years due to the ongoing transformer shortage. The bills’ introduction follows the House Appropriations Committee’s FY24 Energy and Water spending bill provision to block DOE from implementing the proposed distribution transformer efficiency standards and the two letters sent earlier this spring that were signed by dozens of House and Senate members urging DOE Secretary Jennifer Granholm to reconsider the proposed rule.

House E&C Panel Hosts FERC Commissioners for Oversight Hearing

On June 13, the House Energy and Commerce Subcommittee on Energy, Climate, and Grid Security held an oversight hearing of the Federal Energy Regulatory Commission (FERC), with all four commissioners testifying on the panel.  Several Republicans voiced their opposition to the Environmental Protection Agency’s (EPA) proposed power plant emissions rules and urged the commissioners to ensure coal, nuclear and natural gas power plants remain online and to maintain reliable and affordable energy.  Commissioners Christie and Danly echoed these concerns for fossil fuel and nuclear plants.  Many Democrats in the hearing emphasized the need for further transmission buildout to help support the clean energy transition.  Subcommittee Ranking Member Diana DeGette (D-CO) urged FERC to support large, interregional transmission lines and that the commission should not be delayed by the interregional transfer capability study included in the recent debt ceiling law.  When asked by Subcommittee Chair Jeff Duncan (R-SC) whether electric reliability has “worsened or improved” over the last three years, Commissioner Danly said that reliability has gotten worse, while Commissioner Clements said that it depends on a variety of factors, including the region of the country, time of year, and extreme weather events.  Commissioner Phillips responded that reliability has “worsened somewhat” but the trend is “beginning to change” under his leadership.  Commissioner Christie responded by saying, “I think it’s generally worsened, because we’re losing the dispatchable resources that are necessary to keep the lights on.”

House Appropriations Advances FY24 Energy-Water Bill; Senate Appropriations Sets FY24 Funding Levels

On June 15, the House Appropriations Energy and Water Development and Related Agencies Subcommittee advanced its FY24 appropriations bill to the full committee, which includes a provision to block the Department of Energy (DOE) from implementing any energy efficiency standard that increases conservation standards for distribution transformers.  The House’s bill provides an increase from last year’s level for defense-related DOE funding but a decrease from last year’s level of non-defense funding – particularly in renewable energy and climate change-related programs.  The bill includes $57.9 billion in discretionary spending and is $1.9 billion below the President’s budget request.  It provides $32.5 billion in defense spending and $25.5 billion in non-defense spending, which is $143 million above the FY23 level and $1.63 billion below the President’s budget request.  DOE would receive $48.9 billion, $133.2 million above the FY23 enacted level and $3.69 billion below the President’s budget request.

On June 22, the House Appropriations Committee approved the FY24 Energy and Water spending bill for floor consideration.  During the markup, Republicans successfully added amendments to block DOE from implementing new efficiency standards for gas stoves and washing machines and to block companies associated with China or Russia from receiving DOE research funding, among other provisions.

Separately, the Senate Appropriations Committee also approved topline spending numbers, which match the allocation levels set in the debt limit law: $1.59 trillion in discretionary spending, $886.3 billion in defense spending and $703.7 billion in nondefense spending.  The Senate Energy and Water Appropriations Subcommittee received a $56.7 billion discretionary spending allocation, $4.3 billion more than the House proposal.  The Senate has begun scheduling its FY24 bills for markups, and the Senate Energy and Water bill is expected in July.  As the House and Senate bills will be quite different in funding levels and policy priorities, a difficult reconciliation process is expected.

IRS Releases Guidance for IRA Elective Payments

On June 14, the Internal Revenue Service (IRS) published proposed guidance for tax-exempt entities claiming elective payments of energy tax credits as authorized under Section 6417 of the Inflation Reduction Act (IRA).  The IRA allows tax-exempt and governmental entities to receive elective payments for 12 clean energy tax credits as well as tax credits for electric vehicles and charging stations.  Starting in 2024, the amount of elective payment will be reduced if domestic content requirements are not met, and a waiver has not been approved.  The IRS also released proposed guidance for an electronic pre-filing registration process, to open by the end of 2023, which will be required for tax-exempt entities planning to seek an elective payment.  The IRS is requesting written comments by Aug. 14 and will hold public hearings later this summer to hear feedback on several of the proposed definitions and the need for any additional input into the guidance.

In this edition:

• Congress: The “Fiscal Responsibility Act” passes in Congress, raising the debt ceiling and averting a default…
• Energy: A bipartisan group of senators send letter to DOE on proposed distribution transformer conservation standards; APPA, NRECA and other utility groups send a letter to President Biden with similar concerns…
• Environmental Regulation: EPA proposes new greenhouse gas emissions standards for fossil-fueled power plants…
• Infrastructure: DOE issues NOI/RFI on designation of National Interest Transmission Corridors…
• Tax and Finance: IRS issues guidance for IRA domestic content bonus credit…

Debt Ceiling Deal Passes Congress, Signed into Law

On May 27, President Biden and Speaker Kevin McCarthy (R-CA) reached an agreement to lift the debt ceiling and avert a financial crisis.  The final deal suspends the borrowing cap until Jan. 1, 2025, sets discretionary spending caps for the next 6 years, claw back unspent COVID spending, and includes some project permitting reforms, among other things.  Of interest to municipal utilities and rural cooperatives , the deal would not rescind energy tax credits or direct pay provisions of the Inflation Reduction Act.  The agreement drew significant criticism from both sides of the political aisle, with conservative Republicans expressing frustration that the bill doesn’t go far enough to curb future spending and budget reforms, and progressive Democrats frustrated with work requirements being tied to social aid programs and the lack of legislation to address new transmission needs.    However, the House passed the “Fiscal Responsibility Act” on May 31 by a bipartisan vote of 314-117.   The bill then saw expedited consideration in the Senate and passed June 1 by a bipartisan vote of 63-36.

47 Senators Send Letter to DOE on Proposed Distribution Transformer Conservation Standards

On June 1, a bipartisan group of 47 Senators sent a letter to Energy Secretary Jennifer Granholm urging reconsideration of the proposed conservation standards for distribution transformers.  The letter, led by Sen. Bill Hagerty (R-TN), asks that the Department of Energy (DOE) allow manufacturers to continue to use grain-oriented electrical steel.  DOE’s proposed rule, which would take effect in 2027 if finalized, would require that many distribution transformers be made with the slightly more efficient — but much less domestically available — amorphous steel cores.  The letter says that the new requirement “could put the administration’s electrification goals at risk by exacerbating an existing grid vulnerability,” and, “meaningfully worsen the current supply chain shortage by requiring manufacturers to change production lines to less readily available amorphous steel.”  The Senate letter follows a letter written in April and signed by more than 60 House members similarly urging DOE to withdraw the proposed rule.

In related news, the American Public Power Association (APPA), National Rural Electric Cooperative Association (NRECA) and the Edison Electric Institute (EEI), among other utility and industry advocacy groups, sent a letter to President Biden concerning the domestic electrical steel shortage that is creating challenges for restoring power after outages, the clean energy transition, and construction of residential and commercial buildings.  The group requested that Biden host an “Electrical Steel Summit” with utilities, manufacturers, and other stakeholders to discuss solutions to the supply crisis.  The letter also noted that even with the recent agreement from domestic electric steel manufacturers to increase production, supplies of domestic steel, “will still fall far short to meet electrification goals,” and that manufacturers’ plans to expand “are now in flux” due to DOE’s proposed conservation standards for distribution transformers.

EPA Proposes New Power Plant Emissions Rules

On May 11, the Environmental Protection Agency (EPA) proposed five separate actions regulating greenhouse gas emissions from fossil-fueled power plants under Sec. 111 of the Clean Air Act: 1) standards for new plants; 2) standards for plants that undergo significant modification; 3) standards for existing plants; 4) special standards for the largest plants operated as baseload resources; and 5) repeal of the Affordable Clean Energy rule.  New and reconstructed plants would need to either use highly efficient generation or install carbon capture technology (CCS) or co-fire with hydrogen, depending on the capacity factor of the resource.  Existing large natural gas units (over 300 MW with a capacity factor over 50%) would be subject to a standard equivalent to either 90 percent capture of CO2 using CCS by 2035, or co-firing of 30% hydrogen beginning in 2032 and co-firing 96% hydrogen beginning in 2038.  Existing coal plants that plan to operate after 2040 would need to capture 90% of their emissions, but those that commit to closing earlier would be subject to a less stringent standard.  Critics have hit hard at the reliance on CCS, which is not in operation at any U.S. plant currently, and the rule’s legal footing in the wake of West Virginia v. EPA, which told the agency it needed clearer direction from Congress before issuing a rule with sweeping economic consequences.

DOE Issues NOI, RFI on National Interest Transmission Corridors Program

On May 10, DOE issued a Notice of Intent to establish a program to designate “National Interest Electric Transmission Corridors” (NIETC) for large power lines to help with transmission buildout, promote resilience, and connect more renewables to the grid.  The program would provide federal financing and siting assistance to projects that would be built or expanded in DOE-designated corridors.  Power lines in federally designated corridors are eligible for $2.5 billion under the Infrastructure Investment and Jobs Act and $2 billion through a transmission loan program authorized under the Inflation Reduction Act.  Comments on the program, including recommendations on proposed corridors, are due by June 29, 2023.

IRS Issues IRA Domestic Content Bonus Credit Guidance

The Internal Revenue Service (IRS) has unveiled its initial guidance to qualify for and claim the domestic content bonus credit for clean energy projects.  Under the Inflation Reduction Act (IRA), an additional 10 percent “bonus” credit is provided for projects and facilities that meet domestic content requirements and can be stacked on top of the investment and production tax credits as well as other bonus credits, including the energy communities bonus credit.  Notice 2023-38 provides guidance on the domestic content requirement applicable to steel or iron, for which manufacturing processes must take place in the U.S.  For manufactured products, 40% of the attributed cost, except for offshore wind, must be mined, produced, or manufactured in the U.S. as well.  The guidance, among other things, also describes a safe harbor of certain components that may be found in utility-scale photovoltaic systems, land-based wind facilities, offshore wind facilities, and battery energy storage technologies.  The IRS  is expected to publish final guidance in the coming months as well as release guidance on how tax-exempt entities can claim refundable direct payment of energy tax credits.

In this edition:

• Congress: House Republicans pass package to raise the debt ceiling including large energy permitting reform bill and IRA cuts; Senate EPW Committee holds a hearing on environmental permitting reforms…
• Energy: The Treasury Department releases IRA tax guidance for energy communities…
• Infrastructure: The Department of Energy issues RFI on distribution and large transformer manufacturing and demonstration funding program…
• Security: The North American Electric Reliability Corp. recommends updated assessments for Critical Infrastructure Protection Reliability Standards; the Department of Homeland Security issues a warning for potential physical attacks against transportation and telecommunications infrastructure…

House Republicans Pass Bill to Raise the Debt Ceiling, Cut IRA Direct Pay Tax Credits

On April 27, the House passed a bill to raise the debt ceiling, the “Limit, Save, Grow Act,” by a vote of 217-215, with all Democrats voting in opposition as well as Republican Reps. Andy Biggs (R-AZ), Ken Buck (R-CO), Tim Burchett (R-TN), and Matt Gaetz (R-FL).  The bill would extend the federal government’s borrowing authority by an extra $1.5 trillion or until March 2024—whichever comes first. To secure the votes to pass the bill, Speaker Kevin McCarthy made last-minute amendments, including rescinding the repeal of three biofuel incentives at the request of a group of Midwestern lawmakers ahead of the vote.  However, the amendment leaves in place the repeal of direct payment tax credits for tax-exempt entities.  Other changes would repeal IRA funding for the adoption of building codes for energy-efficient construction, loans to back energy infrastructure projects, grants to improve transportation access to neighborhoods, and grants for reducing climate pollution, among others.  Senate Democrats insist that the House Republicans’ bill is dead on arrival in the Senate and have not yet backed down from their position that a debt ceiling increase must be “clean” with no conditions.  President Joe Biden has also pledged to veto the bill if it were to reach his desk.

Senate EPW Holds Energy Permitting Reform Hearing

The Senate Environment and Public Works (EPW) Committee held a hearing on April 26 kicking off discussions of the federal permitting review process in the Senate, with both Republicans and Democrats on the panel in agreement that reforms are needed.  In his opening statement, Committee Chairman Tom Carper (D-DE) said that a bill should be bipartisan, support the transition to a clean energy economy, result in lower emissions, and maintain protections from the National Environmental Policy Act (NEPA) and other environmental statutes.  Carper also said that the bill should boost community engagement with project development, especially for disadvantaged and underserved communities.  In the hearing, Senate Republicans floated changes similar to House Republicans’ provisions that would place a two-year timeline on environmental reviews and a litigation time limit following permit approval, as well as other language codifying Trump-era environmental review changes.  Chairman Carper said that he has no timeline for when a bill could materialize, although additional hearings on permitting reforms are expected in May in both the EPW Committee and in the Senate Energy and Natural Resources Committee.

Treasury Releases Tax Guidance for IRA Energy Communities

On Apr. 4, the Treasury Department released guidance for determining which sites qualify for the Inflation Reduction Act’s (IRA) 10% bonus tax credit for clean energy projects located in “energy communities.” The IRA defines these as communities with brownfield sites, census tracts with a shuttered coal mine or coal-fired electric power plant, or certain high-unemployment areas with direct employment or local tax revenues related to coal, oil, or natural gas.  The guidance clarifies which census tracts had a coal mine closure or coal-fired electric generating unit retirement in the relevant time periods, status of brownfield sites, and which metropolitan statistical areas (MSAs) and non-metropolitan statistical areas (non-MSAs) qualify to claim the bonus credit.  The Biden Administration’s Interagency Working Group on Energy Communities has released a mapping tool to help identify areas that are eligible for the bonus credit.  Separately, the Department of Energy will be releasing a tool to help identify coal power plants that have retired or are slated to retire by the end of 2030.

DOE Requests Information on Transformers

On April 9, DOE announced a Request for Information (RFI) on distribution and large power transformers to inform a future funding opportunity related to innovations in transformer manufacturing and demonstration. The RFI requests feedback from electric utilities, transformer manufacturers, and other stakeholders on several categories to examine, including technology development and supply chain constraints, with a focus on technology gaps and cost-effective domestic manufacturing, among other categories of consideration. Responses to the RFI are due May 5, 2023. 

NERC Recommends Updating Assessments for Protection of Grid Infrastructure Against Physical Attacks

The North American Electric Reliability Corp. (NERC) has released a report recommending to not expand the Critical Infrastructure Protection Reliability Standard, CIP-014, to apply to more types of electric substations and to instead update the rule to ensure that electric utilities perform more “uniform assessments.”  NERC stated in the report that the CIP-014 standard “appropriately focuses limited industry resources” and applies only to the most critical facilities.  To help ensure that assessments are performed consistently, NERC will initiate a standards development project to clarify risk assessment expectations and will hold a technical conference to further study appropriate levels of physical protections.  NERC’s report comes as the number of physical attacks against substations and other grid infrastructure sharply increased in 2022, and four months after the Federal Energy Regulatory Commission (FERC) directed NERC to assess whether changes to infrastructure protection regulations were needed.

DHS Sends Memo to Utilities on Risk of Physical Attacks to Transportation, Telecommunications Infrastructure

The Department of Homeland Security has released a memo to utility providers warning that the increase in physical attacks and threats against U.S. electric grid infrastructure could also lead to a rise in attacks against other critical sectors, including transportation and telecommunications infrastructure.  The memo said that these sectors could be especially vulnerable in rural areas, given the low risk to assailants and the lack of arrests.  Specifically, the memo states, “Easily accessible rural infrastructure assets—such as pipeline systems, energy substations, and cell towers—are typically lightly guarded with cameras and simple physical barriers like fences and gates, making them vulnerable to low-risk firearms attacks that result in significant disruptions.”

In this edition:

• Congress: House passes Republicans’ large energy permitting reform bill; House and Senate Appropriations committees begin FY24 budget hearings…
• Finance: The U.S. Treasury releases additional guidance for IRA energy tax credits…
• Energy: NEPPA and National Trade Associations submit comments urging DOE to not move forward with new distribution transformer efficiency standards; A potential new FERC nominee circulates…
• Infrastructure: Utility industry voices concern over the Biden administration’s new cyber strategy for critical infrastructure…

The House Passes Large Energy Package

On March 30, the House approved Republicans’ large energy permitting reform bill, H.R. 1, the “Lower Energy Costs Act,” by a vote of 225-204.  All but one House Republican voted in favor of the bill, along with Democratic Reps. Henry Cuellar, (D-TX), Vicente Gonzalez (D-TX), Jared Golden (D-ME), and Marie Gluesenkamp Pérez (D-WA).  The bill includes provisions to ease permitting requirements within the National Environmental Policy Act (NEPA), grant greater access to public lands for oil and gas drilling and mineral extraction, and repeal several provisions of the Inflation Reduction Act (IRA), including the methane fee and $27 billion in funding for the EPA’s Greenhouse Gas Reduction Fund.  Senate Majority Leader Chuck Schumer (D-NY) has previously promised that if the bill was passed in the House, it would be “dead on arrival” in the Senate.  However, several Senate committee leaders have already begun discussing which elements of the Lower Energy Costs Act may find a place in a future negotiated bill.

Appropriations Committees Begin FY24 Budget Hearings

The House Appropriations Committee, now under Republican control this Congress, began its yearly questioning of the administration’s budget proposals during the week of March 20.  On March 22, the House Interior Appropriations Subcommittee invited Environmental Protection Agency (EPA) Administrator  Michael Regan to testify, while the House Energy and Water Appropriations Subcommittee hosted Energy Secretary Jennifer Granholm.  Both budget hearings included a good bit of hard questioning from Republican members over the President’s funding priorities, which include a 19% increase in funding for EPA and a 13.5% increase for the Department of Energy.  Granholm had to defend a decrease in funding set aside for Nuclear Energy programs from a panel of strong nuclear advocates.  Regan, on the other hand, was made to defend the sizeable EPA budget increase in spite of new funding the agency received the 2021 Bipartisan Infrastructure Law and last year’s Inflation Reduction Act.

During the week of March 27, Interior Secretary Deb Haaland visited both the House Appropriations Committee and the Senate Appropriations Committee to speak.  The House hearing was predictably more political, with Republicans holding the chairmanship and former Interior Secretary Ryan Zinke (R-MT) sitting on the panel.  Republican members pressed Haaland to justify her budget numbers, while Democrats asked her to identify consequences that budget cuts could have on her agency, such as hiring freezes.  The Senate hearing was more docile, with a focus on oil and gas and Alaska-specific issues from Sen. Murkowski (R-AK).

Treasury Releases IRA Guidance for Energy Communities

The Treasury Department has released guidance for determining which sites qualify for the Inflation Reduction Act’s (IRA) 10% bonus tax credit for clean energy projects located in “energy communities.” The IRA defines these as communities with brownfield sites, census tracts with a shuttered coal mine or coal-fired electric power plant, or certain high-unemployment areas with direct employment or local tax revenues related to coal, oil, or natural gas.  The guidance clarifies which census tracts had a coal mine closure or coal-fired electric generating unit retirement in the relevant time periods, status of brownfield sites, and which metropolitan statistical areas (MSAs) and non-metropolitan statistical areas (non-MSAs) qualify to claim the bonus credit. The Biden administration’s Interagency Working Group on Energy Communities will be releasing a mapping tool to help identify areas that are eligible for the bonus credit.  Separately, the Department of Energy will be releasing a tool to help identify coal power plants that have retired or are slated to retire by the end of 2030.

NEPPA and National Trade Associations Urge DOE to Reconsider New Transformer Efficiency Proposal

NEPPA, the American Public Power Association (APPA), and the National Rural Electric Cooperative Association (NRECA) each submitted comments to the Department of Energy (DOE) in response to a proposed rulemaking that would increase the energy conservation standard for distribution transformers.  The existing standard for distribution transformer efficiency had been set just five years ago with a requirement for transformers to be more than 99% efficient.  Compliance with that standard required manufacturers to use grain-oriented electrical steel, which was difficult to source domestically.  Now, DOE’s Notice of Proposed Rulemaking (NOPR) would require the use of amorphous steel cores, an even scarcer type of steel, to produce transformers.  NEPPA’s letter noted that member utilities report delays of 24 months or more to receive new transformers from overseas and emphasized that the new standard will certainly exacerbate an already constrained supply chain challenge with the new efficiency requirement.

Speculation Emerges for FERC Frontrunner

Judy Chang, who has formerly served as Undersecretary of Energy in Massachusetts, has reportedly emerged as a frontrunner for the open seat in the Federal Energy Regulatory Commission (FERC).  Previously, Chang worked as a principal at the Brattle Group, where she researched renewable energy, electric power markets, FERC policies, and other issues.  Senate Energy and Natural Resources Chairman Joe Manchin (D-WV) said during a briefing on March 16 that he had conducted an interview with a potential FERC nominee earlier in the day, although he did not specify who he interviewed.  The Biden administration has been searching for a replacement following former Chair Richard Glick’s departure earlier this year from the commission due to Chairman Manchin’s opposition to confirming his renomination.

Utilities Voice Concerns with Biden Administration’s New Cyber Strategy

The Biden administration’s new national cybersecurity strategy, which was released on March 2, is under fire as some utilities and lawmakers express concern about the call for minimum cybersecurity standards for critical infrastructure across multiple economic sectors.  The strategy states that “the current practice of allowing sectors including utilities, food and agriculture, healthcare and others meet voluntary cybersecurity standards had resulted in inadequate and inconsistent outcomes,” and that it seeks to “level the playing field” for cyber regulations.  Leaders in the energy space have expressed that the electric utility sector already incorporates the use of minimum cybersecurity requirements and that duplicative regulatory regimes for multiple federal agencies could lead to confusion and higher costs.

In this edition:

• Congress: House Natural Resources Republicans propose energy permitting reforms for NEPA…
• Energy: The U.S. Treasury releases additional guidance for IRA energy tax credits; DOE extends the comment deadline on distribution transformer efficiency standards NOPR…
• Infrastructure: FERC meets with state commissioners on safety measures against physical attacks on the electric grid; FERC approves new cold weather reliability standards for power plants…

House Natural Resources Republicans Propose NEPA Changes for Energy Permitting Reform

On Feb. 28, the House Natural Resources Committee held a hearing on a draft bill titled “The Building United States Infrastructure Through Limited Delays and Efficient Reviews (BUILDER) Act” which will serve as the blueprint of an energy permitting reform plan by the panel’s Republican members.  The bill seeks to make alterations to the National Environmental Policy Act (NEPA) to speed up environmental reviews for permitting energy projects and would require regulators to rely on “existing reliable data” rather than conduct brand-new analyses.  The bill would also allow project sponsors to assist in conducting environmental reviews and limit any lawsuits that could slow down the approval process.  In the hearing, Republicans sought for any support by the committee’s Democratic members, with Committee Chair Bruce Westerman (R-AR) reiterating that they are aiming for a bipartisan bill to ensure a path forward in the Democratic-controlled Senate.  Instead, Republicans were met with skepticism of the plan, with some Democrats voicing general support of energy permitting reforms, but were critical of the Republicans’ approach.  Others, including Ranking Member Raul Grijalva (D-AZ), were adamantly opposed, with Grijalva stating that, “accelerating environmental reviews for the fossil fuel industry would allow it to pollute when and where it wants without having to tell the public too much about it.”

Treasury Releases Further Guidance on IRA Energy Tax Credits

On Feb. 13, the Treasury Department and the Internal Revenue Service (IRS) published two notices providing general rules and guidance on qualifying projects and procedures to claim the Advanced Energy Project Credit (Section 48C(e) program) and the wind and solar projects in low-income communities provision in the Inflation Reduction Act (IRA).  Unlike other tax credits that can be claimed simply by undertaking a qualified project, the programs outlined in the notices instead establish competitive vetting processes at the Department of Energy (DOE) in order to receive an allocation.

The 48C program provides tax incentives to re-equip, expand, or establish manufacturing facilities to produce equipment used in renewable energy, energy efficiency, grid modernization, or energy storage projects, or critical minerals processing; or re-equipping a manufacturing facility with carbon capture or other significant emissions reduction technology. Of particular interest to utilities, transformers are a type of eligible equipment that could be manufactured at facilities earning this credit. Under the law, at least $4 billion must be allocated to “energy communities.”

The low-income wind and solar credit is focused on projects with a nameplate capacity of less than 5 MW and will allocate credits totaling 1.8 GW of capacity. Treasury, IRS, and DOE will issue further guidance delineating additional criteria for prioritizing allocations, which “may include a focus on facilities that are owned or developed by community-based organizations and mission-driven entities, have an impact on encouraging new market participants, provide substantial benefits to low-income communities and individuals marginalized from economic opportunities, and have a higher degree of commercial readiness.”

DOE Extends Comment Period on Distribution Transformer Proposed Rule

DOE has extended the comment period for its proposed conservation standard for distribution transformers by 14 days – to March 27 – after requests for more time from the American Public Power Association, National Rural Electric Cooperative Association, and others. The groups had requested 30 to 60 days additional time to respond to the new standards, which will require transformers to be manufactured with amorphous steel that is only available from one domestic source and could exacerbate the current shortage of grid components.

FERC, States Discuss Solutions on Physical Grid Attacks

On Feb. 15, the Federal Energy Regulatory Commission (FERC) held a state-federal task force meeting with several state utility commissioners on electric transmission and potential solutions to lower the impact of physical attacks on the electric grid.  In the meeting, both FERC and state commissioners agreed that any new requirements should be carefully designed to minimize impacts and costs on energy consumers and providers.  One of the solutions floated by the group would be to build more transmission lines and substations, which could limit the extent of damage from individual substation attacks.  Another possible solution would be to promote more agreement among utilities to share equipment, such as transformers, so that damaged substations could be fixed more quickly.  In December 2022, FERC directed the North American Electric Reliability Corp. (NERC) to conduct a study evaluating the current standards for physical grid security, which is expected to be completed sometime in April.  FERC may mandate new infrastructure security requirements based on NERC’s findings.

FERC Approves New Cold Weather Reliability Standards for Power Plants

During its monthly meeting on Feb. 16, FERC unanimously approved new rules requiring power plants to implement extreme cold weather reliability standards based on the temperatures in their area. The new and revised standards require generator owners to implement freeze protection measures, identify generator cold weather critical components susceptible to freezing, implement corrective actions so equipment freezing do not occur, and develop procedures to improve the coordination of load reduction measures during a grid emergency, among other things. Power plants that have experienced outages or other problems due to frozen equipment will have until July 1 to develop corrective action plans, and other power plants will have up to five years to develop a plan. The new and revised reliability standards come two years after Winter Storm Uri in Texas caused millions of people to lose power in below-freezing temperatures.  In addition to the new rules, NERC is drafting another standard in response to Winter Storm Uri that is expected later this year.

In this edition:

• Congress: Rep. Kevin McCarthy (R-CA) is elected Speaker of the House for the 118^th..
• Energy: DOE proposes new energy efficiency standards for distribution transformers; FERC Commissioner Willie Phillips is named acting chair; FERC directs NERC to develop reliability standards for monitoring internal network systems…
• Infrastructure: The FBI sends a memo to utilities on recent shootings and physical attacks on electric grid infrastructure…

Kevin McCarthy Secures Speakership in the House
Late on Jan. 6, Rep. Kevin McCarthy (R-CA) finally won the election to become Speaker of the House on the 15th ballot.  Of the bloc of 20 Republicans that had at one point voted no, fourteen eventually switched to a ‘yes’ in later votes. Six voted ‘present’ in the final vote, including Rep. Matt Gaetz (R-FL), Andy Biggs (R-AZ), Eli Crane (R-AZ), Bob Good (R-VA), Matt Rosendale (R-MT), and Lauren Boebert (R-CO), effectively lowering the win threshold to 215 votes.  To win support from the holdouts, McCarthy agreed to add several changes to the House rules package: 1) restore a rule that allows a single member to call for a vote to oust the Speaker; 2) allow a single member to force a recall vote at any time; 3) limit bills to a single subject, and 4) set up a separate vote to create a Judiciary subcommittee to centralize investigations into the Executive branch.  McCarthy also agreed to appoint three “solid conservatives” to the Rules Committee and ensure that the Freedom Caucus has proportional representation on other House committees.

DOE Proposes New Energy Efficiency Standards for Distribution Transformers
The Department of Energy (DOE) has proposed new efficiency standards for transformers that would require all three subcategories of transformers manufactured or imported in 2027 or later to have amorphous steel core components, shifting from the current traditional, grain-oriented electrical steel.  Under the Energy Policy and Conservation Act (EPCA), DOE is authorized to prescribe new energy conservation standards for distribution transformers when it is technologically and economically feasible and improves energy efficiency standards. As such, DOE has identified that amorphous steel is much more efficient than grain-oriented steel, contending that the regulation change would cut carbon dioxide emissions by an estimated 340 million metric tons over the next 30 years.  With the ongoing supply chain and critical mineral challenges, electric utilities currently face severe shortages of distribution transformers.  The new proposed standard could further exacerbate transformer production challenges for manufacturers due to the lack and competition for steel supplies, which will significantly increase the already-long lead times electric utilities have to contend with to procure distribution transformers.  Comments on DOE’s proposal are due on March 13, 2023.

Biden Names Acting Chair for FERC
President Biden has chosen Willie Phillips to serve as the acting Chair of the Federal Energy Regulatory Commission (FERC) until a new permanent Chair is nominated and confirmed by the Senate.  Phillips currently serves as a FERC commissioner and has formerly chaired the D.C. Public Service Commission and worked at the North American Electric Reliability Corporation (NERC).  Former Chair Richard Glick exited the agency at the end of 2022 after Senate Energy and Natural Resources Committee Chairman Joe Manchin (D-WV) chose to not hold a hearing on his renomination.  Sen. Manchin has endorsed President Biden’s temporary pick, saying that Phillips is a “supremely qualified and reasonable person” and someone who “understands the need to balance affordability and reliability” in energy markets.

Biden Announces DOE, EPA, and Interior Renominations
On Jan. 23, President Biden announced the renominations of Jeffrey Marootian to be assistant secretary for the DOE Office of Energy Efficiency and Renewable Energy, Laura Daniel-Davis for Assistant Interior Secretary for Land and Minerals Management, and Joe Goffman for EPA air chief.  A couple weeks earlier, President Biden renominated David Crane to be Undersecretary of Energy for Infrastructure.  These candidates were renominated after failing to secure Senate confirmation before the end of the 117^th Congress.

FERC Orders Development of Reliability Standards for Monitoring Internal Network Systems
At its monthly meeting on Jan. 19, FERC directed the North American Electric Reliability Corporation (NERC) to develop new reliability standards requiring electric utilities to monitor the internal networks of high-impact bulk electric system cyber systems and medium-impact systems with external routable connectivity.  The final rule directs NERC to study whether similar protections should be required for other medium- and low-impact cyber systems.  The rule builds on another FERC proposal first issued in January 2022 and is in response to the SolarWinds cyberattack in 2020 and other similar attacks in which traditional security monitoring controls under existing regulations were bypassed.

FBI Sends Memo to Utilities on Physical Attacks Against Grid Infrastructure
On Jan. 12, the Federal Bureau of Investigation (FBI) released a memo to utility providers regarding the increase in attacks and threats against the U.S. electric grid, encouraging utilities to report suspicious activity, including “explicit reconnaissance or surveillance activity” of critical facilities, signs of tampering or unauthorized access, and theft of equipment including employee uniforms and access keys.  The memo comes as the number of physical attacks and threats against the electric grid reached its highest point in at least a decade last year, according to news sources.

In this edition:

• Congress: The 118^th Congress begins; the $1.7 trillion FY23 Omnibus Appropriations package becomes law…
• Tax and Finance: The Biden administration releases a Guidebook for the Inflation Reduction Act…
• Energy: Sen. Manchin’s energy permitting reform language is excluded from end-of-year legislative vehicles; DOE and FERC hold a joint technical conference on supply chain risk management…

118th Congress Sworn In
On Jan. 3, the 118th Congress convened, with several new delegation members representing New England.  In the Senate, former House Representative Peter Welch (D-VT) was seated in the Senate seat formerly held by now-retired Sen. Patrick Leahy.  Becca Balint (D-VT) will be sworn in to take over as Vermont’s at-large Representative.

As of this writing, Republican Leader Kevin McCarthy (R-CA) has thrice failed to secure the Speakership, with all Democrats voting for Minority Leader Hakeem Jeffries (D-NY) and 20 Republicans voting for Rep. Jim Jordan (R-OH) on the third ballot.  The vote marks the first time in roughly a century that a Speaker was not elected on the first ballot, and no business can proceed in the House until a candidate reaches a majority of 218 votes.

Congress Passes FY23 Omnibus Spending Package
On Dec. 22, the Senate passed the $1.7 trillion FY23 Omnibus appropriations spending bill by a vote of 68-23 with the House passing the package by a vote of 225-201 on Dec. 23.  President Biden was able to sign the bill into law just hours ahead of the midnight deadline, averting a government shutdown.  The bill includes a 10% increase to domestic spending generally, including a significant boost to the Department of Energy.  However, it did not include funds to accelerate action under the Defense Production Act to spur domestic manufacturing of transformers and other grid components.

Guidebook Released for Inflation Reduction Act
On Dec. 15, the Biden administration released an official Guidebook for the $369 billion in clean energy and climate investments in the Inflation Reduction Act (IRA). The Guidebook includes one-page descriptions of the IRA’s clean energy tax incentives and provides additional information on its grant funding and energy efficiency programs, including eligibility and programmatic requirements, period of availability, and other key details.  The Guidebook also acts as a roadmap of agency contacts and clarifying information that is similar in nature to the one published for the Bipartisan Infrastructure Law. The Administration is expected to make updates to the Guidebook as relevant announcements, including Treasury Notices on clean energy tax incentives implementation and Funding Opportunity Announcements, among other things, are published.

Sen. Manchin’s Permitting Reform Bill Dies
Sen. Joe Manchin’s (D-WV) energy permitting reform legislation was left out of the FY23 National Defense Authorization Act (NDAA) despite support from President Biden and Democratic leadership.  On Dec. 5, Sen. Manchin made some adjustments to the draft to help facilitate integration of additional renewable and other clean energy resources into the grid.  However, too many progressive Democratic lawmakers stood in opposition, voicing concerns that the bill would undermine environmental protections and other environmental justice issues. Ultimately, Democratic leadership elected to exclude the reforms from the base bill to ensure it would be able to pass.  Sen. Manchin also unsuccessfully attempted toad the reforms by amendment to the NDAA or as an addition to the FY23 Omnibus appropriations package, leaving it unattached to any must-pass legislative vehicle before the conclusion of the 117^th Congress.  However, permitting reform is likely to be a top agenda item for Republicans in the 118th Congress, who are likely to seek advancement of their own version.

DOE and FERC Hold Joint Technical Conference on Supply Chain Security
On Dec. 7, the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) held a joint technical conference on supply chain risk management.  The main theme of the conference was cyber and physical security of the power grid, and the recent attack on two North Carolina substations was frequently referenced.  Panelists discussed FERC’s supply chain standards and whether new updates were needed, although at the conclusion of the conference, there was not an established consensus.  FERC Chair Richard Glick expressed support for new critical infrastructure protection (CIP) standards, saying that “there are people out there, whether they be people here in the United States or people around the world, that are out there trying to do damage to the grid,” and that “the supply chain threat has evolved and become more serious over time.”

However, several panelists cautioned DOE and FERC against adopting new standards that are overly prescriptive. They contended that time and flexibility is needed to consider existing standards, and that the industry is already facing multiple security regimes such as the Office of Management and Budget’s memo on federal agencies’ software supply chain risk management and the cyber incident reporting language from the Critical Infrastructure Act of 2022.

In this edition:

• Congress: Sen. Manchin’s energy permitting reform is not included in the National Defense Authorization Act; mid-term election results are finalized…
• Energy: Appropriations Committees receive letters from APPA and House Democrats to pass emergency funding for distribution transformers…
• Tax and Finance: U.S. Treasury releases its first set of Inflation Reduction Act tax guidance on prevailing wage and apprenticeship requirements; President Biden announces nominee to head the IRS…

Sen. Manchin’s Permitting Reform Bill Excluded from NDAA
Sen. Joe Manchin’s (D-WV) permitting reform legislation has been officially left out of the base text of the FY23 National Defense Authorization Act (NDAA) despite Democratic leadership and President Biden’s support.  On Dec. 5, Sen. Manchin made some adjustments to the draft to help facilitate integration of additional renewable and other clean energy resources into the grid.  However, too many progressive Democratic lawmakers stood in opposition, voicing concerns that the bill would undermine environmental protections and other environmental justice issues. Ultimately, Democratic leadership elected to exclude the reforms from the base bill to ensure it will be able to pass.  Nevertheless, Sen. Manchin may continue the effort by pursuing a floor amendment to the NDAA or by seeking inclusion of the permitting reform language in the omnibus appropriations package.

Democrats Keep Majority in the Senate, Republicans Flip the House for the 118th Congress
On Nov. 12, Democrats secured a majority in the Senate for the 118th Congress after the razor thin race for incumbent Sen. Catherine Cortez Masto (D-NV) was called following the Nov. 8 election.  Sen. Cortez Masto’s 0.5 percentage point win ensured Democrats will retain control of the chamber when the new Congress convenes in January 2023.  In a Dec. 6 runoff election in Georgia, Sen. Raphael Warnock retained his seat, giving Democrats a 51-49 advantage in the Senate.  In the House, Republicans won enough seats to flip the majority, and will hold a slim margin of 222-213 for the two-year term beginning in January.

APPA, NRECA, and EEI Send Joint Letter to Appropriations Leadership on Distribution Transformer Shortage Crisis
On Nov. 18, the American Public Power Association (APPA), National Rural Electric Cooperative Association (NRECA), and Edison Electric Institute (EEI) sent a letter to House and Senate Appropriations Committee leadership requesting a $1 billion appropriation to address the national distribution transformer shortage crisis.  The letter requests that funding be included in the end-of-year emergency supplemental appropriations bill and be authorized under President Biden’s Defense Production Act (DPA) Executive Order that was issued in June of this year to increase domestic production of distribution transformers, electric grid components, solar, fuel cells, electrolyzers, heat pumps, and others.  Influential groups from the construction industry, including the Association of General Contractors and National Association of Home Builders also cosigned the letter, signaling that the transformer shortage is affecting the residential and commercial development industry in addition to the electric grid.

On Dec. 5, a group of House Democrats sent a letter to House and Senate Appropriations Committees asking them to include $2.1 billion in the end of year emergency supplemental to boost domestic production of distribution transformers and other electric grid components.  The request emphasized that “the current shortage puts America’s national security at risk, weakens the resilience of our electrical grid, and jeopardizes our decarbonization goals.”  The letter was led by Rep. Sean Casten (D-IL) and cosigned by Rep. Connor Lamb (D-PA), Paul Tonko (D-NY), and six other House members.

Treasury Releases First Guidance on Inflation Reduction Act Tax Title
On Nov. 29, the U.S. Department of Treasury and the Internal Revenue Service (IRS) published initial guidance on prevailing wage and apprenticeship requirements that tax-exempt entities, including public power and electric cooperatives, must meet to be eligible for the enhanced value or “bonus rate” of various production and investment tax credits under the Inflation Reduction Act (IRA).  Under the IRA, energy tax credits are structured in a two-tier approach with a “base rate” and a “bonus rate,” in which the bonus rate is five times that of the base rate and would apply to projects that meet prevailing wage and apprenticeship requirements.  The IRS Notice provides guidance and accompanying examples on how owners of clean energy facilities may satisfy these requirements as well as guidance on methods to use to establish the beginning of construction or installation of a facility.  Under the Act, the requirements must go into full effect 60 days after publication, which is Jan. 30, 2023.  In the near future, the Treasury and IRS anticipate issuing proposed regulations and other guidance related to the prevailing wage and apprenticeship requirements.

President Biden Announces Nomination for Head of IRS
On Nov. 10, President Biden announced the nomination of Danny Werfel to lead the Internal Revenue Service (IRS).  Werfel has held posts in both Democratic and Republican administrations, serving both President Barack Obama as the IRS Acting Commissioner and President George W. Bush as Office of Management and Budget (OMB) Controller.  If confirmed by the Senate, Werfel would take charge at the agency in the wake of an $80 billion influx of funding to the agency from the Inflation Reduction Act to implement the substantive climate and energy tax title.  Chuck Rettig, the current IRS head, departed from the agency at the end of his term on Nov. 12.

In this edition:

• Congress: The Senate begins consideration of the FY23 National Defense Authorization Act…
• Energy: APPA and NRECA send a letter to DOE on distribution transformer shortage; FERC holds a conference on transmission planning…
• FEMA: Clean energy companies send letter to the ICC on FEMA’s proposal to require Risk Category 4 for power plants…
• Tax and Finance: Treasury requests public comment on implementation of IRA energy tax incentives; Secretary Janet Yellen names new acting head of the IRS…

Senate Begins Process for FY23 NDAA 

Senate Armed Services Committee Chairman Jack Reed (D-RI) has begun consideration of the FY23 National Defense Authorization Act (NDAA) by offering a package of 75 proposed amendments to the base bill, after receiving more than 900 potential amendments.  Among the energy amendments included is an authorization of $3.5 billion to establish a new Nuclear Fuel Security Program to reduce U.S. reliance on uranium from Russia, as well as a separate amendment that would require the Department of Defense and the National Nuclear Security Administration to submit a plan on restoring domestic capabilities for enriching uranium by 2035.  Another amendment would create an Office of Manufacturing Security and Resilience within the Department of Commerce to increase domestic production of critical minerals and technologies.  Adding Sen. Joe Manchin’s (D-WV) energy permitting reform legislation has not yet been discussed and may become a point of negotiation when Congress returns from recess in mid-November.  The House passed its version of the NDAA earlier this year.

APPA and NRECA Send Letter on Transformer Shortage to DOE 

On Oct. 19, the American Public Power Association (APPA) and National Rural Electric Cooperative Association (NRECA) sent a letter to Energy Secretary Jennifer Granholm emphasizing the transformer shortage crisis and asking the Department of Energy (DOE) to prioritize funding from the Inflation Reduction Act to boost U.S. production of distribution transformers.  The letter urges DOE to establish a $220 million wage subsidy program to assist manufacturers with labor attraction and retention, which would enable 24/7 manufacturing operations.  In February, DOE released a report stressing that the supply of transformers will have to multiply dramatically if the nation’s grid is to support new wind and solar generation and EV charging, and that the transformer supply is an issue of national security.

FERC Holds Conference on Transmission

On Oct. 6, the Federal Energy Regulatory Commission (FERC) held a technical conference on transmission planning and cost management for transmission facilities developed through local or regional transmission planning processes.  Panelists discussed the development and use of local transmission planning criteria and challenges with cost management practices and protocols in the local and regional transmission process, among other things.  Public power utilities, which were represented on several panel discussions throughout the conference, advocated for clear management protocols for tracking costs and benefits and have asserted that costs should be allocated in a manner roughly commensurate with benefits.  In the conference, several Commissioners noted that there are gaps in the current transmission and cost recovery processes and that more state and local scrutiny is needed in the processes.

Energy Companies Push for Rejection of FEMA Category 4 Code Proposal

A group of 318 clean energy companies have sent a letter to the International Code Council urging the rejection of the Federal Emergency Management Agency’s (FEMA) building code proposal that would affect power generation facilities owned and operated by public utilities and require them to meet Risk Category 4, the highest risk category under the model building codes.  If the code is adopted, clean energy projects would be required to withstand severe natural disasters such as hurricanes, floods, or earthquakes.  In the letter, companies in the solar, storage, wind, and other industries contend that the change would spike the cost of construction and force “unworkable” requirements on manufacturers of renewables.  In defense of the proposal, FEMA has said that the new requirements are “measured in scope and a necessary preparation for natural disasters”.

Treasury Requests Public Comment on Implementation of IRA Energy Tax Incentives 

On Oct. 5, the Treasury Department and the Internal Revenue Service (IRS) released for public comment the first set of six Notices on various climate and energy tax provisions in the recently enacted Inflation Reduction Act (IRA). The six Notices cover a wide array of provisions including clean energy generation incentives, direct payment to tax-exempt entities, prevailing wage, apprenticeship, and domestic content requirements, among other things. Comments to the six Notices will help inform the Treasury and IRS implementation guidance. The deadline to submit comments is Nov. 4.

Treasury Secretary Names Acting Head of IRS

On Oct. 28, Treasury Secretary Janet Yellen appointed Douglas O’Donnell to serve as the acting head of the Internal Revenue Service (IRS).  The current IRS Commissioner, Chuck Rettig, is a Trump era appointee whose term is set to end on Nov. 12.O’Donnell is currently deputy commissioner and will take the lead of the IRS until President Joe Biden names a nominee for the position and Congress approves a new permanent head.  The appointment comes as the IRS has received $80 billion in funding from the Inflation Reduction Act and is tasked with overseeing the tax title of the bill, including writing guidance on the eligibility and requirements for the clean energy tax credits.

In this edition:

• Congress: A continuing resolution is passed without Sen. Manchin’s energy permitting reform…
• Energy: The Department of Energy gathers feedback on the Defense Production Act; President Biden establishes new White House Office on Clean Energy Innovation and Implementation…
• Cybersecurity: The Cybersecurity and Infrastructure Security Agency issues an RFI to gather feedback on cyber incident reporting requirements; the Federal Energy Regulatory Commission issues a NOPR on advanced cybersecurity investment incentives…

Continuing Resolution Moves Forward Without Permitting Reform
Congress passed a Continuing Resolution (CR) on Sept. 30 to extend current levels of government funding through Dec. 16. The CR will be the last major piece of legislation passed until after the midterm elections as Congress has adjourned for recess until mid-November.  The CR gives time to finalize appropriations for FY23 during the lame duck session.  The bill includes $1 billion for the Low-Income Home Energy Assistance Program (LIHEAP), as well as $2 billion for disaster assistance, among other things.

Sen. Joe Manchin’s (D-WV) energy permitting reform legislative proposal was originally included in the CR, however, Sen. Manchin asked Senate Majority Leader Chuck Schumer (D-NY) to strip the language ahead of the Senate’s first procedural vote on the measure due to opposition from both parties in both chambers.  Democratic leaders may attempt to attach Sen. Manchin’s permitting reforms to another piece of must-pass legislation before the end of the year, such as the National Defense Authorization Act or an end-of-year omnibus appropriations bill.

DOE Issues RFI on Defense Production Act Executive Order
The Department of Energy has issued a Request for Information (RFI) on the implementation of the Defense Production Act (DPA) to accelerate domestic production and manufacturing of solar technology, transformers and electric grid components, electrolyzers, fuel cells, and other equipment.  The DPA, a wartime presidential authority used to increase production of supplies during national emergencies, was invoked by President Biden in June to help mitigate supply chain issues in the energy sector.  The RFI seeks information from industry leaders and state and local governments on supply chain challenges, domestic manufacturing, workforce issues, and equality.

Biden Creates Clean Energy Office for IRA Implementation
President Biden issued an executive order on Sept. 12 to help with the implementation of the Inflation Reduction Act (IRA), establishing the White House Office on Clean Energy Innovation and Implementation.  The new office will be headed by senior adviser John Podesta and is intended to help ensure that IRA funds are distributed and used effectively across the federal government.  Podesta’s office will also work in coordination with the White House Office of Domestic Climate Policy to help structure the law’s grants and tax credits.  Podesta has already received multiple requests from the energy sector to release guidance on the IRA as soon as possible to help spur its implementation, although no announcement for it has been made yet.

CISA Seeks Feedback on Cyber Incident Reporting Requirements
The Cybersecurity and Infrastructure Security Agency (CISA) has issued a Request for Information (RFI) to gather feedback on cyber incident reporting requirements for critical infrastructure.  Earlier this year, as part of the FY22 spending deal, Congress enacted the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA) which mandates new cyber incident and ransomware reporting requirements for critical infrastructure operators.  CISA is seeking input on definitions for and interpretations of the terminology to be used in the proposed regulations; the form, manner, content, and procedures for submission of reports required under CIRCIA; and information on requirements to report a description of the vulnerabilities exploited, among other things.  In addition to the RFI, CISA will hold 11 public listening sessions to gather feedback.  Comments to the RFI are due 60 days after publication in the Federal Register.

FERC Issues NOPR on Incentives for Advanced Cybersecurity Investment
On Sept. 22, the Federal Energy Regulatory Commission (FERC) held its monthly meeting.  FERC issued a Notice of Proposed Rulemaking (NOPR) on incentives for advanced cybersecurity investment, with proposed rate incentives for investing in cybersecurity technology and participating in cybersecurity threat information sharing programs.  The cyber incentives would take the form of either a return of equity adder or deferred cost recovery.  In direct contradiction with the NOPR, Chairman Richard Glick said in the meeting that he had “significant concerns” about cyber threats and that they may be better addressed through mandatory standards instead of incentives for voluntary measures.  The Bipartisan Infrastructure Law requires FERC to establish incentive rates on cybersecurity investments by May 2023.  Comments are due within 30 days of the NOPR’s publication in the Federal Register.

In for a green bank, and $9.7 billion for the cooperative transition fund, among other things.  To help pay for the bill and reduce deficits, the package would include a 15 percent corporate minimum tax, prescription drug pricing reforms and stepped-up funds for IRS enforcement.

The Senate parliamentarian is now reviewing the bill’s provisions to ensure they comply with the Senate’s budget rules.  With every Democrat vote needed to advance the bill, Senate Democrats are awaiting Sen. Kyrsten Sinema’s (D-AZ) position, as she has not yet indicated whether or not she would vote in favor of the deal.  While Sen. Sinema has voiced her opposition to raising individual and corporate tax rates in the past, she supported the 15 percent minimum book income tax during Reconciliation negotiations back in December, which is a major source of revenue in the Manchin-Schumer bill.

The House Passes Minibus of Six Appropriations Bills
The House passed its first package of appropriations bills for FY23—a six-bill minibus totaling $402 billion. The package includes the Energy and Water, Interior-EPA, Transportation-Housing and Urban Development, Agriculture-Rural Development, Financial Services-General Government, and Military Construction-Veterans Affairs spending measures. The Energy and Water bill provides $56 billion – an increase of $3.4 billion from FY22 spending levels – for the Department of Energy (DOE), the U.S. Army Corps of Engineers, the Bureau of Reclamation, and related federal programs.  Democrats successfully fended off Republican efforts to de-fund President Biden’s executive actions on climate as well as to make across-the-board cuts to spending at the EPA, the DOE, and the Department of the Interior.  The Senate has begun releasing text for its appropriations bills for FY23, but hearings will not be scheduled until after the August recess.

Congress Passes “Chips and Science” Innovation Bill
On July 28, the House passed the “Chips and Science” Innovation bill after the Senate’s passage on July 27 that would bolster competition with China and address shortages of chips and semiconductors.  Previously named the “US Innovation and Competition Act” (USICA) in the Senate and the “America COMPETES Act” in the House, the bill had undergone weeks of negotiations in a joint committee to reconcile the bills’ various differences.  However, after a push from President Biden and other stakeholders, Majority Leader Chuck Schumer (D-NY) pared off the chips portion of the USICA to boost domestic manufacturing sooner rather than later due to supply chain shortages, and includes $52 billion for semiconductor manufacturing. After a series of procedural votes in the Senate, Leader Schumer added $200 billion in research authorizations for the Department of Energy’s Office of Science and the National Science Foundation—representing a slimmed down version of the USICA and America COMPETES.  The bill now awaits signature from President Biden to become law.

House Panel Advances Power Plant Permitting Bill
On July 20, the House Oversight and Reform Committee advanced the “Justice in Power Plan Permitting Act” (H.R. 6548) on a party-line vote after a contentious markup.  The bill, sponsored by Chairwoman Carolyn Maloney (D-NY), would prevent the permitting of fossil fuel-fired power plants within one mile of an existing major air pollution source and establish a $10 billion “Just Energy Transition Fund” to replace plants that are not eligible to be permitted or re-permitted under the legislation, among other things.  During the markup, the panel rejected several amendments proposed by Republicans including one by Ranking Member James Comer (R-KY) that would have removed a provision of the bill that gives preference to renewable energy projects constructed by labor union-friendly firms.  The House Energy and Commerce Committee, which also has jurisdiction over the bill, has not yet scheduled a markup. In another effort to curb power plant emissions, Rep. Alexandria Ocasio-Cortez (D-NY) is circulating a bill, “The EPA Regulatory Authority Act of 2022”, which would give the EPA broad authority to regulate greenhouse gas emissions from power plants that was stripped by the Supreme Court’s West Virginia v. EPA ruling last month.  However, several of Rep. Ocasio-Cortez’s Democratic colleagues seem reluctant to make changes to the Clean Air Act during an election year, and it is highly unlikely that the bill would pass in the Senate.

DOE Announces New Staff Appointments
On July 19, the Department of Energy (DOE) announced several new appointees to head various clean energy offices and oversee the implementation of grant programs newly created under the Bipartisan Infrastructure Law (BIL).  Maria Robinson, a former nominee to lead the Office of Electricity, will be the first-ever director of the new Grid Deployment Office.  In her role, Robinson will be responsible for the modernization and upgrade of the nation’s electric transmission system as well as efforts to deploy reliable and affordable clean electricity.  Zachary Valdez has been tapped for the role of chief of staff for the Office of Manufacturing and Energy Supply Chains to help lead the agency’s efforts to address energy supply chain issues and distribute funding to domestic battery production. Since last year, DOE has been on a hiring spree to disburse and implement $62 billion in funding for clean energy investments under the BIL.

In this edition:

• Energy and Climate: The Inflation Reduction Act is signed into law, includes direct pay for not-for-profit utilities…
• Appropriations: Congress prepares a stopgap funding bill with possible energy permitting reforms and emergency funding…
• Senate: The Senate confirms Annie Caputo and Bradley Crowell to the Nuclear Regulatory Commission (NRC)…
• DOE: The Department of Energy (DOE) denies a request from the American Public Power Association to temporarily waive conservation standards for distribution transformers…

Congress Passes “Inflation Reduction Act” 

On Aug. 16, President Biden signed the “Inflation Reduction Act” into law after passing both chambers of Congress on a party line vote.  The bill includes $370 billion in climate and energy measures, including an extension and expansion of the production and investment tax credits for clean energy that transition to a technology-neutral credit in 2025. Also included are a new tax credit for existing nuclear facilities, an increase to the credit for carbon capture and sequestration, a new hydrogen production credit, and credits for energy efficient homes and personal investments in clean energy.

Most of the tax credits are offered at a lower “base” rate that is increased if the project follows prevailing wage and apprenticeship requirements, to be elaborated upon by forthcoming Treasury guidance.  Additional bonuses are offered for projects in an “energy community” that has seen a coal plant closure or loss of energy-related jobs, projects that meet domestic content production requirements, or wind and solar projects in low-income communities.  The bill allows not-for-profit entities to claim the credits as direct-pay rebates, but reduces the value somewhat for projects financed with tax-exempt bonds.

Rural utilities and cooperatives would be eligible for new grants and loans to purchase renewable and zero-emission generation systems.  States and non-profits would be eligible for grants to install clean energy projects at low-income housing sites and for environmental justice projects.  The bill would also create a new grant and loan program for transmission siting and establishing new transmission lines in corridors of national interest.  It also contains $100 million to address production of high-assay, low-enriched uranium (HALEU).

With $62 billion in the Bipartisan Infrastructure Law and $369 billion in the IRA for climate and clean energy investments, it will take time for the Department of Energy and the Treasury to publish details and guidance on new grant programs and tax incentives.  Among the tax changes that took effect on the date of enactment are the new final assembly provision for EVs, which require EVs to be assembled in North America to be eligible for the tax credit.  Several other restrictions on the EV tax credit have called into question whether any cars currently on the market will qualify.

Congress to Take Up Appropriations and Energy Permitting Reforms

With the Inflation Reduction Act signed into law, appropriations talks and Sen. Joe Manchin’s (D-WV) energy permitting reform list are expected to be the new center of attention.  With the deadline to approve FY23 funding looming on Sept. 30, a stopgap funding bill is expected to be considered before that date, as the Senate has not yet passed any of its appropriations bills and House and Senate appropriators have yet to agree on topline spending amounts.  That stopgap bill may include permitting reforms that had been demanded by Sen. Manchin as a part of his agreement to support the Inflation Reduction Act, and on which Sen. Majority Leader Chuck Schumer (D-NY) promised a vote before the end of the year.  Several members from both parties are showing reluctance to pass new permitting reforms, although neither party appears interested in delaying government funding.

The Biden administration has also sent a request to Congress to add $47.1 billion in emergency supplemental funds to the stopgap bill, including $22.4 billion in emergency funds for COVID-19 response and $6.5 billion in additional disaster relief aid for several federal agencies, among other things.  Republicans are already resisting various riders, with Senate Appropriations Ranking Member Richard Shelby (R-AL) calling for a “clean” bill.  It is not yet clear what will be included in the final draft, but the House is expected to take up the bill the week of Sept. 12 after it returns from August recess to avoid a government shutdown on Oct. 1.

Senate Confirms Two Nuclear Regulatory Commission Nominees

The Senate has confirmed the nominations of Annie Caputo and Bradley Crowell to the Nuclear Regulatory Commission (NRC), restoring the commission to its full five members.  The NRC is tasked with overseeing the country’s existing nuclear power plants and approving the next generation of reactor designs, as well as protecting public health and safety related to nuclear energy.  Caputo previously served as an NRC commissioner before her term expired in June 2021.  Before her confirmation, Caputo was a consultant with the Idaho National Laboratory, a staffer for the Senate Environment and Public Works Committee, and worked for the Exelon Corporation.  Before his confirmation, Crowell served as director for the Nevada Department of Conservation and Natural Resources, and had previously worked under Sen. Sheldon Whitehouse (D-RI), former Nevada Governor and Senator Richard Bryan, and at DOE during the Obama administration.

DOE Denies Temporary Efficiency Standard Waiver for Distribution Transformers

DOE has denied the request from the American Public Power Association (APPA) and the National Rural Electric Cooperative Association (NRECA) to temporarily roll back the most recent conservation standards for distribution transformers.  APPA and NRECA’s letter, which was sent to Secretary Jennifer Granholm in May, urged the department to temporarily waive the standards in order to boost manufacturing of transformers as grid operators are faced with severe supply chain issues and long lead times to fulfill orders.  DOE’s response, which was sent by Principal Deputy Assistant Secretary Kelly Speakes-Backman, cited a commitment to fairness and opted to not change an industry-wide regulation at this time.

In this edition:

• Energy and Climate: Sen. Joe Manchin (D-WV) and Majority Leader Chuck Schumer (D-NY) make a reconciliation agreement including $369 billion energy and climate package with refundable direct pay tax credits…
• Appropriations: The House advances six out of twelve appropriations bills for FY23, the Senate begins releasing its appropriations bill text…
• Congress: The House and Senate pass the China Competition “Chips and Science” bill; the House circulates several power plant emissions bills…
• DOE: The Department of Energy announces appointments for the new Grid Deployment Office and the Office of Manufacturing and Energy Supply Chains…

Energy and Climate Title Added to Reconciliation Deal, Includes Direct Pay
On July 6, Senate Democrats submitted language on prescription drug pricing to the parliamentarian, making it the first section of a new package to be reviewed for its comportment with strict reconciliation rules.  News outlets have reported that Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin III (D-WV) were considering a “$300 billion ceiling” for energy tax incentives.  However, on July 14, Sen. Manchin surprised Democratic leaders by saying that he would not vote for new spending on climate change or tax increases in the reconciliation bill that Democrats have been negotiating for weeks.

In a grand turn of events, Sen. Manchin and Majority Leader Schumer reached a reconciliation deal on July 27, now called the “Inflation Reduction Act of 2022,” that includes $369 billion for energy and climate.  In a huge legislative victory, access to refundable direct pay tax credits for not-for-profit electric utilities was also kept in the bill.  The deal also includes an extensive list of extended and new tax incentives for renewables, carbon capture, standalone energy storage, nuclear, and EVs, as well as $60 billion in funding for clean energy manufacturing, $27 billion for a green bank, and $9.7 billion for the cooperative transition fund, among other things.  To help pay for the bill and reduce deficits, the package would include a 15 percent corporate minimum tax, prescription drug pricing reforms and stepped-up funds for IRS enforcement.

The Senate parliamentarian is now reviewing the bill’s provisions to ensure they comply with the Senate’s budget rules.  With every Democrat vote needed to advance the bill, Senate Democrats are awaiting Sen. Kyrsten Sinema’s (D-AZ) position, as she has not yet indicated whether or not she would vote in favor of the deal.  While Sen. Sinema has voiced her opposition to raising individual and corporate tax rates in the past, she supported the 15 percent minimum book income tax during Reconciliation negotiations back in December, which is a major source of revenue in the Manchin-Schumer bill.

The House Passes Minibus of Six Appropriations Bills
The House passed its first package of appropriations bills for FY23—a six-bill minibus totaling $402 billion. The package includes the Energy and Water, Interior-EPA, Transportation-Housing and Urban Development, Agriculture-Rural Development, Financial Services-General Government, and Military Construction-Veterans Affairs spending measures. The Energy and Water bill provides $56 billion – an increase of $3.4 billion from FY22 spending levels – for the Department of Energy (DOE), the U.S. Army Corps of Engineers, the Bureau of Reclamation, and related federal programs.  Democrats successfully fended off Republican efforts to de-fund President Biden’s executive actions on climate as well as to make across-the-board cuts to spending at the EPA, the DOE, and the Department of the Interior.  The Senate has begun releasing text for its appropriations bills for FY23, but hearings will not be scheduled until after the August recess.

Congress Passes “Chips and Science” Innovation Bill
On July 28, the House passed the “Chips and Science” Innovation bill after the Senate’s passage on July 27 that would bolster competition with China and address shortages of chips and semiconductors.  Previously named the “US Innovation and Competition Act” (USICA) in the Senate and the “America COMPETES Act” in the House, the bill had undergone weeks of negotiations in a joint committee to reconcile the bills’ various differences.  However, after a push from President Biden and other stakeholders, Majority Leader Chuck Schumer (D-NY) pared off the chips portion of the USICA to boost domestic manufacturing sooner rather than later due to supply chain shortages, and includes $52 billion for semiconductor manufacturing. After a series of procedural votes in the Senate, Leader Schumer added $200 billion in research authorizations for the Department of Energy’s Office of Science and the National Science Foundation—representing a slimmed down version of the USICA and America COMPETES.  The bill now awaits signature from President Biden to become law.

House Panel Advances Power Plant Permitting Bill
On July 20, the House Oversight and Reform Committee advanced the “Justice in Power Plan Permitting Act” (H.R. 6548) on a party-line vote after a contentious markup.  The bill, sponsored by Chairwoman Carolyn Maloney (D-NY), would prevent the permitting of fossil fuel-fired power plants within one mile of an existing major air pollution source and establish a $10 billion “Just Energy Transition Fund” to replace plants that are not eligible to be permitted or re-permitted under the legislation, among other things.  During the markup, the panel rejected several amendments proposed by Republicans including one by Ranking Member James Comer (R-KY) that would have removed a provision of the bill that gives preference to renewable energy projects constructed by labor union-friendly firms.  The House Energy and Commerce Committee, which also has jurisdiction over the bill, has not yet scheduled a markup. In another effort to curb power plant emissions, Rep. Alexandria Ocasio-Cortez (D-NY) is circulating a bill, “The EPA Regulatory Authority Act of 2022”, which would give the EPA broad authority to regulate greenhouse gas emissions from power plants that was stripped by the Supreme Court’s West Virginia v. EPA ruling last month.  However, several of Rep. Ocasio-Cortez’s Democratic colleagues seem reluctant to make changes to the Clean Air Act during an election year, and it is highly unlikely that the bill would pass in the Senate.

DOE Announces New Staff Appointments
On July 19, the Department of Energy (DOE) announced several new appointees to head various clean energy offices and oversee the implementation of grant programs newly created under the Bipartisan Infrastructure Law (BIL).  Maria Robinson, a former nominee to lead the Office of Electricity, will be the first-ever director of the new Grid Deployment Office.  In her role, Robinson will be responsible for the modernization and upgrade of the nation’s electric transmission system as well as efforts to deploy reliable and affordable clean electricity.  Zachary Valdez has been tapped for the role of chief of staff for the Office of Manufacturing and Energy Supply Chains to help lead the agency’s efforts to address energy supply chain issues and distribute funding to domestic battery production. Since last year, DOE has been on a hiring spree to disburse and implement $62 billion in funding for clean energy investments under the BIL.

In this edition:

• SCOTUS: The Supreme Court issues its long-awaited ruling on the West Virginia v. EPA..
• Budget: Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV) continue to negotiate a budget reconciliation bill; the House finalizes its FY23 appropriations bills…
• Energy and Climate: President Biden announces executive actions to assist solar and other energy industries with supply chain issues; The Biden administration proposes National EV charging infrastructure standards…
• FERC: The Federal Energy Regulatory Commission issues a Notice of Proposed Rulemaking (NOPR) on improvements to generator interconnection procedures and agreements…
• DOE: The Department of Energy announces new home efficiency standards to phase out non-condensing gas furnaces by 2029…

SCOTUS Reins in EPA Authority to Regulate GHGs  
The Supreme Court issued its much-anticipated ruling in West Virginia v. Environmental Protection Agency (EPA) on June 29, the case that began as a challenge to the Clean Power Plan.  As expected, the conservative-leaning court ruled that Congress must speak with specificity on the issue of greenhouse gas regulation before EPA may issue sweeping rules that would transform the electric sector.  The 6-3 opinion, written by Chief Justice Roberts, focuses on whether EPA’s use of Sec. 111(d), under which the Clean Power Plan was issued, provides the agency with broad regulatory authority, but its invocation of the “major questions doctrine” indicates that other sections of the Act that had once been considered alternate paths to control the pervasive pollutant are also foreclosed from being used for major rules.  Under the Court’s ruling, it is possible that a much narrower exercise of power could be permissible, but it is hard to envision a rule that would meet the Court’s approval and also provide meaningful emissions reductions.

Lawmakers and legal scholars continue to parse the Supreme Court opinion in West Virginia v. Environmental Protection Agency to determine what, if any, paths forward exist for the regulation of greenhouse gases from the electric sector.  While the opinion did not go so far as to endorse the interpretation that only inside-the-fence-line upgrades are permissible as a system of emissions reduction under Clean Air Act Sec. 111(d), EPA is still foreclosed from any “major” regulation under existing law, as Congress has not clearly spoken to the issue.  Democrats in Congress are examining options to do just that, although the Budget Reconciliation process that would allow them to do so over the objections of Republicans requires a focus on budgetary matters that may make granting new regulatory authority a challenge.

Budget Reconciliation Pressure Rises to Combat Inflation, SCOTUS Ruling
The SCOTUS ruling has Democrats feeling greater urgency to pass a climate deal. News outlets have reported that talks between Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV) have progressed, however negotiations over various climate and clean energy tax credit provisions still need to be ironed out.  Adding to the challenges, Senate Minority Leader Mitch McConnell (R-KY) tweeted a warning on June 30 that GOP support for the China competition bill (USICA) would evaporate if the majority moves a partisan budget reconciliation bill.  After the Senate’s two-week July 4 recess, Democrats will have very few legislative days to reach a deal on a budget reconciliation package before the month-long August recess.  If a deal comes together, it would likely be in the form of a Reconciliation bill that could pass before September, and would consist of measures on energy and climate, inflation, the federal deficit, and prescription drug prices, but specific details have yet to be released.  Of concern to not-for-profit electric utilities, Sen. Manchin is reportedly souring on a direct pay option for clean energy tax credits, which may threaten the value of those extensions.

House Appropriators Approve FY23 Energy and Environment Funding Bills
During the last week of June, the House Appropriations Committee approved several FY23 funding bills, readying the bills for floor action, including the Energy-Water and Interior-EPA appropriations bills.  Earmarks were included in both measures, for the second year after a decade-long pause.  under the bills, funding for the EPA would increase by 21% ($11.5 billion), up from $9.5 billion as enacted in FY22.  The Department of Energy (DOE) would receive $48.2 billion, up $3.3 billion from the FY22 enacted level.  Within the DOE, the Office of Energy Efficiency and Renewable Energy would receive the biggest boost, nearly $800 million more than last year, while ARPA-E received a $100 million plus-up from FY22 enacted ($550 million).  Additionally, DOE would receive $100 million to fund President Biden’s invocation of the Defense Production Act to increase domestic production capability for transformers, electric grid components, solar, fuel cells, electrolyzers, heat pumps, and insulation.

While all the House FY23 funding bills have been approved ahead of the July 4 recess, the Senate has yet to schedule markups for any of their FY23 bills.  Senate Appropriations Chairman Patrick Leahy (D-VT) has indicated that the committee will begin reviewing bills after the July 4 recess, although Ranking Member Richard Shelby (R-AL) has told reporters that he is already preparing for a Continuing Resolution extending funding past the fiscal year deadline of Sept. 30, in anticipation of election-year delays.

Biden Announces Executive Actions for Solar Projects and Grid Reliability
The Biden administration has announced a two-year pause on any new tariffs on solar modules imported from four Southeast Asian countries on June 6.  The tariff pause comes as the Department of Commerce (DOC) has been investigating whether solar imports from Cambodia, Malaysia, Thailand, and Vietnam have been circumventing tariffs on goods made in China.  The investigation has stalled imports and solar projects in the U.S. since the probe began in March, which further stymied solar energy generation with an already fragile supply chain.  Additionally, President Biden invoked the Defense Production Act (DPA) for clean energy allowing DOE to accelerate domestic production and manufacturing of solar technology, as well as increase production of transformers and electric grid components, electrolyzers, fuel cells, and others.  The DPA is a wartime presidential authority used to increase production of supplies during national emergencies.  Electric utilities have called for the Biden administration to address supply chain challenges to maintain grid reliability as the 2022 hurricane season gets underway and the number of extreme weather events increases.

Biden Administration Proposes National EV Charging Infrastructure Standards
On June 9, the Biden administration announced a Notice of Proposed Rulemaking (NPRM) for states on standards for EV charging stations and infrastructure.  The document comes nearly a month late, as Congress originally set the deadline for May 13.  This gives states about a month and a half to integrate the standards into their proposals for the National Electric Vehicle Infrastructure (NEVI) Program ahead of the August 1 deadline.  The proposed standards are intended to help states build a nationwide network of EV charging stations to decrease range anxiety and increase EV reliability.  The NPRM would require states to partner with electric utilities to ensure the secure operability and communications of EV charging stations.  The Biden administration is also in the process of creating an advisory committee to plan the national EV charging station network, working with the American Public Power Association (APPA), Edison Electric Institute (EEI), and National Rural Electric Cooperative Association (NRECA).

FERC Moves Ahead with Generator Interconnection NOPR
At its monthly meeting on June 22, the Federal Energy Regulatory Commission (FERC) voted unanimously to move forward with a Notice of Proposed Rulemaking (NOPR) related to improvements to generator interconnection procedures and agreements.  The new generation interconnection process would require transmission providers to conduct interconnection studies through a “first-ready, first-served” approach on a group of proposed generating facilities, rather than addressing each request in the order it was received.  The NOPR would also require a more detailed system studies process, as well as impose deadlines and penalties on transmission providers that do not complete the studies on time.  The updated process aims to reduce the backlog of over 8,100 projects in the interconnection queue waiting to connect to the grid, according to Chairman Glick.  While the NOPR does not address the participant funding to pay for transmission upgrades, Chairman Glick noted that the Commission plans to address it in future FERC actions. Comments are due by Oct. 13.

DOE Proposes New Efficiency Standards for Home Furnaces
DOE has proposed efficiency standards for home furnaces that could require homeowners to switch from natural gas-fired furnaces to electric ones by 2029.  Achieving an annual fuel utilization efficiency of 95 percent, as required by the proposed standard, would effectively phase out non-condensing gas furnaces in favor of condensing furnaces, which use secondary heat exchangers to capture and use excess heat.  The proposal would be the first significant tightening of the standards since the 1980s, although the agency attempted to update them in 2011 before a court remand.  The agency then finalized a rule allowing older models to remain on the market, but reversed its decision when the Biden Administration took office.  DOE will accept comments for 60 days after publication in the Federal Register, and natural gas advocacy groups are already gearing up for another court challenge.

In this edition:

• Energy and Climate: Sen. Joe Manchin (D-WV) continues weighing support for a potential bipartisan energy-climate package…
• Budget Reconciliation: Sen. Manchin speaks on budget reconciliation priorities at the World Economic Forum…
• DOE: The Department of Energy (DOE) releases Notice of Intent (NOI) for its Transmission Facilitation Program and Vehicle Technologies Office Program…
• FERC: Federal Energy Regulatory Commission (FERC) Chair Richard Glick is renominated for a second term; FERC releases its summer grid reliability report…
• SCOTUS: The Supreme Court denies states’ request to block federal agencies from using the social cost of carbon…

Sen. Manchin Still Weighing Bipartisan Support for Climate and Energy Package 

Sens. Joe Manchin (D-WV) and Lisa Murkowski (R-AK) have hosted several meetings in the past several weeks on a potential bipartisan energy-climate package. Sen. Manchin is seeking 60 votes for a bill that would include some measures from the Build Back Better Act alongside provisions that would increase domestic production of oil and gas.  During the meetings, the small, moderate group of Senators have discussed a potential border adjustment tax on imports of carbon-intensive goods to pay for the package, and have had talks about the clean energy tax credits that were included in last year’s Build Back Better Act.  In a meeting on May 18, Sen. Kyrsten Sinema (D-AZ) joined the group for the first time.  Sen. Sinema helped broker the Bipartisan Infrastructure Law (BIL) last year, but held up the Democrats’ Build Back Better Act (along with Sen. Manchin).  While details on the most recent meeting’s topics were minimal, Sen. Kevin Cramer (R-ND) noted that there was consensus arising in the group to improve federal permitting review timelines.

Sen. Manchin Speaks Publicly on Budget Reconciliation Agenda

At the World Economic Forum in Switzerland on May 23, Sen. Joe Manchin reiterated his priorities for a budget reconciliation bill, with a focus on addressing inflation, reducing the cost of prescription drugs, and energy and climate.  He defended fossil fuels, maintaining that they are still important in preserving energy reliability and security, and shouldn’t be immediately swapped out for renewable energy sources.  Sen. Manchin also pushed for increased domestic output of critical minerals needed for battery manufacturing to decrease dependence on China and other countries.  Although he predicted that Congress would be able to pass meaningful legislation before the midterms in November, many Senate Democrats had considered Memorial Day to be the ‘soft deadline’ to reach a deal on a reconciliation bill, as the legislative calendar becomes more constrained through the summer and leading up to November’s elections.  Discussions on reaching agreement for a reconciliation bill among Senate Democrats continue, as well as private talks between Sen. Manchin and Senate Majority Leader Chuck Schumer (D-NY).

DOE Releases NOI for Transmission Facilitation Program, Vehicle Technologies

As part of its “Building a Better Grid Initiative” under the BIL, the Department of Energy (DOE) issued a Notice of Intent (NOI) for its Transmission Facilitation Program (TFP) on May 10.  The $2.5 billion program provides DOE with new authorities and tools to provide capacity contracts and loans as well as undertake public-private partnerships for the construction of new or upgraded high-capacity transmission lines.  The NOI is accompanied by a Request for Information (RFI) on the application process, criteria for qualification, and selection of eligible projects to participate in the TFP.  The NOI is the latest in a series of actions by the Biden administration to spur transmission buildout.

On May 12, DOE issued another NOI to provide funding through cooperative agreements for various research, development, demonstration, and deployment (RDD&D) activities through the Vehicle Technologies Office Program.  The NOI lists 13 areas of interest that the agency is looking to fund, including the advancement of electric drive technologies, clean energy mobility solutions for underserved communities, deployment of low-cost sharing solutions for drivers that do not have access to dedicated residential charging options, and projects that support working with owners and operators of multi-family housing developments to develop replicable programs for providing cost-effective EV charging for residents, among other things.  DOE plans to issue a Funding Opportunity Announcement in July 2022.

FERC Chair Richard Glick Renominated for Second Term

On May 20, President Biden announced his intent to renominate Federal Energy Regulatory Commission (FERC) Chair Richard Glick to a second term at the Commission.  Since joining FERC in 2017 and being elevated to the Chair role last year, Glick has launched an ambitious energy and climate agenda, including its current notice of proposed rulemaking (NOPR) on long-term transmission planning and cost allocation requirements.  Glick’s renomination process may be contentious as members of the Senate Energy and Natural Resources Committee, including Chairman Joe Manchin, have criticized Glick in recent months for the Commission’s controversial gas policy proposals and siting of gas pipeline infrastructure.  Glick’s current five-year term ends June 30 and if confirmed by the Senate, is expected to serve on the Commission until sometime in 2027.

FERC and NERC Release Grid Reliability Assessment and Risks for Summer 

In its 2022 Summer Reliability Assessment issued May 18, the North American Electric Reliability Corporation (NERC) warned of potential increases in forced outages this summer in multiple regions.  The combination of factors including above-average seasonal temperatures, wildfires, and extended drought may heighten reliability risks for parts of the Midwest, South, and West.  As grid operators prepare for challenging summer conditions, NERC encourages the consideration of all available tools to keep systems in balance as well as factoring in extreme weather conditions in long-term planning to continue to have a reliable and resilient bulk system.

The same day NERC’s summer grid assessment warned of forced outages proliferating this summer, Federal Energy Regulatory Commission’s (FERC) Chairman Richard Glick advised utilities and grid operators to adjust to the “new normal” as severe heat waves, drought, and wildfires are becoming more commonplace.  FERC also released an analysis on summer grid conditions that reached similar conclusions to NERC’s: the Midwest, West, and Texas are at risk of power outages due to extreme heat.  After the report’s release, Glick contended that there is a need for more transmission lines and changes in the power markets driven by the transition of energy resources from fossil fuels to renewables.

Supreme Court Ruling Denies Request to Block Social Cost of Carbon

On May 27, the Supreme Court denied a request from ten states to block the Biden administration from using the social cost of carbon, an environmental metric that estimates the societal costs of increased greenhouse gas emissions.  An interagency working group was directed to use the tool by executive order in January 2021.  The states sued in federal court in Louisiana, and in February, a U.S. District judge temporarily blocked the use of the cost estimates.  The federal government appealed, and the 5th U.S. Circuit Court of Appeals issued a stay of the ruling.  Following the Supreme Court decision, the interagency working group is expected to propose in the coming months a broader update of the social cost metric, which will be factored into pending rulemakings and environmental reviews of energy infrastructure projects.   

In this edition:

• Energy and Climate: Senator Joe Manchin (D-WV) teams up with Senator Lisa Murkowski (R-AK) to consider creating a new bipartisan climate-energy package separate from Budget Reconciliation…
• DOE: DOE, CISA issue joint advisory alert for advanced cyber-attacks against critical infrastructure; DOE releases an RFI on grid resilience grants under “hardening program”…
• FERC: FERC issues NOPR for transmission planning and cost allocation; Chairman Richard Glick calls for an independent transmission monitor…
• Budget: Fiscal Year 2023 Congressional Appropriations season begins…

Sens. Manchin and Murkowski Weigh Bipartisan Support for Climate and Energy Package

Sens. Joe Manchin (D-WV) and Lisa Murkowski (R-AK) led a meeting with other moderate Senators on April 25 to gauge bipartisan support for a new climate and energy bill.  Energy security has become an increasingly hot topic on Capitol Hill amidst rising inflation and the ongoing conflict between Russia and Ukraine.  Sen. Manchin has said he wants to address these issues through regular order rather than Budget Reconciliation, and is seeking 60 votes for a bill that would include some measures from the Build Back Better Act alongside provisions that would increase domestic production of oil and gas.  The group of 16 Senators, eight from each party, is hoping to tap back into the bipartisan momentum that passed the Infrastructure Investment and Jobs Act (IIJA) last year.

However, several Democratic Senators are hesitant to abandon efforts to pass a Budget Reconciliation bill as the bipartisan deal would most likely scale back the negotiated $550 billion in climate and energy tax incentive provisions.  Others involved in the bipartisan talks insist that both a bipartisan bill and a Democrat-only Reconciliation bill could move forward this year.

At a closed-door meeting May 2, the small, bipartisan group of senators discussed a potential border adjustment tax on imports of carbon-intensive goods to pay for the bipartisan energy and climate package.  The tax would place tariffs on foreign fossil fuels and products from countries with high greenhouse gas emissions.  The concept of a border adjustment tax has support from members from both sides of the aisle, however, the discussions are still in preliminary stages. Lawmakers also discussed making changes to the National Environmental Policy Act (NEPA) review process to expedite project approvals.  The bipartisan group is expected to meet again this week to continue work on a compromise energy package deal.

DOE, CISA Warn Critical Infrastructure of Advanced Cyber Attacks

On the federal agency front, the Department of Energy (DOE), the Cybersecurity and Infrastructure Security Agency (CISA), and other federal agencies have issued a joint advisory alert to warn critical infrastructure operators that advanced cyber hackers have created tools to target and disrupt multiple supervisory control and data acquisition (SCADA) and industrial control system (ICS) devices.  The federal agencies are urging the energy sector to implement detection and mitigation recommendations provided in the alert to protect critical devices against cyberattacks.  The alert is the latest warning from administration officials of increasing cybersecurity threats emerging from current geopolitical tensions.

DOE Releases RFI on Grid Resiliency Grants Under “Hardening Program”

DOE has released a Request for Information (RFI) on its plans to distribute $2.5 billion in grid resiliency grants to states as part of a “hardening program” in the Infrastructure Investment and Jobs Act (IIJA).

Eligible uses under the program include:

• Utility pole upkeep and removal of trees and other vegetation affecting grid performance
• Undergrounding electrical equipment
• Relocating or reconductoring powerlines
• Improvements to make the grid resistant to extreme weather
• Increasing fire resistant components
• Implementing monitoring, controls, and advanced modeling for real-time situational awareness
• Integrating distributed energy resources like microgrids and energy storage

The hardening program provides for half of its $5 billion in grant money to be distributed through a formula to states to make subsequent grants to utilities and others, and DOE will take direct applications for the other half.  The RFI is accompanied by a Notice of Intent (NOI) and draft allocation to States.  Comments on the materials are due by June 27.

FERC Issues NOPR for Transmission Planning and Cost Allocation

The Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) on April 21, to reform the Commission’s transmission planning and cost allocation requirements.  Prior to the issuance of the NOPR, the Commission reviewed hundreds of comments to its Advance Notice of Proposed Rulemaking (ANOPR) and conducted various stakeholder input opportunities over the past year.  Broadly, the NOPR would require transmission providers conduct regional transmission planning on a sufficiently long-term, forward-looking basis driven by changes in the resource mix and demand.  With respect to cost allocation, transmission providers must establish a method and seek agreement from states for the cost allocation of transmission facilities.  The NOPR also proposes to amend Order No. 1000 to permit the exercise of a federal right of first refusal for transmission facilities for purposes of cost allocation, providing the incumbent transmission provider establishes joint ownership of those facilities.  Comments to the NOPR are due 75 days from date of publication in the Federal Register.

FERC Chair Calls for Independent Transmission Monitor for National System

Speaking on a transmission reform panel on May 3, Federal Energy Regulatory Commission (FERC) Chair Richard Glick called for the Commission to consider establishing an “independent transmission monitor” to oversee the nation’s transmission system buildout.  Chair Glick’s comments come on the heels of last month’s 475-page Notice of Proposed Rulemaking (NOPR) to reform transmission planning and cost allocation requirements.  The creation of an independent monitor was not included in the NOPR, but was floated in the Advanced NOPR (ANOPR) as a way to oversee new regional transmission planning and cost allocation processes. Glick noted the independent monitor idea could be included in a future NOPR on cost containment, but admitted he did not know if there were sufficient votes on the Commission for such a concept.  In comments to the ANOPR, public power systems have championed joint ownership as well as local and regional decision-making as ways to control costs to consumers.  Following the comment period on the NOPR, Chairman Glick intends to issue a final rule on transmission planning and cost allocation by the end of this year.

Congress Begins FY23 Appropriations Season

The House and Senate Appropriations Committees and authorizing panels have begun FY23 budget hearings for various agencies and departments.  On April 27, the House Energy and Water Appropriations Subcommittee held a hearing on the budgets for the Corps of Engineers and Bureau of Reclamation.  On April 28, the same subcommittee reviewed the annual budget request for the Department of Energy (DOE), with Secretary Jennifer Granholm testifying.  Sec. Granholm also testified before the House Energy & Commerce Committee that morning.  Department of Transportation (DOT) Secretary Pete Buttigieg also testified before the Senate Appropriations Committee.  The busy week of budget hearings comes on the heels of the annual appropriations request process, in which constituents formally express support for certain programs as well as request funding for community projects.  Members spend the spring season evaluating both the President’s requests and constituents’ requests before drafting their respective funding bills.

In this edition:

• Infrastructure: Bipartisan Infrastructure Text is Released; Democrats Plan Next Steps
• FERC: FERC Focuses on Transmission Planning in Monthly Meeting, FERC Granted Backstop Siting Authority in Bipartisan Infrastructure Package, House E&C Panel Holds FERC Oversight Hearing,
• Budget: House Begins Consideration of 7-Bill Minibus for FY22, Senate Appropriators Advance FY22 Energy-Water Bill
• Cybersecurity: President Biden Signs Memo on Cybersecurity Standards for Critical Infrastructure, Congress Examines Growing Cybersecurity Threats to Critical Infrastructure, Bipartisan Senators Introduce Bill to Require Reporting of Cyberattacks

Bipartisan Infrastructure Text is Released; Democrats Plan Next Steps

On Aug. 1, the legislative text for the bipartisan infrastructure deal, now formally named the “Infrastructure Investment and Jobs Act,” was released.  The bill came in at 2,702 pages and includes $550 billion in new spending, and also incorporates Sen. Joe Manchin’s (D-WV) “Energy Infrastructure Act” in its entirety.  Some notable inclusions in the bill are $3 billion for Smart Grid Investment Grants for utilities to enhance grid flexibility, $3.5 billion for Weatherization Assistance, $2.5 billion for infrastructure in alternative fuel corridors, and $3.5 billion over five years for four regional direct air capture hub projects.  The package also includes $500 million ($100 million per year for five years) in additional LIHEAP funding. 

More than 400 amendments to the bill have been filed so far, although only a handful have come to a vote.  Meanwhile, Democrats are continuing to draft their $3.5 trillion Reconciliation package, but are coming up against the obstacle of pay-fors.  Sen. Ron Wyden (D-OR) told reporters that the Finance Committee is expecting to work through the summer to work out the details of raising revenue for this package.  The Senate is expected to delay the start of its annual summer recess in order to complete consideration of the infrastructure bill and also hold a vote on a Budget Resolution measure, the first step in the Budget Reconciliation process.

FERC Focuses on Transmission Planning in Monthly Meeting

On July 15, the Federal Energy Regulatory Commission approved an Advance Notice of Proposed Rulemaking (ANOPR) on potential reforms to improve transmission planning and cost allocation as well as generator interconnection processes.  The ANOPR follows the Commission’s establishment of a joint federal-state task force on electric transmission at the June meeting.  Chairman Glick has made reforms to interregional transmission policy one of his top priorities for the Commission. 

The Commission is seeking public comment on potential reforms in three specific areas: reforms for longer-term regional transmission planning and cost-allocation processes, cost responsibility for regional transmission facilities and interconnection-related network upgrades, and enhanced transmission oversight over how new transmission facilities are identified and paid for.  Comments on the ANOPR are due on October 12. 

During the meeting, Commissioners gave accolades to Commissioner Neil Chatterjee as he announced that the July meeting will likely be his last, barring special circumstances.  Chairman Glick stated that the next open meeting in September will be held in person.

FERC Granted Backstop Siting Authority in Bipartisan Infrastructure Package

The bipartisan infrastructure package includes a somewhat controversial provision allowing the Federal Energy Regulatory Commission (FERC) to override states’ transmission siting decisions, giving the Commission new authority that could affect future transmission build out.  The siting authority would help advance the Biden administration’s clean energy goals by allowing FERC to plan the expansion of renewable energy nationwide.  State regulators, including the National Association of Regulatory Utility Commissioners (NARUC), have expressed concerns over the expansion of FERC’s siting authority, stating that it gives FERC too much power without considering the needs of the affected states.  Supporters of the siting authority, including former FERC Chair Cheryl LaFleur and energy-related groups including the National Resources Defense Council (NRDC), have defended the provision, arguing that a central authority to coordinate transmission build-out between states will expedite the process.  LaFleur also noted that the authority is designed to only be used as a backstop when absolutely necessary, but that states would ideally be able to continue planning their own transmission build out.  This provision is included in the bill on the heels of FERC issuing an Advanced Notice of Proposed Rulemaking soliciting comments on regional transmission build-out.

House E&C Panel Holds FERC Oversight Hearing

On July 27, the House Energy and Commerce Subcommittee on Energy held an oversight hearing in which the committee heard testimony from all five FERC Commissioners.  Much of the hearing was focused on questions posed in FERC’s Advance Notice of Proposed Rulemaking, which was approved by the Commission at their July open meeting.  When asked what the major impediments to the development of additional transmission to the grid are, Chairman Glick responded that they are coordinating siting among various states, planning through a holistic approach, and allocating costs in a manner that is commensurate with benefits.  As one of his top priorities for the Commission, Chairman Glick has set an ambitious goal of finalizing a rulemaking by the end of next year.

Several members, including representatives from Texas, underscored the need for the buildout of interregional transmission and cited the recent American Council on Renewable Energy report, which noted that even one high-voltage transmission line into Texas from a surrounding state could have significantly eased strain on Texas’ grid earlier this year.  Other issues raised in the hearing were the lengthy process for hydropower licensing and FERC’s role in eliminating barriers to newer technologies, with their most recent Orders on energy storage and distributed energy resources.

House Begins Consideration of 7-Bill Minibus for FY22

During the week of July 26, the House of Representatives brought to the floor a 7-bill “minibus” appropriations bill for FY22, including funding for energy and environment programs.  Over 200 amendments were considered, with notable measures adopted to increase the Department of Energy’s Office of Energy Efficiency and Renewable Energy by $3 million and decrease the Office of Fossil Energy by $4 million.  Many partisan attempts to derail President Biden’s environmental initiatives were brought to a vote but ultimately not adopted.  This minibus, comprised of the Labor, Health and Human Services and Education (LHHS-Ed), Agriculture, Military Construction, Transportation-HUD, Financial Services, Interior, and Energy-Water bills, was approved on the House floor on July 29 – paving the way for the House to recess for the month of August.

Senate Appropriators Advance FY22 Energy-Water Bill

The Senate Appropriations Committee approved three FY22 funding bills on Aug. 4, the Energy and Water Development, Military Construction, and Agriculture bills.  The $53.5 billion Energy and Water bill sets aside $45.3 billion for the Department of Energy – a $3.3 billion increase from FY21, but $1 billion less than what the Biden administration requested.  The details of the bill have not been released, but the Appropriations Committee has provided summaries of the measure. 

Of interest to electric utilities, the bill provides $3.89 billion for Energy Efficiency and Renewable Energy, $100 million more than the House’s proposed level and over $1 billon more than the FY21 enacted level.  The Office of Science would receive $7.5 billion, $464 million more than the FY21 level.  In the markup, Ranking Member John Kennedy (R-LA) expressed dismay over what he felt were low numbers for Nuclear Energy, which would receive $1.6 billion in this proposal – $100 million less than the House’s bill, and $300 million less than the Biden request. 

The three Senate committee-passed FY22 funding bills are now ready for floor consideration by the Senate, but with August recess looming, the bills will likely not see floor action until September at the earliest.

President Biden Signs Memo on Cybersecurity Standards for Critical Infrastructure

On July 28, President Biden signed a National Security Memorandum directing federal agencies to develop voluntary cybersecurity goals.  This memo formalizes the Industrial Control System Cybersecurity Initiative, which was launched earlier this year in April.  The initiative instructs the Department of Homeland Security to provide preliminary baseline cybersecurity standards for all critical infrastructure by the end of September.  While no requirements are mandated for critical infrastructure operators, the initiative aims to standardize the way that these operators proactively prepare for cyberattacks and give them greater oversight over attacks when they do occur.  The administration is reportedly considering plans to impose mandated standards in the near future, but has begun with voluntary standards in order to create a partnership between federal agencies and critical infrastructure operators that may be apprehensive about new mandates.

Congress Examines Growing Cybersecurity Threats to Critical Infrastructure

On July 27, panels on both sides of the Capitol held multiple hearings related to the growing threat of cybersecurity and ransomware attacks on critical infrastructure.  The House Oversight and Energy and Commerce Committees as well as the Senate Judiciary and Commerce Committees heard testimony from various federal agencies, including the Department of Energy (DOE), Cybersecurity and Infrastructure Security Agency (CISA), and FERC on what actions Congress can take to strengthen the security of the electric grid.  

Key takeaways from the various hearings included that cyberthreats should be treated as seriously as physical threats and better information sharing between the federal government and the public and private sectors is needed to develop and promote best practices for electric grid cybersecurity.  Witnesses from the various federal agencies also noted the need for more mandatory reporting requirements, which would allow them to better track and develop guidance to defend against these attacks.  In the hearings, members recommended additional mandatory reporting requirements for electric utilities and their supply chains and raised concerns over the bureaucratic stove piping among multiple federal agencies in a cybersecurity incident.

Bipartisan Senators Introduce Bill to Require Reporting Of Cyberattacks

In response to the SolarWinds and Colonial Pipeline ransomware attacks, Sens. Mark Warner (D-VA), Marco Rubio (R-FL), and Susan Collins (R-ME) introduced the “Cyber Incident Notification Act” on July 21.  The bipartisan bill would require federal agencies and critical infrastructure companies to notify the Cybersecurity and Infrastructure Security Agency (CISA) of confirmed and potential cyber intrusions within 24 hours.  The bill directs CISA to define the criteria for what is considered a confirmed and potential cyber intrusion.  

Of concern, the bill does not limit duplicative reporting requirements and requires CISA to harmonize new reporting criteria with existing reporting mandates.  The bill also allows the CISA Director to assess a penalty fee, not to exceed 0.5 percent of the entity’s gross revenue from the prior year, for each day an entity fails to meet reporting requirements, which for public utilities may require a rate increase to consumers.

In this edition:

• Infrastructure: White House Indicates Bipartisan Infrastructure Package Introduction in Coming Weeks; Questions Remain Over Reconciliation Package, Sen. Manchin Introduces Draft Energy Infrastructure Legislation, White House Signals Dedication to Implementing CES
• Regulatory: White House Releases Regulatory Agenda
• Budget: House Budget Chairman Introduces Budget Resolution, Energy Secretary Granholm Visits Senate Committees
• Congress: Senate Commerce Subcommittee Holds Hearing on Resilient Broadband Networks, House E&C Subcommittee Holds Hearing on Electric Transmission

White House Indicates Bipartisan Infrastructure Package Introduction in Coming Weeks; Questions Remain Over Reconciliation Package
The bipartisan infrastructure package could be ready for floor consideration as early as the week of July 19 according to reports from White House officials who say they are working in conjunction with the Senate to prepare the bill. However, details including pay-fors and the exact structure of the legislative text remain in limbo as committees work to finalize their respective provisions, which could potentially push back the bill’s introduction date.

Several key Senate Democrats are now expressing concerns over the pay-fors included in the package. Currently, two of the main funding mechanisms included in the bipartisan framework are the repurposing of unspent unemployment benefits and state assistance funds originally provided in COVID-19 relief legislation. Several Democrats, including Senate Finance Committee Chair Ron Wyden (D-OR) and Senate Budget Committee Chair Bernie Sanders (I-VT), have publicly expressed objections to these revenue raising methods, with Sanders saying that he will not vote in support of any package that includes these suggested pay-fors. Sen. Wyden is reportedly drafting a bill that will raise revenues through taxing corporations and unrealized capital gains.

As preparations on the bipartisan package move forward, Democrats are simultaneously working to draft a bill that will include many of President Biden’s climate priorities that can be pushed through Congress without Republican support by using the Budget Reconciliation process. Senate Majority Leader Chuck Schumer (D-NY) reportedly plans to consider both bills before the chamber leaves for August recess. President Biden committed this week to including a clean energy standard (CES) in the Democrat-only bill, which could prove problematic for its passage, as it is unclear at this time if a CES will be allowed under the Byrd Rule, which requires that all Reconciliation provisions must have a budgetary impact. If the Reconciliation package lacks some of Biden’s key climate priorities, it is possible that some more progressive Senators will be unwilling to vote for its passage.

Sen. Manchin Introduces Draft Energy Infrastructure Legislation
Senate Energy and Natural Resources (ENR) Committee Chairman Joe Manchin (D-WV) met with President Biden on June 21 to discuss his draft of an energy bill released the previous week that includes funding to enhance grid resiliency to natural disasters and cyber threats, amp up energy efficiency efforts in commercial and private buildings, and assist with a variety of demonstration projects focused on energy storage, among other things. Highlights of the bill include a provision to establish a credit program that would allow existing nuclear plants to stay online, funding for solar, wind, and geothermal technology demonstration projects, a $5 billion program to stop methane emissions from orphaned oil and gas wells, and $100 million for long-term energy storage technologies. It is not clear where exactly Manchin intends this legislation to end up amidst infrastructure negotiations, but it is possible that provisions from this legislation could be tacked onto either a bipartisan deal or a Reconciliation package, or could alternatively be moved as a standalone package.

White House Signals Dedication to Implementing CES
A memo released on Wednesday from National Climate Adviser Gina McCarthy states that the White House is dedicated to implementing a clean energy standard (CES), and intends to include a CES in the package that Democrats will pass through the Budget Reconciliation process. Other priorities that President Biden is likely to support in the Reconciliation package include clean energy tax credits and a Civilian Climate Corps. However, it is possible that a true CES may not be viable under the Byrd rule, which stipulates the requirements for legislation to be included in a Reconciliation bill. This memo was released in response to critiques from Democrats that the bipartisan infrastructure package does not go far enough on climate measures. While progressive Democrats were originally the most vocal about their disappointment over lack of climate provisions, this vocal group has grown to 120 members, led by Rep. Mike Levin (D-CA), and now spans a broad ideological spectrum. The group sent a letter to the White House urging significant climate and environmental investments be included in the Reconciliation package. In this letter, lawmakers voiced support for a clean energy standard, additional electric vehicle investments, and 10-year clean energy tax credits.

White House Releases Regulatory Agenda
On June 11, President Biden announced his regulatory agenda for the next several years, which sheds light on the administration’s priorities, including issues such as climate change and workers’ rights. Among other things, the agenda includes revisions to oil and gas leasing rules, which are expected to be proposed in May 2022, and a new definition of streams and wetlands under the Clean Water Act, which do not have an expected proposal date. The agenda also does not include a timeline for a new carbon dioxide rule for existing power plants, although EPA Administrator Michael Regan has indicated a desire to engage with industry prior to issuing a new rulemaking. The Council on Environmental Quality (CEQ) has a three-step plan featured relating to the National Environmental Policy Act (NEPA) rules, with part one, which would begin to reverse the Trump administration’s update to NEPA rules, anticipated in July. The Fish and Wildlife Service (FWS) will likely propose new rules reversing the Trump administration’s policies for listing species and designating critical habitat under the Endangered Species Act, and the Department of Energy is slated to reverse several Trump-era rules relating to energy efficiency. Due to partisan gridlock in Congress, the administration’s regulatory agenda will be a key way for President Biden to enact his priorities without pushing them through the House and Senate first.

House Budget Chairman Introduces Budget Resolution
On June 14, House Budget Committee Chair John Yarmuth (D-KY) introduced a measure, called a “deeming resolution,” that limits government funding to $1.5 trillion for the next fiscal year. This measure was approved in the House by a party-line vote, meaning that appropriators are now able to begin working on annual spending bills. The funding levels match those laid out in President Biden’s Budget Request, increasing domestic budget accounts by 16.5% and defense accounts by 1.6%. The deeming resolution comes as lawmakers have just 15 weeks before current government funding levels run out on Sept. 30. Republican lawmakers have criticized Democrats for passing the deeming resolution without debate, stating that Democrats are shirking their responsibility and that introduction of the resolution lacked transparency. Several lawmakers on the Appropriations Committee are reportedly pessimistic about the likelihood of passing a budget by Sept. 30 and are preparing to keep the government funded with another stopgap funding measure.

Energy Secretary Granholm Visits Senate Committees
Secretary of Energy Jennifer Granholm testified before the Senate on June 15. Granholm spoke on the Department of Energy’s FY22 budget in the Senate Energy and Natural Resources Committee. Granholm was questioned on her agency’s commitment to pipeline security, as well as implementation and funding for programs authorized in the Energy Act of 2020. Chairman Joe Manchin (D-WV) criticized what he felt were low funding levels in the Department of Energy’s carbon capture and advanced nuclear research. Granholm noted that there could be opportunities for funding through the forthcoming infrastructure package the White House has been promoting for Congressional consideration this summer. In addition, Granholm faced scrutiny about the Biden administration’s plans for storage of nuclear waste, to which she replied that the process of identifying willing communities to take on the waste will begin next month.

Senate Commerce Subcommittee Holds Hearing on Resilient Broadband Networks
On June 22, the Senate Commerce Subcommittee on Communications, Media, and Broadband held a hearing on building resilient broadband networks. Testimony focused on the importance of building and investing in reliable, redundant, and secure networks, especially during emergencies and targeted attacks by malicious actors. As the need for constant digital connectivity grows, the threats to broadband network systems have risen exponentially.

Many of the Subcommittee members noted that there is already a considerable amount of funding for broadband; however, a more strategic and targeted approach is needed to ensure broadband infrastructure is being built in unserved and underserved areas, incentivizing competition to build Middle Mile infrastructure, and maintaining sustained funding to perform maintenance and upgrades on networks in the future. Members asked the witnesses to share what ways the federal government can better coordinate recovery of telecommunication networks in a natural disaster or malicious attacks. They stated that they need greater coordination and information sharing among power companies, energy providers and telecommunications providers through a lead federal agency, in most cases, the Federal Communications Commission.

House E&C Subcommittee Holds Hearing on Electric Transmission
On June 29, the House Energy and Commerce Subcommittee on Energy held a hearing to discuss transmission policy provisions in the CLEAN Future Act and related legislation. Patricia Hoffman, Acting Assistant Secretary at DOE’s Office of Electricity, told the panel that DOE has several top priorities for transmission investments: increasing the capacity of existing systems with enhancing technologies such as energy storage technology, dynamic line rating and reconductoring of transmission systems, looking at what is needed to build new transmission in the United States, including high voltage DC transmission, and reviewing the transmission planning process that allows for collaborative dialogue and interactions between states.

Much of the discussion at the hearing was on the planning, permitting, and regulatory hurdles with the buildout of transmission, focusing on interregional and interstate systems. Many members expressed frustrations with the multi-year NEPA reviews and multi-federal agency permitting and siting processes for interstate transmission systems. Republican members voiced concerns with a provision in the CLEAN Future Act that would require all public utilities to place transmission facilities under the control of an ISO or RTO within two years.

In this edition:

• FERC: ISO-NE CEO Announces Plans to Eliminate MOPR
• Infrastructure: Senate Republicans Release Second Infrastructure Counteroffer, Parliamentarian Gives Ruling on Reconciliation
• Cybersecurity: Ransomware Hack Disrupts Major Pipeline, Spurs Lawmaker Response, President Biden Signs EO Aimed at Shoring Up Federal Cybersecurity
• Tax and Budget: EPA Administrator Regan Testifies on FY22 Budget in House Energy and Commerce, House Appropriators and E&C Examine FY22 Budget for Department of Energy, Senate Finance Holds Markup of Wyden’s Clean Energy Tax Incentive Bill, Biden Administration Releases Presidential Budget
• Transition: Senate EPW Holds Confirmation Hearing for DOI, EPA Nominees

ISO-NE CEO Announces Plans to Eliminate MOPR
At a FERC technical conference on May 25, ISO New England CEO Gordon van Welie announced that the organization will file to eliminate the minimum offer price rule (MOPR) in the first quarter of 2022. This rule has been used to frustrate state and local government policies that favor certain generation sources, such as emissions-free or government-owned resources, and effectively ended the ability of consumer-owned utilities to “self-supply” their own capacity. After years of pushback on the problems inherent with the MOPR, Van Welie acknowledged to the Commission that the MOPR negatively impacts renewable energy generators and would hurt states’ abilities to promote zero emission generation. Several states, most publicly Connecticut, have even considered taking control of their own resources entirely in order to keep up with state-level clean energy goals. Eliminating the rule would set a precedent for other capacity markets to potentially do the same, with PJM Interconnection expected to file a proposal to replace its own rule later this year. FERC Chairman Richard Glick has been supportive of eliminating the MOPR, as well as broader changes to the capacity market construct.

Senate Republicans Release Second Infrastructure Counteroffer, Parliamentarian Gives Ruling on Reconciliation
On May 27, a group of Senate Republicans, led by Sen. Shelley Moore Capito (R-WV), unveiled a $928 billion counteroffer as negotiations with the White House on a major infrastructure plan continue. This latest Republican offer is a $360 billion increase from their original proposal offered in April, but it remains far below President Biden’s latest proposal that totals $1.7 trillion. Among other things, the new proposal increases spending on roads and bridges, public transit, electric vehicle infrastructure, and western water storage. In a memo accompanying the latest proposal, the Senate Republican group remained firmly opposed to inclusion of social policy program spending in the bill, stating that “policies unrelated to physical infrastructure do not fit in this package.”

Meanwhile, Senate Parliamentarian Elizabeth MacDonough issued a ruling on May 28 that would allow Democrats to use Reconciliation once again to pass an infrastructure package, with the stipulation that the process cannot be used only for political expediency and must be justified by reasons such as an economic downturn. This ruling would significantly slow Democrats down if they choose to use Reconciliation as a means for passing either the American Jobs Plan or the American Families Plan, as they would be required to start the budget process from the beginning, including going back to House and Senate budget committees. Senate Majority Leader Chuck Schumer (D-NY) has indicated that he plans to pass the President’s infrastructure plan by July, a timeline that could be impacted by the ruling.

Ransomware Hack Disrupts Major Pipeline, Spurs Lawmaker Response
A large pipeline that serves as the main oil supply to the East Coast shut down after suffering a large ransomware cyberattack over the weekend of May 8-9. The attack was reportedly carried out by a group of private hackers known as DarkSide, who targeted poorly protected corporate data rather than industrial controls governing pipeline operations. Nevertheless, the group was able to access so much data that the company elected to close the pipeline rather than risk a more widespread attack. The pipeline was re-opened on May 13.

In response, lawmakers from both parties called for greater cybersecurity measures to be included in any upcoming infrastructure package. Sen. Maria Cantwell (D-WA) is leading an effort on moving pipeline cybersecurity oversight from the Transportation Security Administration (TSA) to DOE, citing TSA’s insufficient staffing and under-preparedness, and the role of the grid in securing supplies. House Energy and Commerce Committee leaders reintroduced bipartisan cybersecurity bills on May 11, including legislation aimed at the electric grid as well as pipeline operations. Federal Energy Regulatory Commission (FERC) Chairman Rich Glick said that pipelines may need to be subject to mandatory cybersecurity standards, as electric utilities are.

President Biden Signs EO Aimed at Shoring Up Federal Cybersecurity
On May 12, President Biden signed a highly anticipated Executive order that aims to improve federal cybersecurity. The order requires that all software sold to the federal government establish a baseline cybersecurity standard and gives current software used by the government a nine-month deadline to establish these standards. The order also establishes a standardized guide for how agencies should immediately respond to cyber breaches and requires that IT providers in business with the federal government report data breaches.

Biden Administration Releases Presidential Budget
On May 28, the Biden administration released its proposed FY22 Budget, a more than $6 trillion request that incorporates the President’s previous spending plans known as the American Jobs Plan and American Families Plan. The budget assumes deficits of more than $1 trillion for the next ten years.

Among other things, the Budget includes $36 billion in investments to combat climate change, including investments in resilience (including cyber security investments) and clean energy infrastructure. Of interest to utilities, the Presidential budget contains over $5 billion for building clean energy projects, an increase in 22% of funding for the Environmental Protection Agency, and a 10% increase in funding for the Department of Energy. Other provisions include funds designed to promote environmental justice in marginalized communities and increasing investments in innovation and science. The Budget also delves into tax policy, recommending elimination of oil and gas tax breaks and extending and expanding clean energy tax credits, along with new tax credits for transmission and existing nuclear plants.

EPA Administrator Regan Testifies on FY22 Budget in House Energy and Commerce
EPA Administrator Michael Regan testified before the House Energy and Commerce Committee on April 29, a day after his visit to the Senate Energy and Natural Resources Committee, to defend and take questions on the FY22 budget for the EPA. Regan faced scrutiny from Republicans on the House E&C Committee for the 21% increase to the EPA’s budget proposed by President Biden. Democrats, meanwhile, put pressure on Regan to address parochial pollution problems in various districts represented by Committee members. Without details on the budget at the time of the hearing, members focused on the new Administration’s emissions reduction goals, as well as the tools needed and feasibility of the President’s plans.

House Appropriators and E&C Examine FY22 Budget for Department of Energy
On May 6, Secretary of Energy Jennifer Granholm made her first appearance on Capitol Hill since being sworn in, testifying before the House Appropriations Subcommittee on Energy and Water Development on the Biden Administration’s FY22 budget request. Biden has stated that he plans to mandate an emissions-free standard for the electricity sector by 2035, and Granholm let the Subcommittee know that renewable energy (particularly wind and solar), as well as nuclear, will need to be supported with federal loan programs and tax incentives to achieve Biden’s goal.

Granholm also visited the House Energy and Commerce Committee on May 19, testifying on the FY22 budget for DOE. Granholm has faced scrutiny about Biden’s plans for cybersecurity in recent hearings, as the information on funding for the Office of Cybersecurity, Energy Security and Emergency Response has not been detailed. However, for this hearing, the first she testified in since the Colonial Pipeline ransomware attack, Granholm was grilled by committee members on how the Biden administration plans to help prevent such cyber-attacks from happening in the future. Granholm promised to work with lawmakers and the private sector on this issue.

Senate Finance Holds Markup of Wyden’s Clean Energy Tax Incentive Bill
On May 26, the Senate Finance Committee amended Chairman Ron Wyden’s (D-OR) clean energy tax incentive bill, which ended with a 14-14 vote along party lines. This bill aims to simplify the tax code for clean energy, consolidating a variety of incentives into technology neutral investment tax credits (ITC, valued at 30%) or production tax credits (PTC, valued at 1.5 cents per kWh). Republicans are opposed to the bill due to provisions that remove deductions for fossil fuels, citing the bill’s tech-neutral approach as a reason for inclusion of oil and gas.

One key amendment, from Sen. Michael Bennet (D-CO), provides for a direct pay option that would allow public power utilities to receive refundable direct payments of the investment and production tax credits. The bill as drafted allowed a direct pay option, but prohibited not-for-profit entities from accessing it. However, the amendment retains current law which says that projects receiving “subsidized” financing are ineligible for the credits (i.e., projects otherwise financed by municipal bonds may not also claim the tax credits). In addition, Chairman Wyden modified the bill text to remove the ability of municipal and cooperative utilities to issue taxable direct payment Clean Energy Bonds, as a tradeoff for these utilities being able to access the direct pay credits.

Senate EPW Holds Confirmation Hearing for DOI, EPA Nominees
On May 12, the Senate Environment and Public Works (EPW) Committee held a hearing for three Biden Administration nominees: Shannon Estenoz to be Assistant Secretary of Fish and Wildlife and Parks at the Department of the Interior (DOI), Radhika Fox to be Assistant Administrator for Water at the Environmental Protection Agency (EPA), and Michal Freedhoff to be Assistant Administrator for Chemical Safety and Pollution Prevention at the EPA. Senators questioned the nominees about the Biden Administration’s “30×30” conservation plan to conserve 30% of the nation’s land and waters by 2030, as well as the rollback of the Trump Administration’s changes to implementation of the National Environmental Policy Act (NEPA).

On May 18, three nominees for senior positions at the Department of the Interior appeared before the Senate Energy and Natural Resources (ENR) Committee. The nominees included Robert Anderson to be the Department’s Solicitor, Shannon Estenoz for Assistant Secretary of Fish and Wildlife and Parks, and Tanya Trujillo for Assistant Secretary of Water and Science. Questions during the hearing focused on how the nominees plan to help the Department’s agencies prepare for and adapt to a changing climate and emphasized the need for resilience, modernizing and repairing aging infrastructure, and addressing challenges associated with drought in Western states.

In this edition:

• Infrastructure: Republicans, White House Signal Openness to Bipartisan Action on Infrastructure …
• Cybersecurity: Government Agencies Release Reports on Cybersecurity Threats; Biden Administration Announces 100-Day Cybersecurity Sprint…
• Tax and Finance: FY22 “Skinny Budget” Released; Committees Begin Hearings; Sen. Wyden Unveils Clean Energy Tax Overhaul…
• Transition: Senate Confirms Trottenberg, Mallory, and McCabe…

Republicans, White House Signal Openness to Bipartisan Action on Infrastructure
Lawmakers returned from a spring recess ready to work collaboratively, at least conceptually, on infrastructure legislation. A bipartisan meeting at the White House on April 12 yielded productive discussions about how the President’s infrastructure proposal could attract Republican support by focusing on “traditional” infrastructure and trimming non-infrastructure elements like home health care, as well as scrapping plans to pay for the package with corporate tax hikes. Lawmakers will continue discussions with the White House into May.

On April 22, several Senate Republicans, led by Senate Environment and Public Works Committee Chairman Shelley Moore Capito (R-WV), unveiled a counteroffer to President Biden’s infrastructure proposal. Their legislation contains $568 billion for what lawmakers have described as “traditional” infrastructure, including $299 billion for roads and bridges, $61 billion for public transport systems, and $65 billion to expand broadband infrastructure. The proposal includes user fees for electric vehicles and repurposing of unused funds allocated in the American Rescue Plan which Congress passed in March. Discussions continue on a compromise bill that would not contain energy and innovation items contained in the President’s proposal, although those elements might move in a different package later in the year.

Government Agencies Release Reports on Cybersecurity Threats; Biden Administration Announces 100-Day Cybersecurity Sprint
Two government agencies released reports in early April detailing cybersecurity threats to utility distribution systems and electricity networks. The first report, released by the Government Accountability Office (GAO), concluded that utility distribution systems are at risk of cyberattacks and that focusing security efforts solely on transmission and generation assets leaves distribution systems vulnerable. One reason for this, the report suggests, is that industrial control systems (ICS), which distribution networks use to manage the grid, allow remote access, providing hackers with additional channels to access systems. In a report released on April 13, the Office of the Director of National Intelligence (ODNI) identified the greatest threats to U.S. electricity networks. The report concluded that China, Russia, Iran, and “probably” North Korea all have the ability to significantly disrupt U.S. critical infrastructure, including by attacking software supply chains.

On April 20, the White House announced a 100-day cybersecurity effort to enhance grid security. The effort will be led by the Department of Energy (DOE) and the Cybersecurity and Infrastructure Security Agency (CISA). While details of the plan remain largely unknown, the White House has indicated that DOE will encourage electric utilities to improve their “detection, mitigation, and forensic capabilities.”

FY22 “Skinny Budget” Released; Committees Begin Hearings
On April 9, President Biden released a lengthy letter to Congress in which he highlighted certain priorities for his Administration, including some, but certainly not all, program funding requests for FY22. This “Skinny Budget” is a precursor to the formal request documents, which are expected sometime in May. According to the “Skinny Budget” letter, the FY22 Budget Request proposes funding aimed at combatting climate change – notably including funding increases for existing and new climate change programs throughout the entire government. DOE would see a 10% increase from the FY21 enacted amount under this proposal, to $46.1 billion, and the EPA would increase 21%, to $11.2 billion.

Following the release of the Budget, the House Interior-Environment Appropriations Subcommittee, led by Chairman Chellie Pingree (D-ME), hosted hearings on the FY22 budgets of the U.S. Forest Service (USFS), the Department of the Interior, and EPA. On April 20, Secretary of Interior Deb Haaland testified for the first time as a Cabinet member on the FY22 budget for the Department of the Interior. Finally, new EPA administrator Michael Regan came virtually before the subcommittee on April 21 to discuss the FY22 EPA budget.

Sen. Wyden Unveils Clean Energy Tax Overhaul
Senate Finance Chairman Ron Wyden (D-OR) released his highly anticipated clean energy tax overhaul on April 21, a revised version of the “Clean Energy for America Act” he has introduced for several years in a row. The legislation, which Sen. Wyden has said should be a “linchpin” of President Biden’s infrastructure proposal, aims to simplify the energy tax code by creating three technology-neutral incentives for clean energy projects. This version of the bill differs from previous years by including updated emission limits and eliminating tax cuts for the fossil fuel sector, among other things. Sen. Wyden noted that this bill is similar to provisions in President Biden’s infrastructure proposal, and expressed optimism over the potential to combine the provisions in the Administration’s plan with those in the Clean Energy for America Act. Not-for-profit utility groups expressed concern that the tax credits, while available as direct pay credits for investor-owned utilities, are not available at all to entities without a tax burden. The Senate Finance Committee will hold its first hearing on this legislation soon.

Senate Confirms Trottenberg, Mallory, and McCabe
On April 13, the Senate confirmed Polly Trottenberg’s nomination to be the Deputy Transportation Secretary. Trottenberg previously served as a senior official at DOT during the Obama administration, and most recently ran New York City’s transportation department. On April 14, the Senate voted to confirm Brenda Mallory to lead the White House Council on Environmental Equality (CEQ). Mallory’s nomination was approved in a 53-45 vote, with GOP Sens. Susan Collins (ME), Lindsey Graham (SC), and Rob Portman (OH) all voting in support of the nomination. Finally, on April 27, the Senate voted 52-42 to confirm Janet McCabe as Deputy Administrator of the EPA.

In this edition:

• FERC: Technical Conference Signals Policy Shift on Capacity Markets…
• Infrastructure: Biden Announces $2.25 Trillion Infrastructure Plan…
• Cybersecurity: Senate Homeland Security Examines Agency Response to SolarWinds Hack…
• Transition: Senate Panel Holds Hearing on FEMA Nominee; EPW Advances Mallory to Full Senate…

FERC Technical Conference Signals Policy Shift on Capacity Markets
On March 23, the Federal Energy Regulatory Commission (FERC) held a virtual technical conference on resource adequacy that signaled big changes ahead for how the three eastern RTOs procure capacity. Chairman Rich Glick and other panelists echoed not-for-profit utility groups’ characterization of mandatory capacity markets as “administrative constructs” that have become unsustainable in their tension with states’ energy policies, and Commissioner Neil Chatterjee made waves by saying he is “not wedded” to the Minimum Offer Price Rule (MOPR) that frustrates self-supply and state-sponsored resources from competing in the markets, even though he has voted multiple times to uphold that policy. Commissioner Danly, however, cautioned against the potential reliability consequences of driving conventional resources that provide baseload, integration, and peaking services out of the market if the MOPR is eliminated.

Biden Announces $2.25 Trillion Infrastructure Plan
On March 31, the White House unveiled a $2.25 trillion infrastructure and jobs plan that contains money for roads, the power grid, broadband, and more. This plan includes $100 billion for investments in clean energy production and related infrastructure, including a 10-year extension of renewable energy tax credits, expansion of credits for energy storage, and a proposed grant program for state and local government to build out a network of 500,000 EV chargers by 2030. The proposal also includes a “Energy Efficiency and Clean Electricity Standard” that would include nuclear power and hydropower technology. To pay for this package, the administration has proposed eliminating tax breaks for the fossil fuel industry and raising $2 trillion in corporate taxes over the next 15 years.

Committees in both chambers have been holding hearings examining infrastructure needs in anticipation of the package. March 18 and 24 saw hearings in the Energy and Commerce Committee on Democrats’ “Clean Future Act,” a bill focused on clean energy and climate provisions. Chairman Frank Pallone (D-NJ) highlighted the bill’s $7 billion investment over 10 years to promote grid resilience and efficiency, as well as provisions that invest in microgrids and enable responsible buildout of the electricity transmission system. Chairman Pallone emphasized throughout the hearing that an improved transmission system is key to reliability, resiliency, and achieving clean energy goals, which was echoed by witnesses. Republicans on the Committee expressed frustration at the lack of bipartisan input, and a theme of the hearing became how the electric sector will eliminate carbon emissions without technology breakthroughs that enable reliable operation of the grid without fossil fuels. Energy and Commerce Republicans also released a package of climate-focused bills dealing with nuclear, hydropower, and carbon capture meant to serve as a counterproposal to the Democrats’ bill.

On March 22, the Energy and Commerce Committee held a hearing on Committee Democrats’ infrastructure proposal, the “LIFT America Act,” which authorizes $3.87 billion per year for five years to modernize and shore up the electric grid, tens of billions for energy efficiency improvements to new and existing infrastructure, $41.8 billion to support deployment of electric vehicle infrastructure nationwide, and several provisions aimed at boosting domestic manufacturing of battery storage.

Senate Homeland Security Examines Agency Response to SolarWinds Hack
On March 18, the Senate Homeland Security Committee held a hearing to examine the response to the SolarWinds supply chain attack from federal agencies. Witnesses at the hearing were Christopher DeRusha, Federal Chief Information Security Officer at the Office of Management and Budget (OMB), Brandon Wales, Acting Director of the Cybersecurity and Information Security Agency (CISA), and Tonya Ugoretz, Acting Assistant Director of the Cyber Division of the Federal Bureau of Investigation (FBI). When asked what specific actions CISA is currently taking to mitigate future attacks, Wales spoke to the difficulty of determining where the attack was coming from, but said that with funds from the recently-passed COVID-19 rescue bill, CISA will be working to improve its capabilities in this area. Ugoretz testified that the FBI is taking action alongside CISA’s mitigation efforts to provide a post-attack report that will help prevent future attacks, and emphasized that cross-agency coordination is crucial.

Senate Panel Holds Hearing on FEMA Nominee; EPW Advances Mallory to Full Senate
On March 25, the Senate Homeland Security and Governmental Affairs Committee held a hearing on the nomination of Deanne Criswell to be Administrator of the Federal Emergency Management Agency (FEMA). During the hearing, Chairman Gary Peters (D-MI) referenced studies that show six dollars in future disaster cost can be avoided for each dollar invested in hazard mitigation, even though disaster mitigation only plays a small part in our nation’s disaster spending. Criswell agreed that reducing risk is a priority, especially as the impacts of climate change increase. She stated she hopes to understand how jurisdictions utilize the newly implemented Building Resilient Infrastructure and Communities (BRIC) Program to reduce risk, and to help ensure disaster mitigation plans are taking climate change’s growing impact into account. Criswell committed to promoting engagement and coordination between FEMA and state and local governments.

Separately, on March 24, the Senate Environment and Public Works Committee favorably reported the nomination of Brenda Mallory to Chair the Council on Environmental Quality.

In this edition:

• COVID-19 relief: House Passes $1.9T COVID-19 Bill…
• Cybersecurity: Biden Administration Considers Executive Actions on Cybersecurity, Senate Intel Holds Hearing on SolarWinds Hack…
• Climate change: House Democrats Release Updated CLEAN Future Act…
• Extreme weather: Blackouts in South and Midwest Prompt Inquiry, Calls for Reform
• Transition: EPW Advances Regan Nomination, Jennifer Granholm confirmed as Energy Secretary, OMB Director Nominee Neera Tanden Withdraws Nomination,

House Passes $1.9T COVID-19 Bill
On Feb. 26, the House passed its COVID-19 aid package, the “American Rescue Plan Act,” (H.R. 1319) by a nearly party line vote of 219-212 using Budget Reconciliation procedures. The $1.9 trillion package includes provisions to deploy a national vaccination plan; deliver direct payments of $1,400 to individuals and families; provide emergency rental assistance; $350 million in aid to U.S. states, cities, and tribal governments; and additional provisions aimed at providing relief across all sectors of the U.S. economy.

The version passed by the House does not include a federal moratorium on shutoffs and expands access to payroll tax credits for emergency paid sick and family leave to public power utilities. The bill also adds $4.5 billion to the Low Income Home Energy Assistance Program (LIHEAP) to aid American families with their utility bills.

The Senate took up consideration of the bill on March 3, with expectations that Republicans would try to delay passage and force difficult votes through the amendment process, which is unlimited. Democrats, however, are hoping to pass the bill with as few changes as possible, as quickly as possible. President Biden has urged that the bill be sent to the White House prior to March 14, the date on which enhanced unemployment benefits are set to expire.

Biden Administration Considers Executive Actions on Cybersecurity
Anna Neuberger, Deputy National Security Adviser for Cyber and Emerging Technology, announced yesterday that the Biden administration will consider approximately 12 potential Executive actions to close gaps it has identified since the cyberattack on IT monitoring firm SolarWinds. Neuberger said that the administration is in the beginning stages of understanding the scope and scale of the attack, and that they expect to uncover more entities who were targeted and breached throughout their investigation. They anticipate that the investigation will take several months to complete. While she did not elaborate on what the Executive actions would entail, Neuberger did address legal barriers to public-private collaboration on the issue, calling them “something we need to overcome.”

Senate Intel Holds Hearing on SolarWinds Hack
On Feb. 23, the Senate Intelligence Committee held a hearing to question the leaders of major technology companies targeted by the recently exposed Russian-linked cybersecurity breach. Witnesses included Sudhakar Ramakrishna, CEO of SolarWinds, the IT software firm at the heart of the attack. Ramakrishna, who was not CEO of SolarWinds at the time of the attack, told Senators that the company is investigating how the hack was able to happen, and have narrowed it down to three avenues through which the hackers could have gotten into the system. Ramakrishna also emphasized that this hack indicates larger threats to supply chain security in general, and implored lawmakers to collaborate with companies to help avoid future hacks. Following the hearing, White House Press Secretary Jen Psaki told reporters that the administration’s response to the hack is “weeks, not months” away.

House Democrats Release Updated CLEAN Future Act
On Mar. 2, Democratic leaders announced an updated version of the CLEAN Future Act, originally released in the 116th Congress. The bill totals $565 billion and establishes a federal clean electricity standard with targets of 80% clean energy by 2030 and 100% by 2035, a much more stringent goal than the previous bill’s net zero by 2050 goal. It also includes new grant programs in energy efficiency, distributed energy resources, grid infrastructure, electric vehicles, and microgrids. Additionally, there are provisions included to improve the efficiency of new and existing buildings, as well as national energy savings targets for continued improvement of model building codes.

The bill also includes a placeholder section for hydropower relicensing, signaling an interest in working with new Ranking Member Cathy McMorris Rodgers (R-WA) on including Republican priorities and input. The bill also includes a provision requiring all public utilities (a term that generally does not include public power) to relinquish control of their transmission assets to an RTO or ISO within two years.

Blackouts in South and Midwest Prompt Inquiry, Calls for Reform
The weekend of Feb. 13, more than four million homes in Texas and several other nearby states experienced unprecedented blackouts after extremely cold temperatures caused a spike in electricity and natural gas use. The Electric Reliability Council of Texas (ERCOT), the state’s main grid operator, led controlled outages that lasted many hours when the state reached its highest level of emergency operations on Feb. 15. The Department of Energy gave several power plants in Texas authority to bypass pollution control regulations until the power outages are under control. MISO and SPP faced similar challenges that did not escalate to the same degree of emergency but still saw widespread outages. The crisis in the power markets prompted not only the expected politicization of blame but also a joint inquiry from the Federal Energy Regulatory Commission (FERC) and National Electric Reliability Corp. (NERC) and a call for market reform in Texas.

EPW Advances Regan Nomination
On Feb. 3, the Senate Environment and Public Works Committee held a confirmation hearing on the nomination of Michael Regan to be Administrator of the Environmental Protection Agency (EPA). In the hearing, Regan spoke of the need to act quickly to mitigate the impacts of climate change and appealed to both Democrats and Republicans by emphasizing the potential economic impacts of disasters caused by the climate. Throughout the hearing, Regan often related his plans for EPA back to the Biden administration’s plans for aggressive action on climate change, but stopped short of saying he would re-propose the Clean Power Plan in the same form it had taken under the Obama Administration.

On Feb. 9, EPW voted to advance Regan’s nomination to be EPA Administrator in a 14-6 vote.

Jennifer Granholm confirmed as Energy Secretary
On Feb. 25, the Senate voted 64-35 to confirm former Michigan Governor Jennifer Granholm to be the Secretary of Energy. Secretary Granholm will be tasked with leading the Biden Administration’s efforts toward cleaner energy resources to meet the President’s goal to reach carbon neutrality by 2050. Granholm has indicated a strong interest in boosting clean energy jobs, including in the manufacture of electric vehicles, wind turbines, and solar panels. She has also highlighted the need for grid infrastructure upgrades in the wake of the devastating California wildfires and the recent winter storm in Texas and surrounding states.

OMB Director Nominee Neera Tanden Withdraws Nomination
On March 2, President Biden’s nominee for director of the Office of Management and Budget (OMB), Neera Tanden, withdrew her nomination following weeks of scrutiny over tweets she had written about both Republicans and progressive Democrats. After her two confirmation hearings, Sen. Joe Manchin (D-WV) announced that he would not support Tanden, leaving her confirmation reliant on centrist Republicans like Sens. Susan Collins (R-ME) and Lisa Murkowski (R-AK). At the top of the list to replace Tanden is deputy OMB director nominee Shalanda Young, who previously served as Staff Director for the House Appropriations Committee.

In this edition:

• Transition: President Biden Takes Office, Announces Executive Actions, Schumer Outlines Legislative Priorities, Schumer and McConnell Reach Power Sharing Agreement, ENR Committee Holds Confirmation Hearing for DOE Secretary Nominee Jennifer Granholm …
• FERC: FERC Nixes Final Orders; Biden Selects Glick as Chairman…
• COVID-19: Biden Urges Democrats to Pass COVID-19 Relief via Reconciliation

President Biden Takes Office, Announces Executive Actions
On Jan. 20, Joe Biden was sworn in as the 46^th President of the United States. Shortly before he was inaugurated, the Biden administration released a list of executive actions that it plans to implement on the first day in office. The Executive orders focus on changing the course of pandemic response, extending economic relief, advancing racial equity and underserved communities, and reversing Trump-era immigration policies.

Specific to energy and environment, the Executive orders set in motion:

• Revoking the presidential permit of the Keystone XL pipeline,
• Rejoining the Paris Agreement,
• Revising emissions standards for cars, methane, and appliances,
• Pausing oil and gas leasing in the Arctic National Wildlife Refuge,
• Re-establishing the working group on the social cost of carbon,
• Directing agency heads to review 104 environment and energy rules put in place by the Trump administration.

On Jan. 27, Biden released another slew of Executive orders on what has been dubbed “Climate Day,” including suspending new oil and gas leasing on federal land, establishing a new commission on environmental justice, charting a course for placing 30% of federal lands under conservation protection within the decade, and submitting the Kigali treaty to the Senate for ratification. Another order directs an “all-of-government” approach to considering climate impacts in their decision-making, requiring procurement that favors electric vehicles, clean energy, and energy efficiency.

Schumer Outlines Legislative Priorities
On Jan. 12, incoming Senate Majority Leader Chuck Schumer (D-NY) sent a letter to his colleagues outlining his top priorities at the start of the 117^th Congress will be additional COVID-19 relief and addressing climate change. Although short on details, he indicated that the Senate would pursue a “bold” climate bill to include investment in clean infrastructure and manufacturing that would not only help address the climate crisis but also would create jobs.

Schumer and McConnell Reach Power Sharing Agreement
Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) have reached a power-sharing agreement for the evenly divided Senate. The deal paves the way for an organizing resolution that will allow Democrats to hold the chairmanships and thus set the agendas of committees. The final agreement comes after weeks of negotiations between the two leaders and pushback from Minority Leader McConnell over retaining the filibuster, an important tool for the minority party. The organizing resolution is set to be adopted in the Senate today.

ENR Committee Holds Confirmation Hearing for DOE Nominee Jennifer Granholm
At her Jan. 27 confirmation hearing, DOE Secretary nominee Jennifer Granholm told senators that coal, oil, and gas would need to be “part of the mix” even as the Administration plans a transition to net-zero emissions by 2050. The nominee’s remarks focused heavily on jobs, including touting “place-based” investments in communities that have traditionally relied on fossil fuel production. She said the Biden Administration opposed the use of Yucca Mountain for used nuclear fuel and expressed an urgency on siting new transmission lines to bring renewable resources like wind to load centers. Of particular interest to utilities, she expressed concern about the cybersecurity of the grid and said she hoped an upcoming infrastructure package would include grid-hardening measures. On Feb. 3, the Committee advanced Granholm’s nomination through to the Senate floor.

FERC Nixes Final Orders; Biden Selects Glick as Chairman
The Federal Energy Regulatory Commission (FERC) held its monthly meeting on Jan. 19, the final meeting under Chairman James Danly before President Biden took office and the first appearance of newly-sworn in Commissioner Mark Christie. The agenda initially included action on the agency’s transmission incentives and a complaint requesting buyer-side mitigation in New York’s capacity market, but those items were stricken without explanation. In addition, actions on expansion of the minimum offer price rule (MOPR) in PJM Interconnection, categorical exclusions under the National Environmental Policy Act (NEPA), and several natural gas dockets also failed due to lack of support. The Commission approved the bulk of proposed changes to the North American Electric Reliability Corporation’s (NERC) rules of procedure with some additional requests, as well as several other items.

On Jan. 21, President Biden designated Commissioner Richard Glick to chair the Commission in one of his first moves in office. Glick has been a FERC Commissioner since 2017, when he was appointed by President Trump. He has historically opposed minimum offer price rules and has even suggested that capacity markets on the whole need to be restructured. He is also a proponent of improving transmission incentives and building out the grid. Glick and recently appointed Democrat Allison Clements will remain in the minority until June, when Commissioner Neil Chatterjee’s term is up.

Biden Urges Democrats to Pass COVID-19 Relief
On Feb. 1, President Biden met with 10 GOP Senators to discuss their proposed COVID-19 relief package. The Republican package totals $600B, a far smaller number than the $1.9T proposal released by the Biden Administration. While the meeting was reportedly friendly, a deal was ultimately not reached, and President Biden is now supporting Democrats in a push to get their COVID-19 legislation passed via Budget Reconciliation, a two-step process that allows final passage by a simple majority in the Senate (i.e., without support from Republicans). The Democrats’ proposal includes $160B for vaccine distribution, $1,400 direct stimulus payments, and a $15 minimum wage, among other things. Biden has indicated that Democrats can afford to make compromises on several of their proposed provisions, including lowering the eligibility limit for direct payments.

In this addition:

• Transition: Biden selects energy and environment team; House Steering Committees select new committee leadership…
• FERC: Senate confirms Christie and Clements to FERC; FERC proposes cybersecurity Incentives…
• 2020 Year-End Bill: Year-end bill funds government for FY21; COVID-19 relief included; Energy provisions included…

Biden Selects Energy and Environment Team
Pres.-elect Biden has reportedly chosen former Michigan Governor Jennifer Granholm to lead the Department of Energy. During her tenure as Governor, Granholm was an ardent supporter of renewable energy, and forged strong relationships with the auto industry, which could be advantageous to the administration as they seek to speed up the rollout of electric vehicles and quickly develop a network of EV charging stations. Although she is seen as a moderate, left-leaning environmental groups applauded the pick, saying they believe she will push hard to deliver Biden’s goal of a 100% clean energy economy.

Relatedly, former Environmental Protection Agency (EPA) Administrator Gina McCarthy has reportedly been chosen to serve as the top climate advisor to the administration. McCarthy has a reputation as an aggressive advocate for policies that address climate change and was a key architect of President Obama’s climate regulatory efforts to eliminate greenhouse gas emissions. This role will serve as the domestic counterpart to John Kerry, who was named to a climate envoy position early in the transition, and will work closely with the EPA administrator to oversee regulatory action on climate.

The Biden team also announced Brenda Mallory, who served as general counsel for the Council on Environmental Quality in the Obama Administration, will be tapped to lead the organization. She currently serves as the director of regulatory policy at the Southern Environmental Law Center.

Additionally, Rep. Deb Haaland (D-NM) has been chosen to lead the Department of the Interior. Despite Democrats having a thin margin in the House, Speaker Nancy Pelosi (D-CA) publicly endorsed Haaland for the role on Dec. 16, which aides said was intended to serve as a green light for the Biden administration to go through with the nomination.

Finally, Michael Regan, North Carolina’s top energy regulator, will be nominated to the position of EPA Administrator. The selection comes after previous favorite for the role, California Air Resources Board (CARB) Chairwoman Mary Nichols, fell out of favor due to criticism from progressive groups over her handling of environmental justice issues in California. Regan is expected to bring a strong focus on racial equity to the agency.

House Steering Committees Select New Committee Leadership
On Dec. 2, the House Republican Steering Committee chose Rep. Cathy McMorris Rodgers (R-WA) for the top GOP spot on the House Energy and Commerce Committee, making her the first woman to hold a leadership role on the Committee. McMorris Rodgers has long been an advocate for advancing hydropower and has publicly spoken about the need for bipartisan climate change legislation. However, her selection for this position is likely to be seen as a check on the Biden administration’s ambitious environment, technology, and health care agenda. House Republicans, while still in the minority, will hold slightly more power in the 117^th Congress, as they flipped a significant number of seats in the 2020 General Election.

The Steering Committee also chose Rep. Bruce Westerman (R-AR) for the top Republican spot on the House Natural Resources Committee. Westerman beat out Rep. Paul Gosar (R-AZ) for the spot, and is a somewhat controversial pick, as members in this position typically hail from Western states.

Meanwhile, on Dec. 1, the House Democratic Steering and Policy Committee selected Rep. Rosa DeLauro (D-CT) to serve as Chairman of the Appropriations Committee, replacing Rep. Nita Lowey (D-NY), who retires at the end of this year. This selection comes following a contentious race between DeLauro, Rep. Debbie Wasserman-Schultz (D-FL), and Rep. Marcy Kaptur (D-OH). The full Democratic Caucus will still need to confirm the selection with a vote on Dec. 3.

Senate Confirms Clements and Christie to FERC
On Nov. 30, the Senate confirmed the nominations of Allison Clements and Mark Christie to sit as commissioners on the Federal Energy Regulatory Commission (FERC). The confirmation comes after considerable speculation over whether the nomination would be put to a vote during the short lame duck session. With this confirmation, Republicans now have a 3-2 majority on the Commission, which will remain until Commissioner Neil Chatterjee’s term is up in June 2021. President-elect Biden is expected to pick Democratic Commissioner Richard Glick to be Chairman of FERC once he takes office.

FERC Proposes Grid Security Incentives
During its December meeting on Dec. 17, FERC proposed a new rule that would create incentives for utilities to add cybersecurity protections beyond the current minimum requirements. This rule was proposed in response to a cyber attack on the IT service provider SolarWind, which affected thousands of organizations including electric power utilities, several networks within the Departments of Homeland Security, Treasury, and Commerce, and at least two Energy Department national labs. The proposal encourages utilities to go further than the Critical Infrastructure Protection minimum requirements laid out by the North American Electric Reliability Corporation (NERC) by allowing utilities to receive an add-on to their cost recovery that is passed along to customers. While the order was unanimous, there was bipartisan questioning from Chairman James Danly and Commissioner Richard Glick on whether the incentives were adequate to effectively achieve the desired outcome.

Year-End Bill Funds Government Through FY21
The year-end bill includes $39.6 billion for the Department of Energy (DOE), an increase of $1 billion from FY20. Energy Efficiency and Renewable Energy (EERE) will receive $2.86 billion, the Office of Electricity will receive $211.7 million, and the Cybersecurity, Energy Security, and Emergency Response (CESER) office will receive $156 million. Nuclear energy will receive $1.5 billion. The Low-Income Home Energy Assistance Program (LIHEAP) is funded at $3.8 billion, an increase of $10 million. The EPA will receive $9.24 billion, $180 million more than FY20.

COVID-19 Relief Included in Year-End Package
The bill passed by Congress includes $286 billion in direct economic relief for individuals, which includes $600 stimulus checks for individuals (and dependent children) making less than $75,00/year and an additional $300 per week in unemployment benefits through March, 2021. Unemployment benefits are also extended to 50 weeks. $325 billion is for small business relief, including Paycheck Protection Program and other lending and grant programs. Vaccine procurement and distribution, testing, tracing, and mitigation programs will receive $69 billion in funding.

Of interest to utilities, $25 billion will extend the rental assistance program, which also allows renters to use funds to pay past-due utility bills. Further, the bill includes $7 billion for low-income families to access broadband services, which includes a new $300 million grant program to fund broadband in rural areas.

Energy Provisions Included in Year-End Bill
The bill passed by Congress before the end of 2020 includes several provisions that had been included in the House or Senate energy bills. The final bill reauthorizes and updates research and development programs for solar, wind, geothermal, hydropower, carbon removal, industrial emissions reduction, advanced nuclear, as well as hydropower incentives. The Secretary is directed to establish a rebate program for the purchase of energy efficient transformers. It includes $1.7 billion for weatherization assistance, $180 million for energy management in federal buildings, and reauthorizing DOE’s sustainable transportation programs.

The bill includes $1.08 billion for energy storage technology cost reduction and $2.36 billion to advance smart grid technology. ARPA-E is reauthorized at $2.9 billion, and a new Office of Technology Transitions is authorized, along with an expansion of the loan guarantee program. The Secretary is directed to establish a program to support high-assay low-enriched uranium and reauthorizes the advanced nuclear programs.

Of particular interest, the bill directs DOE to establish an energy storage and microgrid grant and technical assistance program for electric cooperatives and public power to design and demonstrate energy storage and microgrid projects that use renewable energy.

The tax section of the bill also includes a number of health care provisions and extenders. It makes permanent the energy efficient commercial buildings deduction, extends the tax credit for paid family and medical leave and employer payments of student loans, and provides a two-year extension to the solar and residential energy-efficient property credit, and one-year extensions of the wind production tax credit, the biofuel producer credit, the energy property credit, the alternative fuel refueling credit, and the energy efficient homes credit. Other provisions would make waste energy recovery property eligible for the energy investment tax credit, extend offshore wind investment tax credit through 2025, allow certain public instrumentalities to claim the Employee Retention Tax Credit, and allow companies to write off expenditures made with Paycheck Protection Program loan proceeds.

In this addition:

• Transition: Biden Wins 2020 Presidential Election, Barrasso Will Lead ENR Committee, Biden Names John Kerry as Special Envoy on Climate, House Steering Committees Select New Committee Leadership…
• FERC: FERC Sees Significant Personnel Changes, FERC Announces NOPR to Address Transmission Line Ratings…
• Appropriations: Legislators Reach Agreement on FY21 Funding Levels…
• Pandemic: Congress and White House Renew Efforts for COVID-19 Relief…

Biden Announced Winner of 2020 Presidential Election

On Nov. 7, news outlets formally projected that former Vice President Joe Biden had won the presidential race, securing more than 270 electoral votes after a large portion of outstanding ballots in PA were counted. That night, President-elect Biden delivered an impassioned speech calling for unity and an end to “this grim era of demonization in America.” In the same speech, Biden named climate as one of his top four priorities, indicating that he plans to spend a great deal of political capital on the issue, no matter the outcome of the Senate majority fight. President Trump has not conceded and General Services Administrator Emily Murphy did not formally declare the results of the election until Nov. 23, although the results are all but certain to hold.

Barrasso Will Lead ENR Committee in 117th Congress

On Nov. 18, Sen. John Barrasso (R-WY) announced that he would leave his chairmanship of the Environment and Public Works (EPW) Committee and take over as top Republican on the Energy and Natural Resources (ENR) Committee in the new Congress. The position will be vacated by current Chairman Lisa Murkowski (R-AK) due to Republican term limits on chairmanships. Depending on the outcome of the two Senate run-off elections in Georgia, Barrasso will become either the Ranking Member or Chairman of the ENR Committee. This move will put lawmakers from two of the leading coal-producing states as leaders of the powerful Committee, with Sen. Joe Manchin (D-WV) serving as the lead for Democrats. Barrasso has long been a strong advocate for nuclear power and uranium mining, and has opposed carbon pricing and the Green New Deal resolution.

Biden Names John Kerry as Special Envoy on Climate

On Nov. 23, President-elect Joe Biden announced that he will name John Kerry as the special presidential envoy on climate, a newly-created position on the National Security Council that requires no Senate confirmation. Kerry has long been considered a frontrunner for such a position due to his work in the Obama administration on the Paris climate accord and his activism at home and abroad. Many environmental groups who were initially skeptical of Biden’s dedication to the issue of climate change have praised him for the appointment, noting that Kerry’s ability to bridge the divide between national and international climate policy will make him a major asset in this role. Biden is also expected to add a climate official focused purely on domestic efforts to his White House team in coming weeks.

House Steering Committees Select New Committee Leadership

On Dec. 2, House Republican Steering Committee chose Rep. Cathy McMorris Rodgers (R-WA) for the top GOP spot on the House Energy and Commerce Committee, making her the first woman to hold a leadership role on the Committee. McMorris Rodgers has long been an advocate for advancing hydropower and has publicly spoken about the need for bipartisan climate change legislation. However, her selection for this position is likely to be seen as a check on the Biden administration’s ambitious environment, technology, and health care agenda. House Republicans, while still in the minority, will hold slightly more power in the 117th Congress, as they flipped a significant number of seats in the 2020 General Election. The Steering Committee also chose Rep. Bruce Westerman (R-AR) for the top Republican spot on the House Natural Resources Committee. Westerman beat out Rep. Paul Gosar (R-AZ) for the spot, and is a somewhat controversial pick, as members in this position typically hail from Western states.

Meanwhile, on Dec. 1, the House Democratic Steering and Policy Committee selected Rep. Rosa DeLauro (D-CT) to serve as Chairman of the Appropriations Committee, replacing Rep. Nita Lowey (D-NY), who retires at the end of this year. This selection comes following a contentious race between DeLauro, Rep. Debbie Wasserman-Schultz (D-FL), and Rep. Marcy Kaptur (D-OH). The full Democratic Caucus confirmed the selection with a vote on Dec. 3.

FERC Sees Significant Personnel Changes

The Federal Energy Regulatory Commission (FERC) saw two large personnel shake ups in November. First, on Nov. 5, President Trump named James Danly as Chairman of FERC, abruptly demoting Neil Chatterjee, who will stay on as Commissioner. Chatterjee acknowledged the move might have been a result of his embrace of carbon pricing in organized markets, but said he is on excellent terms with Danly and expressed peace with the President’s decision. Then, on Nov. 30, the Senate confirmed the nominations of Allison Clements and Mark Christie to sit as commissioners on FERC. The confirmation comes after considerable speculation over whether the nomination would be put to a vote during the short lame duck session. Clements, a former attorney for the Natural Resources Defense Council, will become the second Democrat on the Commission, alongside Commissioner Richard Glick. Christie is a Republican who led the Virginia Corporation Commission, and his confirmation restores representation by a state regulator on the panel – something that was historically commonplace but has not been the case since 2018. With this confirmation, Republicans now have a 3-2 majority on the Commission, which will remain until Commissioner Neil Chatterjee’s term is up in June 2021. If the Senate remains in GOP control, it is possible that they will block a Democratic nomination to replace Chatterjee, establishing a 2-2 gridlock in FERC during Biden’s term.

FERC Announces NOPR to Address Transmission Line Ratings

At its monthly meeting on Nov. 19, FERC announced a Notice of Proposed Rulemaking (NOPR) to address the transparency and accuracy of transmission line ratings. Line ratings, which indicate the maximum power a line can safely conduct, are set to accommodate static, worst-case scenario conditions based on conservative assumptions. The new NOPR would require transmission providers to implement dynamic line ratings that could better represent the transfer capability of the transmission system. Overall, the draft NOPR seeks to improve the efficiency of transmission lines and better reflect transmission capability in real time.

Legislators Reach Agreement on FY21 Funding Levels

On Nov. 24th, House and Senate appropriators reached a bipartisan compromise on FY21 funding levels, making a government shutdown less likely when funding runs out on Dec. 11. The agreement establishes overall totals for 12 appropriations bills that will be rolled into one large omnibus bill, securing funding for the rest of the fiscal year. Specific numbers for the bill will remain under wraps until it is finalized, which will likely happen in the short two-week period following the Thanksgiving recess.

Congress and White House Renew Efforts for COVID-19 Relief

Congressional leaders and the White House have reportedly renewed efforts to pass COVID-19 relief before the end of the year. On Dec. 1, Democrats pitched a new proposal to Senate Majority Leader Mitch McConnell (R-KY), and Treasury Secretary Steve Mnuchin spoke with House Speaker Nancy Pelosi (D-CA) about relief for the first time since before the election. McConnell indicated to reporters that a relief deal would likely be tied to the omnibus spending package. Separately, on Dec. 1 a bipartisan group of House and Senate lawmakers released a framework for a $908 billion relief bill that would run through April. The bipartisan proposal includes $160 billion in aid for state and local governments, $180 billion in expanded unemployment insurance, and small business aid including $288 billion in Paycheck Protection Program loans.

In this edition:

• Election 2020: Key battlegrounds to decide control of White House, Senate, Barrett Confirmed to Supreme Court…
• FERC: Commission Rejects Energy Security Improvements filing, Signals openness to carbon pricing and muddles PJM capacity auction…
• Pandemic: COVID-19 aid elusive…
• Energy: Tonko Floats CAA Amendments…

Key Battlegrounds to Decide Control of White House, Senate
Election night did not produce a clear winner in the Presidential race or for control of the Senate, although by the following afternoon former Vice President Joe Biden appeared to be on a path to take the White House while narrow victories in Senate races like Sen. Susan Collins’ (R-ME) appeared to put a Democratic sweep out of reach. Votes are still being counted in crucial battleground states of Michigan and Pennsylvania, and the President has already indicated his campaign will request a recount in Wisconsin.

Barrett Confirmed to Supreme Court

On Oct. 26, Amy Coney Barrett was confirmed by the Senate to join the Supreme Court by a vote of 52-48, with Sen. Susan Collins (R-ME) joining all Democrats in opposition. Barrett was sworn in the same night, cementing a 6-3 conservative ideological tilt on the bench.

Commission Rejects Energy Security Improvements Filing
The Federal Energy Regulatory Commission (FERC) rejected the ISO-NE proposal known as “Energy Security Improvements,” which would have created new pathways for generators to receive revenue for procuring fuel in advance. FERC found the proposal unjust and unreasonable because it would not provide sufficient time to procure the resources and it would be optional, costing consumers potentially hundreds of millions of dollars per year with no guarantee of benefits. Several NEPPA members submitted comments calling for rejection of the proposal. FERC did lay out potential pathways for ISO-NE to revise its proposal, including a market-based reserve product or day-ahead reserve product.

FERC Signals Openness to Carbon Pricing, Muddles PJM Capacity Auction
At its monthly meeting Oct. 15, FERC signaled openness to approve tariffs that include a price on carbon in RTO markets as a way to accommodate state emissions-reduction policies. The agency’s policy statement would not directly implement carbon pricing, but opens the door for regional RTOs to propose policies that do. Separately, FERC adopted part of the capacity market filing for PJM Interconnection implementing a minimum offer price rule, but remanding other parts that will likely delay the region’s capacity market auction until at least June 2021. Commissioner Rich Glick also raised alarm bells about a footnote in the decision that could suggest FERC is prepared to subject state-level auctions to a price floor, something that would further hamper states from enacting policies that benefit certain resources they may want to favor for policy reasons, such as being emissions-free.

COVID-19 Aid Elusive
House Speaker Nancy Pelosi (D-CA) set a deadline of Oct. 20 for reaching a COVID-19 relief deal with the White House, but as the day came and went with no agreement, the Speaker insisted she would keep working toward a package the House could support. As the Senate held confirmation hearings for Barrett, Senate Majority Leader Mitch McConnell (R-KY) set votes for legislation to extend the Paycheck Protection Program and a $650 billion aid package (similar to a package that failed to advance in September), but reportedly pressured the White House not to agree to a deal before the election. Speaker Pelosi sent Treasury Secretary Mnuchin a two-page letter on Oct. 29 listing the items the White House has not answered in the COVID-19 stimulus discussions, such as funding for state and local governments, schools and child care, tax credits, unemployment, and worker safety. The missive comes amid finger-pointing over which party may be withholding agreement until after the election.

Tonko Floats CAA Amendments Discussion Draft

House Energy and Commerce lieutenant Rep. Paul Tonko (D-NY), who heads the Subcommittee on Environment and Climate Change, is circulating a discussion draft of Clean Air Act (CAA) amendments, which would create a new greenhouse gas reduction program. The program would set a national pollution reduction target for covered entities that would decline relative to a 2005 baseline, with a 90% reduction intended by 2048. Emissions allowances would be auctioned, with states and tribes allocated a certain percentage to be sold to benefit energy efficiency, consumer assistance, and other programs. Additional proceeds from the auctions would be directed toward various programs outlined in the bill, such as a frontline community fund, high-level nuclear used fuel, and a worker transition fund.

In this edition:

• FERC: Senate Committee Holds Confirmation Hearing for FERC Nominees…
• Pandemic: Bipartisan COVID-19 Aid Framework Seeks to Break Impasse, but President Ends Talks…
• Energy: House Democrats Release Clean Energy Package, House Tees Up Energy Bill, but on Shaky Ground…
• Cyber Security: House Passes Grid Cybersecurity Bills…
• Appropriations: CR Passes Hours Ahead of Shutdown…

Senate Committee Holds Confirmation Hearing for FERC Nominees

The Senate Energy and Natural Resources Committee held a hearing on Sept. 16 to consider the nominations of Democrat Allison Clements and Republican Mark Christie to be commissioners on the Federal Energy Regulatory Commission (FERC). Overall, the hearing was cordial with Senators indicating their interest in seeing FERC return to a fully seated slate of five commissioners. Committee Chairman Lisa Murkowski (R-AK) noted in her opening remarks that FERC’s economic reach is 3% of GDP, and she urged the commissioners to strive for independence and impartiality. The nominees’ remarks and many questions from committee members focused heavily on climate issues, technology neutrality, FERC’s role in improving and maintaining grid reliability, and fairness for electric consumers. Several senators also pressed the nominees to work toward improving measures to guard against cybersecurity threats. The Energy and Natural Resources Committee must vote on the nominations before a full Senate confirmation vote can be scheduled, but a committee vote has not yet been announced.

Bipartisan COVID-19 Aid Framework Seeks to Break Impasse, but President Ends Talks

On Sept. 15, the bipartisan House Problem Solvers Caucus released a $1.5 trillion COVID-19 aid package designed to break the impasse between leaders negotiating the next major bill. The framework provides funding for healthcare and virus testing, stimulus checks for most individuals, unemployment assistance, $500 billion in state and local aid (including revenue shortfalls), funds to address incremental election costs, $12 billion for broadband hot spots, and liability and worker protection. It is not clear whether funds for LIHEAP or other utility bill assistance may be included in a section marked “other rent stabilization measures,” but the framework does not include a moratorium on utility disconnects. While both Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Mitch McConnell (R-KY) panned the proposal, President Trump signaled support for the effort, saying he wants people to receive money. The framework was reportedly the basis for an offer from Treasury Secretary Mnuchin, which was rebuffed as House Democratic leaders passed their own offer, a $2.2 trillion version of the HEROES Act. LIHEAP funding would triple under the new bill, to $4.5 billion, and rural electric co-ops that are borrowers of the Rural Utilities Service would be eligible for a new competitive grant program to cover the cost of forgiving customer debt and other losses. However, President Trump abruptly called off further negotiations until after the election, before sending a somewhat mixed message about passing piecemeal bills to address the ongoing crisis.

House Democrats Release Clean Energy Package

On Sept. 24, the House passed a package of clean energy research, deployment, and workforce training bills. Democrats on the Energy and Commerce Committee and the Science, Space and Technology Committee compiled the package based on the past two years of proposals in the committees, and many of the included measures enjoy broad bipartisan support or are included in the Senate’s broad energy bill. The bill includes a proposal to revamp many of the Department of Energy’s (DOE) research and development programs that cover a host of technologies, including wind, solar, geothermal, advanced nuclear, carbon capture, and energy storage. It would also boost funding for the Advanced Research Projects Agency-Energy (ARPA-E); a robust title for electric vehicle infrastructure research, development, and deployment activities; and a significant title dedicated to environmental justice. However, President Trump threatened to veto the bill, and the Ranking Members of the committees of jurisdiction issued a statement opposing the bill the morning it was brought to the floor. Several environmental groups also weighed in with concerns about the bill, but it ultimately passed on a mostly party-line vote. The provisions may be conferenced with the Senate version, if it is brought up in the lame duck period, or attached to a larger vehicle.

House Passes Grid Cybersecurity Bills

On Sept. 29, the House passed four non-controversial bills related to cybersecurity under suspension of the rules. The “Cyber Sense Act” (H.R. 360) would create a voluntary program to white-list products and technologies for use in the bulk-power system. The “Grid Security R&D Act” (H.R. 5760) would authorize DOE to coordinate with stakeholders on research, development, and demonstration projects to strengthen the grid against cyber and physical attacks, including making grants for that purpose and for improving emergency response. The “Enhancing Grid Security Through Public-Private Partnerships Act” (H.R. 359) would encourage DOE to enter into and facilitate public-private partnerships to improve information-sharing, training, and other aspects of grid security. The “Emergency Leadership Act” (H.R. 362) would codify the position of DOE Assistant Secretary for Cybersecurity. The bills were not part of the larger energy bill that passed the House in September and some lack a Senate counterpart, but they could be added to other year-end packages in a lame duck session.

CR Passes Hours Ahead of Shutdown

On Sept. 30, just a few hours ahead of the fiscal year deadline, the Senate voted in favor (84-10) of a Continuing Resolution (CR), extending FY20 government funding until Dec. 11. The House passed this legislation on Sept 22, and the President signed the measure shortly before the funding expiration. The House has passed 10 of 12 individual funding bills for FY21, but the Senate has yet to pass any. With the Senate firmly focused on consideration of the Supreme Court nominee, it is not likely that any of the FY21 bills will be signed into law before Dec. 11; rather, this CR delays any funding decisions until after elections.

In this edition:

• Pandemic: Senate Responds to Saturday House Vote on Postal Service with COVID-19 Offer…
• Energy: Menezes Confirmed to DOE Deputy Role, Senate Democrats Release Climate Recommendations Report, FERC Rejects SPP Tariff to Establish EIM …
• Cyber Security: Senate Energy Panel Examines Cybersecurity Issues in the Electric Sector…
• Telecommunications: Ninth Circuit Rejects Challenge to Pole Attachment Order…

Senate Responds to Saturday House Vote on Postal Service with COVID-19 Offer

Amid growing concerns about planned changes at the U.S. Postal Service and the resulting impact on the ability to vote by mail in November, House Speaker Nancy Pelosi (D-CA) called for a rare Saturday vote during the August recess on a bill to provide $25 billion in funding to shore up operations and reverse planned operational changes. While Postmaster General Louis DeJoy has since said the agency will delay making the planned changes until after the election, Senate Majority Leader Mitch McConnell (R-KY) took the opportunity to release draft text of what is being called a “skinny” COVID-19 plan in response to the House Postal Service measure. The Senate bill includes provisions to provide $300/week in unemployment benefits, liability protections for employers, and funds for the U.S. Postal Service, schools, and the Paycheck Protection Program. The measure is intended to restart discussions about moving smaller packages of pandemic response measures, something the Speaker had previously said she did not want to do.

Menezes Confirmed to DOE Deputy Role

The Senate confirmed Mark Menezes for the Deputy Secretary role at the Department of Energy (DOE) yesterday. Menezes has served for several years in the Department as Under Secretary of Energy, in which he was responsible for overseeing DOE’s energy programs and driving energy technology innovation. Prior to joining the Administration, he worked in the private sector and also previously served as chief counsel of the House Energy and Commerce Committee. The nomination was approved on a bipartisan vote of 79-16.

Senate Democrats Release Climate Recommendations Report

Senate Democrats released a 260-page report outlining their plan to get the U.S. to net-zero greenhouse gas emissions by 2050 and boost federal spending on climate change. The report focuses heavily on the economic fallout of climate change and emphasizes that inaction could permanently damage the economy. To mitigate that impact, the plan aims to create ten million new jobs, and would ensure that 40% of federal spending be directed to communities of color and low-income, disadvantaged communities. While the Senate report is less prescriptive than the report released by House Democrats in June, it touches on many of the same themes, including industrial emissions, electricity generation, and technological innovation.

FERC Rejects SPP Tariff to Establish Imbalance Market

On July 31, the Federal Energy Regulatory Commission (FERC) rejected the Southwest Power Pool’s (SPP) proposed tariff to create a Western Energy Imbalance Service (WEIS) market, providing guidance to the RTO for a modified proposal but casting doubt on its plans to go live in February 2021. FERC faulted the proposal for its use of non-participating entities’ transmission capacity, its assumptions that data on transmission availability will be accurately reported by third parties, its lack of resource adequacy incentives, the lack of data on marginal losses, and its market power mitigation strategy.

Senate Energy Panel Examines Cybersecurity in the Electric Sector
The Senate Energy and Natural Resources Committee held a hearing on Aug. 5 to examine efforts to improve cybersecurity for the energy sector. The hearing focused on improving critical infrastructure protection initiatives and improving collaboration and communication among the federal government and electric infrastructure owners and operators. Federal witnesses included Alex Gates, Senior Advisor for the DOE’s Office of Policy for Cybersecurity, Energy Security, and Emergency Response (CESER), and Joseph McClelland, Director of the Office of Energy Infrastructure Security at FERC. Gates highlighted several DOE initiatives, including the Bulk Power Executive Order to protect the bulk power system and emphasized the Department’s efforts to reach out to stakeholders to better inform agency decisions. McClelland focused on FERC’s role in approving and enforcing reliability standards for the nation’s bulk power system.

Court Rejects Challenges to FCC Pole Attachment Orders

On Aug. 12, the U.S. Court of Appeals for the Ninth Circuit rejected utility groups’ challenges to the Federal Communications Commission’s (FCC) 2018 declaratory orders on pole attachment policy. The ruling affirms FCC’s policies on overlashing, preexisting violations, use of third-party contractors, rates, and shot clocks. The court also rejected municipal utilities’ argument that Sec. 224 of the Communications Act precludes FCC regulation of publicly-owned poles, a significant defeat. The Court sided with utilities on one issue, remanding to FCC a portion of its small cell order dealing with municipal decisions based on aesthetics. APPA and others have not yet indicated whether they will petition the Supreme Court for review.

In this edition:

• Pandemic: Senate bill launches fruitless negotiations, President issues Executive orders…
• FERC: Nominees put forward as McNamee steps down, D.C. Circuit grants jurisdiction over storage in markets, FERC finalizes PURPA rules and dismisses net metering petition…
• Energy: DeGette introduces long-awaited clean energy standard legislation, Muni and Coop financing bills introduced…
• Cyber Security: DOE requests information on Bulk Power System order…

Senate Bill Launches Fruitless Negotiations as President Signs Executive Orders

On July 27, Senate Majority Leader Mitch McConnell (R-KY) unveiled the “Health, Economic Assistance, Liability Protection and Schools (HEALS) Act,” the Senate’s proposal for what is expected to be the final coronavirus relief bill in the foreseeable future. The package includes provisions to continue and expand the allowable uses of Paycheck Protection Program (PPP) funds, improve virus testing capability and supply stockpiles, shield schools, businesses, and government agencies from litigation related to COVID-19 exposure, and provide more than $300 billion to federal agencies to respond to the pandemic, although no additional funding is provided for state and local governments. The bill would also continue supplemental unemployment payments at a reduced amount and provide another round of $1,200 stimulus payments for most individuals and making all dependents eligible for an additional $500 payment. Of particular interest to utilities, the bill provides an additional $1.5 billion for the Low-Income Home Energy Assistance Program (LIHEAP). Provisions related to aiding the energy sector specifically were left out of the package, but so was any language mandating a moratorium on utility disconnections.

The introduction of the bill launched several days of negotiation with the White House and Democratic leaders but proved only to demonstrate how far apart the sides are on the scope and urgency of additional aid. Talks broke down on Aug. 7, leading the President to announce four Executive orders to delay payroll taxes for most workers, suspend student loan interest, slow evictions, and reprogram funds from the Disaster Relief Fund to provide a $400 weekly unemployment benefit (provided states meet a 25% cost share). The announcement has effectively ended the current round of negotiations, and it is not clear if or when they will resume.

President Trump Announces Nominations of Two FERC Commissioners

On July 28, President Trump announced his intent to nominate Republican Mark Christie and Democrat Allison Clements to the Federal Energy Regulatory Commission (FERC). Christie currently serves as the Chairman of the Virginia State Corporation Commission, while Clements is a longtime energy attorney that has worked at the Natural Resources Defense Council and currently heads the clean energy market program at the Energy Foundation. The pairing of these nominees should ease the Senate confirmation process, and a confirmation hearing is expected to be held after the Senate returns from its August recess. Meanwhile, Commissioner Bernard McNamee, who had previously announced his intent to resign, said his last day would be Sept. 4.

D.C. Circuit Grants FERC Jurisdiction Over Energy Storage in Markets

The D.C. Circuit handed FERC a win on July 10, ruling that its Order 841 did not intrude on states’ authority over energy storage systems. The Order prevents states from prohibiting storage resources from participating in organized markets. The Court’s decision may have further implications for FERC’s jurisdiction over distribution resources that intersect with wholesale markets, and utility groups such as NARUC, APPA, and NRECA challenged the Order. However, it had the support of environmental groups who argued the Order would promote market access for clean energy resources.

FERC Finalizes Rules for Implementation of PURPA, Dismisses NERA Petition

FERC finalized rules governing the implementation of the Public Utility Regulatory Policies Act (PURPA) at its monthly meeting in July. The final rule tracks closely to the proposal, which gives states and utilities more flexibility and autonomy in dealings with qualifying facilities. FERC also dismissed on procedural grounds the petition from the New England Ratepayers Association that would have upended state net metering programs.

Rep. DeGette Introduces Long-Awaited Clean Energy Standard Bill

On July 9, Rep. Diana DeGette (D-CO) introduced the “Clean Energy Innovation and Deployment Act,” which would establish a federal Zero-Emissions Energy Standard (ZEES) requiring 100% emissions-free generation by 2050 and incentives to adopt clean energy technologies. The bill is seen as a leading contribution among several versions of a clean energy standard (CES) that have been previously introduced. In addition to providing details about the CES, the bill would create a Clean Energy Deployment Administration within the Department of Energy that can issue loans, loan guarantees, and other credit products, replacing many existing programs. It also includes a subtitle on beneficial electrification that includes a number of provisions to advance electric vehicle deployment. Several tax credits and grant programs are extended or created. Further, utilities that accelerate their transition to 100% clean energy are eligible to receive a tax credit (that can be directly paid) the value of which depends on how quickly the fleet is transitioned.

Bipartisan Group of Senators Introduce Bill to Reinstate Advance Refunding

On July 1, Sens. Roger Wicker (R-MS) and Debbie Stabenow (D-MI), along with a group of bipartisan senators, introduced the “Lifting Our Communities through Advance Liquidity for Infrastructure (LOCAL Infrastructure) Act,” which would restore state and local governments’ access to tax-exempt advanced refunding bonds. Restoring advanced refunding would allow governmental entities to refinance outstanding municipal bonds to more favorable borrowing rates before the end of the initial term. That ability was removed in the 2017 tax reform bill, and restoration of that exemption has been a top priority for public power ever since.

Legislation Introduced to Ease RUS Loan Refinancing

On July 2, a bipartisan group of Senators and House members introduced the “Flexible Financing for Rural America Act,” which would allow electric cooperatives and small rural telecommunications providers to refinance debt held with the Rural Utilities Service (RUS) at current market rates without penalty. Under existing law, RUS borrowers are required to pay a significant penalty to repay early or modify loans. As a result, RUS loan rates may exceed current market rates with no option for borrowers to refinance the debt to obtain a lower interest rate. Under the bill, borrowers would have 180 days from the bill’s enactment to make a refinance request.

DOE Releases RFI on Bulk Power System Executive Order

On July 7, the Department of Energy released a request for information (RFI) on elements of the May Executive Order on Securing the Bulk Power System. The RFI lists for the first-time countries considered to be adversaries and the type of equipment covered under the Order. It also requests information on current industry practices to mitigate supply chain vulnerabilities. Comments are due August 7, 30 days after today’s publication in the Federal Register.

n this edition:

• Energy: Climate Crisis Recommendations take aim at MOPR, Court strikes down tolling orders, Hydro bill reintroduced…
• Pandemic: Panels hold hearings on COVID impacts and response, House passes massive infrastructure bill, Fed expands MLF…
• Cyber Security: FERC Invites Comment on Incentivizing Cybersecurity Investments…

Climate Crisis Recommendations Take Aim at MOPR

On June 30, the House Select Committee on the Climate Crisis unveiled its long-awaited recommendations for combating climate change. The report calls for reaching net zero emissions by 2050 and net-negative in the second half of the century, through multiple policy recommendations. With respect to the electric sector, the recommendations call for a Clean Energy Standard that creates “rapid deployment” of renewables and other zero-emissions technology, strengthening building codes, and zero-emissions cars by 2035, among many other things.

Of interest to NEPPA, the report states that “one of the most significant barriers to a reliable and affordable decarbonized grid is the use of mandatory capacity markets…” and recommends that Congress amend the Federal Power Act to clarify that state authority over generation includes clean energy incentives and prohibit the Federal Energy Regulatory Commission (FERC) from mitigating bids on the basis that it receives support from a state or local government. Such a policy would effectively undo the minimum offer price rule (MOPR) and restore self-supply.

Court Strikes Down Tolling Orders

On June 30, the D.C. Circuit Court of Appeals struck down FERC’s use of “tolling orders” that allow pipeline projects to move forward while the agency mulls rehearing, a practice that challengers and the judges said effectively denies petitioners a meaningful opportunity to challenge those projects in court since a final decision from the agency is a prerequisite to do so. The ruling overturns 50 years of precedent on the matter, and is likely to impact projects under the Federal Power Act, which uses the same statutory language as the Natural Gas Act to prescribe just 30 days for FERC to take up a rehearing request. That could mean that long-delayed final agency decisions on issues such as the Minimum Offer Price Rule (MOPR) in New England and New York’s capacity markets could be ripe for legal challenges.

McMorris Rodgers Introduces Hydropower Licensing Bill

Rep. Cathy McMorris Rodgers (R-WA) reintroduced H.R. 7410, the “Hydropower Clean Energy Future Act of 2020,” on June 29. The bill is similar to legislation she introduced in 2017 which passed the House but ultimately was not signed into law. Among other things, the bill affirms the role of hydropower as a renewable resource and modernizes the hydropower licensing process by improving coordination among permitting agencies and making FERC the lead agency for complying with state and local environmental reviews. The bill also promotes innovation and next-generation hydropower technologies, including expediting licensing for new technologies and small hydropower projects that are unlikely to jeopardize endangered species or critical habitat.

Panels Hold Hearings on Effects of COVID-19 on the Energy Sector

On June 16, the House Energy and Commerce Subcommittee on Energy held a hearing entitled “Reviving Our Economy: COVID-19’s Impact on the Energy Sector.” The Subcommittee heard from Ernest Moniz, President & CEO of the Energy Futures Initiative (and former Secretary of Energy); Gregory Wetstone, President & CEO of the American Council on Renewable Energy; and Rich Powell, Executive Director of ClearPath. Topics covered in the hearing included the effects of climate change on marginalized communities, loss of jobs in the solar industry, the importance of developing greater energy storage capacity, and grid modernization. All of the witnesses urged the Members to consider aid for clean energy in any further stimulus packages.

On the same day, the Senate Energy and Natural Resources Committee hosted a full committee hearing examining the impacts of COVID on the energy industry. Witnesses included Lisa Jacobson, President of the Business Council for Sustainable Energy; Jackie Roberts, President of the National Association of State Utility Advocates; and representatives from the International Energy Agency, the U.S. Energy Information Administration, and the American Petroleum Institute. Though the hearing focused much of its time on crude oil and petroleum market disruption, Senators expressed willingness to engage and help with the unique issues faced by utilities during this pandemic. Both Chairman Lisa Murkowski (R-AK) and Ranking Member Joe Manchin III (D-WV) noted how critical it could be to revisit the energy legislation that was pulled from the floor early this year, updating some provisions to help boost energy sector jobs and expand coverage of financial help to those unable to pay their utility bills. Roberts spoke about the struggles faced by utilities, particularly public power and co-ops. In her testimony and her responses to member questions, Roberts underscored the importance of expanding assistance beyond low-income recipients of LIHEAP to customers who have faced job loss and uncertainty about when they may be able to pay their utility bills – a situation that could cause significant stress to public power and co-ops who depend on sufficient revenue for operating.

House Passes Massive Infrastructure Bill

House Democrats released the legislative text of a major infrastructure package, H.R. 2, the “Moving Forward Act.” The $1.5 trillion bill builds on previous outlines released by Democratic House leaders, and it includes hundreds of wish-list items such as extending the Production Tax Credit for renewables (and making it available as a direct payment to entities with no tax liability) and expanding the electric vehicle tax credit, grants for energy storage projects, and $4.5 billion for transportation electrification. As indicated in the framework released in January, the bill would restore advance refunding for municipal bonds and increase the small issuer exemption. New provisions on dam safety respond to recent dam breaches in the Midwest. The bill would also set FERC on a path to facilitate interregional transmission and includes provisions related to western water, lands, and drought issues. The bill is paid for with a massive transfer from the general fund rather than a fix to the gas tax, although aides report that the pay-for is an opening offer. The House expects to pass the bill before the July 4 recess.

Federal Reserve Again Expands Municipal Liquidity Facility

The Federal Reserve announced on June 3 it would expand the scope of the Municipal Liquidity Facility (MLF) to allow Governors to designate two “Revenue Bond Issuers” in their state that may participate directly in the MLF. A revenue bond issuer is a government-owned, state or political subdivision that issues bonds secured by revenue from a specified source – i.e., a public power utility. The MLF is still considered a lender of last resort, in that a borrower must be unable to secure adequate credit accommodations elsewhere. However, issuers may certify that market or economic conditions due to the pandemic have made lending options inconsistent with “a normal, well-functioning market.” Municipal utilities are hopeful that the MLF will be a viable tool to increase liquidity to manage cash flow pressures during the pandemic. The recent expansion in eligibility will allow additional flexibility for governors of lower population states to access the facility.

FERC Invites Comment on Incentivizing Cybersecurity Investments

At its monthly meeting on June 18, FERC issued a white paper examining incentives for voluntary cybersecurity investments. In doing so, the Commission announced an invitation for stakeholders to provide feedback in addressing a range of questions aimed at improving grid cybersecurity. One option outlined in the white paper would offer transmission owners a higher return on equity (ROE) for voluntarily applying Critical Infrastructure Protection (CIP) standards to facilities currently not subject to those requirements. Among the other questions on which FERC is inviting input is whether a 200-basis point, project-specific adder would be sufficient to incentivize cybersecurity investments that exceed the requirements of CIP standards. A formal Notice of Inquiry was published in the Federal Register on June 24 and will be open to comment for 60 days.

In This Edition:

• Pandemic: House passes more COVID-19 relief, Senate moves more slowly; Fed Expands MLF, SBA Grants Coops Access to PPP; FERC to hold technical conference on pandemic …
• Energy: FERC approves changes to PJM reserve market, new base ROE …
• Cyber Security: DOE clarifies Executive Order on bulk power system…

House passes more COVID-19 relief, Senate moves more slowly

The House passed a $3 trillion “Phase 4” coronavirus aid bill, dubbed the “HEROES Act,” containing additional funds for food assistance, another round of $1,200 payments for most individuals, $500 billion in state fiscal relief, $375 billion in local government relief, and hundreds of additional aid provisions.

The bill would institute a moratorium on debt collection (including disconnecting utility service) against consumers, small businesses, and not-for-profits during the crisis and for 120 days thereafter. However, the provision would also provide creditors access to a Federal Reserve facility to receive long-term, low-interest loans on which payments would be deferred until a borrower resumes making payments to the creditor. A different section requires states and utilities receiving emergency funds to adopt or maintain policies to prevent residential electric utility shutoffs during the emergency period.

The Senate has been reluctant to pass additional COVID-19 relief legislation, instead preferring to monitor the aid programs that have already been passed. As social distancing is more manageable in the Senate, the chamber has restarted in-person activities, with some virtual capabilities as select lawmakers continue to self-quarantine.

While the HEROES Act is essentially dead on arrival in the Senate, the chambers do seem to agree that the Paycheck Protection Program (PPP) should be modified to allow more of the funds to be used on non-payroll expenses. On May 28, the House approved a bill to modify the Paycheck Protection Program loan requirements on a nearly-unanimous basis. In addition to giving recipients the remainder of the year to spend the funds, the bill lowers the threshold for the percentage of the loans that must be spent on payroll in order to have the loans forgiven, from 75% to 60%. The remainder may be spent on other expenses, including utility bills. The Senate is expected to act on the bill but failed to gain unanimous consent to pass the House bill on June 3.

Fed Expands MLF, SBA Grants Coops Access to PPP

Two administrative actions taken this month will provide greater access for not-for-profit utilities to previously-passed emergency funds. On May 14, the Small Business Administration clarified in interim final guidance that cooperatives are eligible to receive loans under the PPP. Access to the program had been uncertain and some banks clawed back funds previously awarded to cooperatives after realizing their eligibility was in question.

Separately, on May 11, the Federal Reserve finalized a new term sheet for the Municipal Liquidity Facility (MLF) and extended eligibility to state and local governments with smaller population thresholds than previously allowed. The term sheet also includes updated pricing that is considerably higher than the rates municipalities could get from traditional banks, however – municipalities with the best credit ratings would pay an extra 1.5% above an overnight indexed swap rate, and those with the lowest credit ratings would pay an extra 5.9%. These numbers reflect the Fed’s intention for its loans to act as “last resort financing” for municipalities, as they want to encourage municipalities to apply for funding through traditional avenues before turning to the MLF for help. APPA submitted comments to the Fed urging further expansion to political subdivisions that issue bonds backed by their own revenue, as suggested in the Fed’s announcement of the MLF expansion last week.

FERC to Hold Technical Conference on Pandemic Impacts

The Federal Energy Regulatory Commission (FERC) announced a late June/early July technical conference on the longterm impacts of the pandemic on energy industries. Topics will include system operations and planning challenges; changes to power and natural gas demand; and credit, liquidity, and access to capital issues.

FERC Approves Changes to PJM Reserve Market, New Base ROE

On May 21, the Federal Energy Regulatory Commission (FERC) ordered an overhaul of the reserve market in PJM Interconnection, the largest RTO. The order would require PJM to adopt a new demand curve that will raise prices for generators and increase penalties for failure to deliver power bid into the market. The operating reserve market is intended to compensate resources for immediate availability, and is distinct from the energy market and the capacity market. Commissioner Rich Glick dissented on the grounds that the overhaul would cost consumers between $500 million and $2 billion annually with no commensurate benefits.

At the same meeting, FERC approved a new method for analyzing the base return on equity (ROE) for transmission projects, adding back a third methodology (discounted cash flow) that was just recently eliminated in a November 2019 order. The change is expected to yield a higher base ROE for transmission projects.

DOE Provides Clarification on Bulk Power System Executive Order

After the White House issued an Executive Order on Securing the Bulk Power System (BPS) on May 7, the Department of Energy (DOE) released a “Frequently Asked Questions” (FAQ) document and is hosting a series of stakeholder calls to address concerns about its scope and implementation. The Order was promulgated out of concern that foreignsupplied equipment used in the bulk power system constituted an “unusual and extraordinary threat” to U.S. national security. In an acknowledgement that industry stakeholders have many unanswered questions about the Executive Order, Assistant Secretary for the Office of Energy Bruce Walker has set up several conference calls to provide additional information about implementation. Among the clarifications offered in a May 12 call are that utilities do not need to take immediate action regarding existing equipment, and that BPS purchases currently in process will not be impacted. DOE will be looking to refine the terms in the Order and will consult with FERC and the North American Electric Reliability Corporation (NERC) to do so, Walker said. On a May 14 call, Walker and others clarified that DOE has already been working to identify the most critical nodes and pathways and will be focusing on equipment that could produce unacceptable and/or catastrophic risk.

In This Edition:

• Pandemic: Fed expands support program for municipalities, Phase 3.5 passed…
• Energy: Over 100 Dem Congressmembers sign letter calling for six months without utility disconnections…
• Cyber Security: President signs Executive order on Bulk Power System; NERC asks for delay of supply chain standards…

Federal Reserve Expands Support Program for Municipalities

The Federal Reserve announced on Apr. 27 that it will reduce the population thresholds required to access the Municipal Liquidity Facility (MLF), allowing a single borrower from counties of at least 500,000 and cities of at least 250,000 to access the $500 billion financing support mechanism. The MLF was initially announced on Apr. 9 and was limited to cities with a population of more than one million or counties with a population greater than two million. Under the lower population thresholds, many more municipalities will be eligible for support. Issuers must still have a high credit rating. In addition, the Fed indicated it was considering expanding the program to governmental entities that issue bonds backed by their own revenues, such as municipal utilities.

“Phase 3.5” Pandemic Aid Enacted; “Phase 4” Scope and Timing Uncertain

On Apr. 21, the Senate passed a $484 billion “Phase 3.5” bill to replenish relief programs previously funded by Congress to respond to the novel coronavirus and economic shutdown. The bill provides $310 billion to the new Paycheck Protection Program (PPP), the program that provides forgivable loans to businesses and nonprofits struggling to maintain business operations amid the pandemic. The bill authorizes PPP eligibility for agricultural enterprises (but does not clarify access for co-ops) and creates a set-aside for small- and medium-sized banks to make loans under the program. The bill also provides $60 billion for the Small Business Administration’s longstanding Economic Injury Disaster Loan Program (EIDL), which typically provides low-interest loans to small businesses impacted by natural disasters and has been also tapped as part of the government’s coronavirus response. Further, the bill provides $75 billion for hospitals and $25 billion for testing.

The House has already begun work on another massive bill that is likely to include language halting utility disconnects (see story below), funding for state and local governments, election reform, hazard pay for essential workers, and possibly more direct payments. Senate Majority Leader Mitch McConnell (R-KY), however, has pushed for liability protection for businesses that reopen in the near term.

Over 100 Dem Members of Congress Sign Letter Calling for Six Month Suspension of Utility Disconnects Nationwide

On Apr. 17, congressional leaders received a bicameral letter signed by 113 Democratic Members of Congress calling for a nationwide moratorium on disconnecting power, water, and internet that would last six months after the coronavirus public health emergency concludes. The letter follows two similar letters to Members of Congress from environmental groups and a Senate letter sent earlier this month. The most recent letter acknowledges that such a policy should be accompanied by aid to utilities, although it lacks a specific policy proposal to that end.

House Energy and Commerce Committee staff is working with trade groups including APPA and NRECA on language they think is palatable to the industry: they believe the language they are working on would not apply to consumer-owned utilities, would be tied to the duration of the public health crisis, and includes a savings clause that the suspension does not absolve customers of debts owed. The committee has been working from draft language that appeared in Division X of the Speaker’s alternative to the CARES Act, which also included different language, from the House Financial Services Committee, that would have disallowed all attempts to collect a debt and is seen as much more onerous for utilities. Discussions around providing some kind of direct aid to utilities are still ongoing, and NEPPA has been surveying its members to provide lawmakers data they have requested to justify including additional aid.

President Trump Signs Executive Order on “Securing the United States Bulk-Power System”

On May 1, President Trump signed an Executive order titled, “Securing the United States Bulk-Power System.” The order aims to reduce the ability of foreign adversaries to interfere with critical electric infrastructure by prohibiting federal agencies and U.S. citizens from acquiring, transferring, or installing Bulk Power System (BPS) equipment in which any foreign country or foreign national has interest – including an interest in a contract for providing the equipment.

The order authorizes the Secretary of Energy to work with the Cabinet and energy industry to establish criteria to create a “pre-qualified” vendor list of approved BPS equipment suppliers and to identify any now-prohibited equipment that is already in use. The order also establishes a task force on federal energy infrastructure procurement policies, with the goal to protect against national security threats by coordinating federal government procurement of energy infrastructure and the sharing of risk information and risk management practices. Members of the task force will include the Secretaries of Defense, Interior, Homeland Security, and Commerce, as well as directors of several other federal agencies committed to protecting U.S. national security.

NERC Requests Enforcement Delay for Supply Chain Standards

The North American Electric Reliability Corporation (NERC) has asked the Federal Energy Regulatory Commission (FERC) to provide a six-month enforcement delay for seven reliability standards and regulations scheduled to take effect this year due to the ongoing pandemic. Most notably, NERC has asked FERC to delay enforcement of three cybersecurity supply chain standards until Jan. 1, 2021; they are currently scheduled to take effect on July 1. Approved 15 months ago, the supply chain standards require covered utilities to develop plans for addressing medium and high cyber risks to industrial control system hardware and software, as well as network systems. The standards emphasize remote access protections and vendor risk management. Various federal agencies, including the Environmental Protection Agency (EPA) and Department of Labor (DOL) have announced delays in rulemakings as well as lifting certain regulations on a temporary basis because of the challenges of the pandemic. Representatives from utility trade groups expressed support for NERC’s request.

In This Edition:

• Pandemic: Coronavirus packages enacted…
• Energy: Senate energy bill stalls…
• FERC: Danly confirmed to FERC; Commission proposes new transmission incentives regime…

Coronavirus Relief Packages Enacted

On Mar. 6, the President signed H.R. 6074, a $8.3 billion supplemental appropriations bill to address the coronavirus outbreak, followed by a larger package signed into law Mar. 18: the “Families First Coronavirus Response Act” (H.R. 6201). In addition to free coronavirus testing, funding for government programs, and food assistance, this bill includes new Family and Medical Leave Act (FMLA) and sick leave requirements for employers, including not-for-profit electric utilities. Organizations with fewer than 500 employees will be required to provide up to 12 weeks of job-protected leave (after the first 10 days of unpaid leave) to workers if they are unable to work or telework because they must care for a child who is home due to school or daycare closures. Additionally, employers must provide two weeks (80 hours) of paid sick leave for employees unable to work or telework due to quarantines or other situations related to the COVID-19 outbreak. Governmental employers are ineligible for tax credits provided to other employers for providing this leave.

On Mar. 25, Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Chuck Schumer (D-NY) announced they had reached a deal with the House Speaker and the White House on a third coronavirus response bill, this one including numerous economic stimulus measures along with emergency health care provisions. The package will provide a $1,200 check to most individuals (subject to income limitations); increase and expand unemployment insurance; establish a $500 billion fund for the Treasury to rescue troubled industries and a $150 billion state and local fund; and make $367 billion in loans available to small businesses for a “Paycheck Protection Program” to retain workers throughout the public health emergency.

Additionally, the bill includes $900 million for the Low-Income Home Energy Assistance Program (LIHEAP). Notably, the bill does not include a federal mandate preventing power shut-off, which had been discussed and included in alternative legislation.

Debate Stalls on Senate Energy Bill

On Mar. 9, the broad energy package championed by Senate Energy and Natural Resources Chair Lisa Murkowski (R-AK) and Ranking Member Joe Manchin III (D-WV) stalled when senators from both parties voted 47-44 against ending debate when it appeared their amendments would not receive a vote (60 votes would have been needed to end debate and proceed to the bill). Among the most vocal were bipartisan supporters of an amendment to phase out hydrofluorocarbons, who sought to attach their legislation to the energy bill despite being within the jurisdiction of the Environment and Public Works (EPW) Committee (whose Chairman opposes the measure). A total of 220 amendments were filed. The bill could be resurrected at a later date, or its provisions could be attached to another legislative vehicle later in the year; however, the Senate has moved on to other business for the time being.

Senate Confirms James Danly to FERC

On Mar. 12, the Senate voted 52-40, along mostly party lines, to confirm James Danly as a member of the Federal Energy Regulatory Commission (FERC). Danly will fill the remainder of the term vacated by former Chairman Kevin McIntyre, who passed away last year. Energy and Natural Resources Ranking Member Joe Manchin III (D-WV) voted in favor of Danly’s confirmation, despite his concerns about the lack of a Democratic counterpart that could have accompanied Danly’s nomination. The White House has reportedly been vetting attorney Allison Clements, but has not announced her as an appointee. Danly is the third Republican commissioner on the panel, which may not be comprised of more than three members from one party. Commissioner Rich Glick is the lone Democrat on the Commission.

FERC Proposes Revisions to Transmission Incentives Policy

On Mar. 19, FERC announced a Notice of Proposed Rulemaking (NOPR) to make changes to its electric transmission incentives policy. The NOPR proposes a number of changes that will generously increase the amount of basis points available to transmission projects, including increasing the RTO/ISO participation adder from 50 to 100 basis points, and awarding it irrespective of whether participation is voluntary. Among the proposed changes, the FERC action would increase incentives for a variety of actions for projects that demonstrate increased economic benefits on benefit-to-cost ratios, demonstrate increased significant reliability benefits, and for new technologies that “enhance reliability, efficiency, and capacity as well as improve the operation of new or existing transmission facilities.” APPA had submitted comments in response to a Notice of Inquiry on transmission incentives last year, advocating against liberal incentives that focus on project benefits and instead maintain the current framework based on a project’s risks and challenges. FERC has been criticized for “rubber-stamping” any incentives requested by a transmission developer.

In This Edition:

• Energy: Senate begins debate on energy bill…
• Budget: President delivers State of the Union address, issues FY21 Budget Request…
• FERC: Commission issues orders on NYISO capacity market, Senate committee advances Danly FERC nomination to full Senate…

Murkowski Energy Bill Released, Floor Vote Expected Early March

On Feb. 27, Senate Energy and Resources Chairman Lisa Murkowski (R-AK) and Ranking Member Joe Manchin III (D-WV) released text, summaries, and a section-by-section of omnibus energy legislation. The bill is comprised of items the Committee has reported in the current Congress.

The bill includes some high-profile items such as the PortmanShaheen “Energy Savings and Industrial Competitiveness Act,” but excludes that bill’s call for voluntary model energy codes, something that had been a sticking point with home builders. Another title deals with advanced vehicle research, but does not include changes to the EV tax credit or address user fees. Cybersecurity, grid modernization, and workforce development are additional titles. The bill cleared a procedural hurdle on Mar. 2, winning 84 votes to begin debate. Hundreds of amendments have been filed on a range of subjects, but bill managers intend to limit votes to only those that have broad bipartisan support.

President Trump Delivers Fiery State of the Union Address

President Trump addressed a joint session of Congress to deliver his third State of the Union message on Feb. 4, the eve of the Senate’s final impeachment trial vote. The President emphasized several positive economic trends including the low unemployment rate and strong stock market returns. Further, he encouraged Congress to pass the Senate surface transportation bill, reported by the Environment and Public Works Committee in July 2019. That bill reauthorizes federal highway programs and includes investments in electric vehicle (EV) charging infrastructure. Additionally, the President announced that the United States will join the one trillion tree initiative – a global effort to plant more trees. While he did not use the words “climate change” the one trillion tree initiative is intended to be part of reducing global carbon emissions.

FY21 President’s Budget’s Request Released; Congressional Hearings Commence

The President’s Budget Request for FY21 was released by the White House on Feb. 10. The document contains a blueprint of President Trump’s priorities, and it notably eschews the budget caps agreed to by the House and Senate in the Bipartisan Budget Act (BBA) of 2019, focusing instead on deficit reduction. It is unlikely that Congressional leadership will revisit or agree to decrease the levels agreed to in the BBA.

The Environmental Protection Agency (EPA) and Department of the Interior budgets faced large cuts of 26% and 16% respectively, compared to FY20 levels. The Department of Energy’s (DOE) budget was cut 8% (to $35.4 billion). Renewable energy programs and the Office of Science didn’t fare well under President Trump’s proposal, although Congress has rejected steep cuts to these programs in the past. The Low-Income Home Energy Assistance Program (LIHEAP) was zeroed out (and likely to be restored by Congress). The request also proposes to end the electric vehicle tax credit. Finally, the President included language supporting interim storage for nuclear waste instead of continued pursuit of the Yucca Mountain waste site.

The first hearings on the budget request took place during the week of Feb. 24. The House Energy and Water appropriations subcommittee held its first budget hearing on Feb. 27, with Secretary Dan Brouillette testifying on the Department of Energy’s request. Also, Environmental Protection Agency (EPA) Administrator Andrew Wheeler went before the House Energy and Commerce Committee to defend the President’s budget request on Feb. 27. Both agency heads faced tough questions from committee Democrats opposed to the budget’s proposed cuts. Additional budget hearings have been taking place the week of Mar. 2.

FERC Holds Monthly Meeting, Signals Trouble for Public Power in NYISO

The Federal Energy Regulatory Commission (FERC) held its monthly public meeting on Feb. 20. Commissioners issued a suite of orders relating to NYISO’s capacity market. The four rules aim to reduce exemptions to the buyer-side mitigation rules, similar to the effect of the Minimum Offer Price Rule (MOPR) that exists in ISO-New England and in PJM after a controversial rule FERC issued in December 2019.

The orders reject a complaint requesting an exemption from buyer-side mitigation rules for storage, reject rehearing of a prior decision affirming NYISO’s capacity market tariff, make demand response resources subject to buyer-side mitigation rules, and deny NYISO’s proposal to institute a megawatt cap on renewable exemptions from buyer-side mitigation rules. Instead, in this final order, FERC directed NYISO to submit a new filing that narrowly tailors exemptions for both renewables and self-supply resources owned by public power. NEPPA has long complained of the loss of selfsupply exemptions in ISO-New England because it chills public power investment in new resources.

Commissioner Glick criticized the Commission’s decision, suggesting that it will increase market prices to the benefit of existing generation and to the detriment of renewables and energy storage. Commissioner McNamee countered that changes in the market require FERC to reconsider how it ensures just and reasonable rates.

Additionally, Commissioners voted to approve several pipeline and LNG certifications. Commissioner Glick dissented on these orders and urged the majority to consider the environmental impact of such projects, which the other commissioners have repeatedly said they lack the authority to do. Also, FERC issued a notice of inquiry (NOI) regarding the use of cloud-based services in the bulk electric system. The commission is interested in the potential cyber risks that utilities face when transitioning some operations from computer hardware to cloud-based services.

James Danly Re-nominated to FERC

On Feb. 12, President Trump formally re-nominated James Danly to be a FERC Commissioner. Mr. Danly, currently FERC General Counsel, had been nominated last year for the seat vacated by the passing of Commissioner Kevin McIntyre. While the Senate Energy and Natural Resources Committee reported the nomination by a 12-8 vote in November 2019, the nomination was not brought to the Senate floor before the end of the session that concluded in December. Therefore, the President was required to send the nomination to the Senate once again. The committee voted 12-8 once again on Mar. 3 to report the nomination to the full Senate. Though Ranking Member Joe Manchin voted in favor of the nominee, he threatened to oppose any future Republican nominee unless it is paired with a Democratic nominee. If confirmed, the Commission would have a 3-1 party balance and Mr. Danly would serve a term that expires June 30, 2023.

In This Edition:

• Political: Senate acquits President Trump…
• FERC: FERC retires standards, McNamee to step down…
• Budget and Finance: House Democrats float infrastructure bill…
• Energy and Environment: House Democrats release CLEAN Future Act text, CEQ proposes NEPA modifications…

Senate Votes to Acquit President Trump of Impeachment Charges

On Feb. 5, one day after a tense State of the Union address, the Senate voted along party lines (except for Sen, Mitt Romney (R-UT)) to acquit President Trump of the two charges leveled by the House in its Dec. 18 impeachment vote. Two-thirds of senators would have needed to vote in favor of finding the President guilty of the House’s charges to remove him from office.

FERC Proposes Retiring Outdated Standards, McNamee to Step Down

The Federal Energy Regulatory Commission (FERC) held its monthly meeting on Jan. 23. Among other dockets considered at the meeting, commissioners proposed to rescind 74 of 77 reliability standard requirements that NERC recommended retiring as a result of its standards efficiency review process. Further, Commissioner Bernard McNamee announced he will not seek another term after his current term expires in June, 2020, citing family reasons. McNamee’s departure, if not preceded by the confirmation of pending nominee James Danly, would result in the loss of a quorum at the Commission. It also complicates controversy over when a Democratic nominee will be announced. Senate Democrats were frustrated that Danly’s nomination was not “paired” with a Democratic nominee, and Republicans had argued that the Democratic nominee would be more reasonably paired with McNamee’s re-nomination.

House Democrats Issue Infrastructure Proposal

On Jan. 29, House Democrats released a framework that will guide their development of a major, $760 billion infrastructure bill. The document outlines plans for clean energy investments, highways, water infrastructure, broadband deployment, and other transportation systems (airports, rail, and transit). At a press conference accompanying the document’s release, House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) discussed the proposal’s $34 billion for energy infrastructure, saying that it will be directed to grid modernization and resilience efforts.

Notably, the tax title of the proposal suggests the bill will restore the tax exemption for advance refunding municipal bonds. This has been a top legislative priority for municipal utilities since the 2017 tax reform law revoked that tax exemption. It also includes provisions for direct pay bonds, similar to Build America Bonds, that would not be subject to budget sequestration. Legislative text of the proposal, which will include important details, did not accompany the framework document. Various committees of jurisdiction are expected to hold hearings and develop sections of the bill over the next few months. Congress must pass a new authorization of federal highway programs by Sept. 30, but the energy and tax provisions are not considered must-pass and may be stripped out.

Energy and Commerce Democrats Release CLEAN Future Act Legislative Text

On Jan. 29, Democrats leading the House Energy and Commerce Committee released legislative text of “the Climate Leadership and Environmental Action for our Nation’s (CLEAN) Future Act,” following a narrative framework that was released earlier in January. The bill includes over 800 provisions intended to promote clean energy, climate stewardship, and efficiency. Meguire Whitney is still reviewing the bill for potential impacts to NEPPA members, but the bill still contains language mandating that all public utilities place their transmission facilities under the control of an RTO or ISO within two years of enactment (public utility is not defined in the bill, and sometimes excludes public power).

CEQ Proposes NEPA Modifications

The White House Council on Environmental Quality (CEQ) released a Notice of Proposed Rulemaking on Jan. 9 to make revisions to the implementation of the National Environmental Policy Act (NEPA). Overall, the proposed rule aims to reduce delays in the federal permitting process by streamlining NEPA reviews, establishing strict timelines, and reducing duplication of efforts among federal agencies. Specifically, the proposed rule calls for time limits of two years for the completion of environmental impact statements (EISs) and one year for completing an environmental assessment (EA). Another efficiency measure would be to allow the expanded use of both EAs and categorical exclusions (CEs) in conducting project reviews, which are less exhaustive than an EIS. Further, the proposal would strengthen the role of a lead agency and require senior agency officials to resolve disputes among federal agencies in a timely manner. The new proposal also requires federal agencies to establish procedures for adopting other agencies’ categorial exclusions and to encourage the use of documents required by states, tribes, and local agencies to reduce duplication of work. Finally, the proposed rule seeks to clarify the application of NEPA reviews by narrowing the scope of actions that would be required under the law.

One significant change contained in the rule would eliminate “cumulative” effects from the factors that agencies must consider. This provision would weaken the requirement to incorporate climate change effects into federal project reviews. Congressional Democrats were quick to condemn the federal action, complaining that the proposed rule ignores the growing threat of climate change and curtails environmental protections. The proposed rule will be open to public comment for 60 days.

In This Edition:

• Political: House votes to impeach the President
• FERC: FERC directs PJM to expand its MOPR…
• Budget and Finance: Congress passes FY20 funding and tax bill…
• Energy and Environment: Democrats float competing climate bills, Senate ENR mars up several bills…

House Votes to Impeach President Trump

On Dec. 18, the House of Representatives passed two articles of impeachment against President Trump, making him the third president in U.S. history to be impeached. The first article – charging the President with abuse of power – passed 230 to 197. The second article, which was for obstruction of Congress, passed 229-198. Not a single Republican supported either article; two Democrats voted against the first article and three voted against the second. The Senate will now hold a trial to determine whether the President is guilty of the two charges. Two-thirds of the chamber – 67 senators – must find the President guilty to remove him from office. Speaker Pelosi has not yet formally sent the articles to the Senate or named managers to present the House’s case, pending details of the Senate’s process.

FERC Directs PJM to Expand its MOPR

On Dec. 19, the Federal Energy Regulatory Commission (FERC) released an order directing PJM Interconnection, the largest RTO, to reform its capacity market to address state policies affecting resources. The order calls for a sweeping expansion of the Minimum Offer Price Rule to cover new and existing resources that receive a broadly-defined “state subsidy.” The new definition removes the exemption for public power self-supply resources. Commissioner Rich Glick provided a strong dissent, citing the upending of the public power business model as a main cause of concern.

Congress Passes FY20 Funding

Congress passed a massive FY20 spending and tax package just before current funding expired on Dec. 20. Within the package, the FY20 Energy and Water bill received $48.3 billion, up $3.66 billion from last year’s bill. In addition to providing significant increases in renewable energy research and development and the Department of Energy’s Office of Science, the bill funds programs the Trump Administration requested be eliminated, such as the Advanced Research Projects Agency – Energy (ARPA-E) and the Title 17 Loan Guarantee Program. The Office of Cybersecurity, Energy Security and Emergency Response received $156 million. The FY20 Interior-Environment bill received $36.1 billion, up $5.46 billion from the President’s request. The bill included $9 billion for the Environmental Protection Agency. Also of interest to NEPPA, the FY20 Labor-HealthHuman Services and Education bill included a $50 million increase from FY19 to the Low Income Home Energy Assistance Program (LIHEAP), bringing the level up to $3.74 billion.

Several tax provisions were included in the package. Of interest to cooperatives, the bill included the RURAL Act – legislation that allows electric co-ops to maintain their tax-exempt status if they receive federal grants (such as disaster assistance funding from the Federal Emergency Management Agency) that comprises more than 15 % of their revenue. The tax title also includes a one-year extension of the production and investment tax credits for several renewable generation technologies, including wind, biomass, geothermal, municipal solid waste, and small hydropower. Credits for energy efficient homes and commercial buildings are also extended for one year. The bill did not include a restoration of the tax exemption for advance refunding municipal bonds or an expansion of the 30D tax credit for electric vehicles (EVs). Additionally, it did not include extensions for solar tax credits (although those credits do not expire until 2022).

Democrats Float Competing Climate Bills

Rep. Diana DeGette (D-CO) is circulating draft legislation to establish a Clean Energy Standard (CES) that could become the main utility sector title of the House Energy and Commerce climate bill, expected as soon as January 2020. The DeGette draft would require electric utilities to source an increasing percentage of their power from clean sources, as defined by the bill, each year. The bill considers all zero-emitting resources to be clean, as well as sources with a carbon intensity below .82 tons of CO2 per MWh. Partial credit is available for resources with a greater carbon intensity, and alternative compliance payments are available. Revenue will fund a carbon mitigation fund. The requirements will not apply to utilities in states with a more stringent emissions reduction program. The bill is different from the CES drafted by Sen. Tina Smith (D-MN) and Rep. Ben Lujan (D-NM) introduced earlier this year.

Separately, Sen. Tom Carper (D-DE) circulated a draft climate bill titled the “Clean Economy Act,” which takes a different approach. The Carper bill would require the Environmental Protection Agency (EPA) to use its existing authorities to develop a plan to achieve net-zero emissions by 2050. EPA would be required to consult with other agencies and achieve a number of associated goals (such as “maximizing flexibility for regulated entities”). The bill is similar in mechanism to a bill introduced by Rep. McEachin (D-VA) that would task a new Clean Economy Federal Advisory Committee with establishing an emissions reduction plan and requires each federal agency to propose its own emissions reduction plan within its own authorities. The Advisory Committee would be comprised of stakeholders from the utility sector, among others.

Senate Energy and Natural Resources Committee Marks Up Several Bills

The Senate Energy and Natural Resources Committee held a business meeting on Dec. 12 and reported nearly two dozen bills to the full Senate. All bills received broad support from committee members. Three of the 22 bills are of interest to NEPPA. A bill (S. 1890) by Sen. Catherine Cortez-Masto (D-NV) establishes a grant program to help schools make energy efficiency improvements and renewable energy enhancements. Sen. Martin Heinrich’s (D-NM) legislation (S. 2393) would create a program at the Department of Energy (DOE) to increase training opportunities for the energy sector through apprenticeships, internship programs at DOE, and support to post-secondary education institutions. Third, a bill (S. 2660) by Sen. Tina Smith (D-MN) would establish a grant program for wind technology research and development aimed at improving energy efficiency and optimizing performance of wind generation. The bills join a backlog of energy-related legislation in the Senate following two previous markups since September.