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 46th 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 117th 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 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 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.