Federal Legislative Update

 

9-2019 NEPPA Newsline

In This Edition:

  • Energy Policy: FERC readies ruling on PJM states resource subsidies, APPA preps comments to FERC’s Performance Metrics proposal, FERC grants ISO-NE extension for market reform proposal, LaFleur departs FERC…
  • Transmission: TAPS, APPA, NRECA express concern to FERC over rising transmission costs…
  • Cybersecurity: FERC, NERC propose disclosing utilities fined for CIP violations …

 

FERC Readies Ruling on PJM Capacity Market Tariff

 

The Federal Energy Regulatory Commission (FERC) is poised to issue rules regarding PJM Interconnection’s capacity market. Last year, FERC found that state subsidies for economically struggling nuclear plants and renewable energy resources in PJM’s territory violate market rules because they suppress the cost of power in the capacity market. Following Commissioner Cheryl LaFleur’s departure on Aug. 30 – which broke the 2-2 partisan deadlock on the commission – the new Republican majority is expected to follow up that finding with an order instituting a price floor, known as Minimum Offer Price Rule, that will deny subsidized resources access to capacity market auctions. Some state regulators within the PJM market, like Illinois, have warned that they may “seek alternatives” or withdraw from the capacity market if FERC blocks their nuclear plants from capacity market participation. Members of Congress have also weighed in. Senate Minority Leader Chuck Schumer (D-NY) and nine of his Democratic colleagues sent a letter to FERC Chairman Neil Chatterjee urging him not to issue a Minimum Offer Price Rule.

 

FERC may issue the rule in such a way that allows states to remove specific plants from the capacity market, rather than forcing the entire state out. However, such a carve out could end up being administratively burdensome and unworkable. 

 

APPA Seeks Feedback on Comments to FERC’s Performance Metrics Proposal

 

In late 2017, the Government Accountability Office (GAO) issued a report on capacity markets that urged FERC to improve the usefulness of data reported in its Common Metrics Report. On July 19, FERC proposed changes to its data collection process by establishing a standardized Input Spreadsheet for data collection. Further, it proposes changes to the list of metrics, suggesting the addition of some and the elimination of others, to focus more directly on organized markets and capacity markets in particular. Metrics related to reliability, interconnection and transmission processes, system lambda, billing controls, and customer satisfaction are eliminated in FERC’s proposal.

 

APPA is preparing comments in response to FERC’s proposal. It plans to ask for FERC to retain the customer satisfaction metrics, but is awaiting member feedback to determine whether it will ask for other metrics to be preserved. Additionally, APPA will recommend that FERC use metric reports to more critically consider organized markets rather than make sweeping conclusions on market benefits. APPA also recommends that FERC expand its New Capacity metric to include the technology and arrangement, and apply it to all organized markets.

 

APPA would like any member feedback on its proposal by Friday, Sept. 6. Comments are due to FERC on Monday, September 9.

 

FERC Grants ISO-NE Six-Month Extension for Market Reforms

 

ISO-NE now has until Apr. 15, 2020 to file its proposed market reforms aimed to enhance fuel security during cold winter months. The proposal was originally due Oct. 15, but the ISO requested a deadline extension due to the plan’s complexity. State governments and market participants had urged FERC to extend the deadline, though some generators preferred a December 2019 deadline to instill better market certainty.

 

Testy Exchange Marks Commissioner LaFleur’s Last FERC Meeting

 

FERC’s July 18 meeting was Commissioner Cheryl LaFleur’s last. Members of the Commission offered tributes for her service and contributions to the agency. Commissioner LaFleur’s last day at FERC was Aug. 30. In a series of exit interviews with trade press, she decried the growing partisan influence on the independent agency’s decisionmaking. Partisan divisiveness was on display at her last meeting. Commissioner Richard Glick once again dissented on the Commission’s decision to approve an LNG project. He has repeatedly done so in protest of the Commission’s May 2017 decision to no longer consider greenhouse gas emissions when weighing such projects. Commissioner Bernard McNamee responded by sharing his view that Congress has not given the Commission the authority to make those considerations. The exchange was more tense than in previous meetings. Chairman Neil Chatterjee concurred with Commissioner McNamee’s interpretation.

 

TAPS, APPA, NRECA Join Letter to FERC on Transmission Dockets

 

On Aug. 23, a number of public utility commissions, public power entities, industrial power users, and consumer advocates sent a letter to FERC highlighting their shared concerns about the rising cost of transmission borne by ratepayers. Among others, APPA, NRECA, and several New England-based organizations signed on. Many of the signatories had submitted individual comments in one or both of the transmission-related Notice of Inquiry dockets open at FERC, including one requesting information on transmission incentives and another on return on equity (ROE) policies. The joint letter does not respond to technical questions but makes a point about the signatories’ common interest in customer costs. The letter notes that some of the policy changes under consideration in the dockets could mitigate increasing transmission prices, while others could raise them.

 

FERC and NERC propose cybersecurity violation disclosure process

 

On Aug. 27, FERC announced it is seeking public comment on a white paper that proposes a plan to disclose limited information about utilities that violate federal cybersecurity standards. Over the past year, FERC has received many Freedom of Information Act (FOIA) requests to disclose the information about companies that have violated the North American Electric Reliability Corporation’s (NERC) Critical Infrastructure Protection (CIP) standards. The commission has been reluctant to make public this information in its existing format because it often contains sensitive technical information about the power grid that could be misused by bad actors.

 

The white paper was prepared jointly by FERC and NERC staff, and proposes a new system to release company names and penalty amounts for violations of the standards for cybersecurity. However, further details about a company’s violations would be shielded from public disclosure to maintain security. Responses to the white paper are due in thirty days.

 

7-2019 NEPPA Newsline

In This Edition:

  • Appropriations: House passes 10 of 12 FY20 appropriations measures …
  • Energy Policy: House panel holds FERC oversight hearing, Commissioner La Fleur to leave FERC in August …
  • Tax Policy: House Ways & Means marks up extenders bill …
  • Cybersecurity: Senate passes King legislation on grid cyber defense pilot …

 

House Passes 10 of 12 FY20 Appropriations Bills Before July 4 Recess

 

The House of Representatives worked furiously during the week of June 24 to pass six FY20 appropriations bills. A fivebill minibus which consisted of the Interior-Environment, Transportation-Housing, Agriculture, Commerce-JusticeScience, and Military Construction appropriations bills passed on June 25 on party lines, by a vote of 227-194. This packaged increased funding for the Environmental Protection Agency, along with more funding for programs focused on climate change. The House passed its Financial Services and General Government funding bill as a standalone measure on June 26, voting 227-196 in favor of the measure. Because they finished work on the minibus package that included Energy and Water, Defense, State and Foreign Operations, and Labor-Health and Human Services-Education the week of June 17, the House has now passed 10 out of 12 appropriations bills for FY20. Only the Legislative Branch and Homeland Security funding bills remain outstanding.

 

The Senate has yet to schedule markups for any of their appropriations bills, as Senate leadership attempted to negotiate a budget framework with Democrats and the White House that would allocate spending levels for each of the 12 funding bills. A deal has not been struck, so it is likely that Senate Appropriations Chairman Richard Shelby (R-AL) will deem spending levels for each of the bills, following closely to last year’s levels. Amid this ongoing stalemate and disagreement with Democrats on budget priorities, President Trump threatened to veto all of the House-passed appropriations bills should they reach his desk in current form.

 

House Panel Holds FERC Oversight Hearing

 

On June 12, the House Energy and Commerce Subcommittee on Energy held an oversight hearing of the Federal Energy Regulatory Commission (FERC) and all four sitting FERC Commissioners testified. In his opening statement Chairman Bobby Rush (D-IL) expressed his opposition to potential action FERC may take to prop up struggling coal and nuclear plants. FERC had unanimously rejected a proposal by the Department of Energy (DOE) in January 2018 to subsidize plants with at least 90 days of fuel on site. At that time, FERC opened a docket on grid resiliency. Chairman Neil Chatterjee, in response to a question by Rep. Marc Veasey (D-TX), said that the resilience docket is ongoing with no set timeline. He said the Commission will remain technology neutral in its approach and will be engaging RTOs and states in the near future on the topic.

 

Chairman Rush and full committee Chairman Frank Pallone (D-NJ) praised FERC for Order 841 on energy storage and both said they were looking forward to FERC addressing distributed energy resources because of the climate benefits of these technologies. Climate change was top of mind for many Democrats on the panel. Commissioner Richard Glick said that while FERC cannot regulate emissions, its decisions can shape how carbon-free technologies participate in energy markets. Chairman Chatterjee repeated his priorities for FERC: energy storage, grid security, and PURPA reform. In response to a question from Rep. Cathy McMorris Rodgers (R-WA) he acknowledged how hydro relicensing can be cumbersome, noting that FERC aims to be flexible and will not shut down hydro facilities that have not yet been relicensed.

 

FERC Commissioner LaFleur to Resign

 

Cheryl LaFleur announced on June 20 that she would leave her post as a FERC Commissioner at the end of August, creating a second vacancy on the five-member Commission. LaFleur has served as a Commissioner for nine years, having been first nominated to the position by President Barack Obama in 2010. Her departure will leave just three sitting members on the five-seat commission, two Republicans and one Democrat. It is unclear at this time when President Trump will nominate replacements – one Republican and one Democrat – for the two open seats.

 

House Ways & Means Committee Marks Up Extenders Bill

 

On June 20, the House Ways and Means Committee held a markup of a bill to extend more than 20 expired tax provisions – known as “tax extenders” – that had expired in 2017 and 2018, as well as a few that are scheduled to expire at the end of 2019. Among the tax extenders were tax credits for wind, solar, biomass, geothermal, and hydropower facilities. The wind and solar production tax credits (PTC) are scheduled to expire at the end of this year after a gradual phaseout that began in 2017. The investment tax credit (ITC) for wind energy is also scheduled to phaseout this year. The bill would extend these credits one more year, through 2020. The solar ITC is not addressed in the bill. That credit is scheduled to phaseout at the end of 2023.

 

The bill also includes provisions to provide tax relief to people affected by natural disasters since Jan. 1, 2018. While the disaster relief provisions are not offset with new revenue, the bill – authored by Chairman Richard Neal (D-MA) – would offset the cost of tax extenders by changing the expiration date for larger exemptions for the estate tax. The 2017 tax reform law doubled the estate tax exemption to $10 million (plus inflation) through 2025. The bill would revert the exemption back to $5 million three years ahead of schedule, drawing opposition from the panel’s Republicans. The committee ultimately reported the bill to the full House on a party line vote, 25-17.

 

Senate Passes Bill to Pilot Analog Tech for Grid Cyber Defense

 

The Senate on June 27 by unanimous consent passed the Securing Energy Infrastructure Act (S. 179) by Sen. Angus King (I-ME). The bill would establish a two-year pilot program at the national energy laboratories to study how analog technology could be used to safeguard the grid from cyber vulnerabilities. It would also create a working group made up of federal and state agencies, along with representatives from the national labs and electric sector to review the work of the pilot program. The Secretary of Energy would be required to submit a final report to Congress detailing the results of the pilot and the working group’s evaluation. The bill was co-sponsored by Sens. Jim Risch (R-ID), Susan Collins (R-ME), Martin Heinrich (D-NM), and Mike Crapo (R-ID). Companion legislation has been introduced in the House by Reps. Dutch Ruppersberger (D-MD) and John Carter (R-TX).

 

6-2019 NEPPA Newsline

In This Edition:

  • Appropriations: House readies first FY20 appropriations measure …
  • Infrastructure: Debate on infrastructure begins and abruptly halts …
  • Energy Policy: Congress continues focus on climate with introduction of clean energy standard legislation …
  • Cybersecurity: NERC submits report on cyber supply chain risks …
  • Tax Policy: Municipal Finance Caucus advocates for tax-exempt bonds …
  • Telecom: Thune-Schatz legislation on pole attachments introduced …

 

House Readies First FY20 Appropriations Measure

 

The House passed the long-awaited disaster supplemental bill by a broad margin of 354-58 on June 3. The bill will provide emergency relief for parts of the U.S. suffering from the aftermath of floods and hurricanes, as well as providing $720 million to the Forest Service for 2018 wildfire suppression activities. The Senate had passed the bill just before Memorial Day recess, and President Trump signed it into law on June 6. In addition, the House Rules Committee has readied the first package of FY20 appropriations bills for floor consideration the week of June 10. This five-bill “minibus” appropriations package includes the Energy-Water bill. Senate appropriators have yet to schedule subcommittee markups of their FY20 bills, electing to wait and see if a bipartisan agreement can be reached on spending levels - including a path forward on how to avoid deep “sequestration” cuts from being enacted. D

 

Debate on Infrastructure Begins and Abruptly Halts

 

On May 22, the House Energy & Commerce Committee held a hearing on “the Leading Infrastructure for Tomorrow’s (LIFT) America Act,” an infrastructure bill from Chairman Frank Pallone (D-NJ) that authorizes $40 billion for infrastructure developments, including grid modernization, renewable energy deployment, electric vehicles, and increased access to high-speed broadband. Simultaneously, top congressional Democrats met with President Trump to iron out funding details of a $2 trillion infrastructure package, which could presumably include the LIFT America Act. These talks fell apart shortly after they began, when the President refused to discuss an infrastructure package until Democrats agreed to halt congressional investigations surrounding his campaign and business dealings. This significantly jeopardizes the chances of a broad infrastructure package that could serve as a vehicle for the LIFT America Act.

 

Congress Continues Focus on Climate with Introduction of Clean Energy Standard

 

Climate change remains a focus in Congress, with congressional committees continuing to review proposals to address energy storage and clean energy proposals. On May 8, Sen. Tina Smith (D-MN) and Rep. Ben Lujan (D-NM) introduced legislation to set a national clean energy standard (CES) by requiring utilities to reduce the emissions of their fleets each year until reaching net zero emissions. The requirement applies to retail sellers of electricity and would initially mandate 2.75% annual growth in the share of clean energy provided, set from a 2019 baseline. “Clean” sources are renewables, hydro, nuclear, qualified biomass, qualified waste-to-energy, and qualified combined heat and power systems, or ones that use carbon capture and storage. Small entities (defined as selling 2 million MWh or less annually) would be required to meet a 1.5% growth standard. 

 

Additionally, several Republican senators, eager to lead on climate issues rather than cede the issue to the Democratic Party, have introduced a suite of bills aimed at decreasing greenhouse gas emissions and promoting clean energy solutions. One of the bipartisan bills, “the Best Energy Storage Technology Act,” introduced by Sens. Susan Collins (R-ME) and Martin Heinrich (D-NM), would authorize nearly $300 million over 5 years for the Department of Energy (DOE) to explore cost reductions in energy storage technologies. Another bill, “the LEADING Act,” would spur research and development of carbon capture technology for natural gas plants. Other efforts include a bill by Sen. Lindsey Graham (R-SC) to create a fund for clean energy, and legislation crafted by Sen. Cory Gardner (R-CO) to improve energy efficiency at federal facilities. Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-AK) has already held several climate hearings this year and appears interested in continuing to bring clean energy legislation before the Committee for discussion and consideration.

 

NERC Submits Report on Cyber Supply Chain Risks

 

On May 28, the North American Electric Reliability Corporation (NERC) submitted a report to the Federal Energy Regulatory Commission (FERC) in accordance with Order 850, a prior action that also approved three supply chain standards developed by NERC. The report evaluates supply chain risks that are not currently subject to the standards and makes several recommendations. NERC staff recommends revising the standards to address Electronic Access Control Monitoring Systems (EACMS) and Physical Access Control Systems (PACS) to high and medium impact bulk electric system cyber assets, and recommends further study on whether to further revise the standards to include low-impact systems with external routable connectivity. It further calls for guidelines to help utilities evaluate their protected cyber assets to determine if additional supply chain guidelines are needed.

 

Municipal Finance Caucus Advocates for Tax Exempt Bonds, Advance Refunding

 

On May 13, Reps. Dutch Ruppersberger (D-MD) and Steve Stivers (R-OH), co-chairs of the House Municipal Finance Caucus, sent a letter to House Ways and Means Committee Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX) expressing support for tax-exempt municipal bonds. The letter notes the importance of tax-exempt municipal bonds to infrastructure development and conveys members’ request that the committee “carefully consider the impact of changes to the tax status of municipal bonds.” The letter was signed by an additional 109 members of the House, including several members of NEPPA’s delegation. On the heels of sending the “Dear Colleague” letter, Reps. Ruppersberger and Stivers introduced legislation (H.R. 2772) on May 15 that would restore the tax-exemption for advance refunding municipal bonds. Advance refunding is a financing tool that effectively allows a bond issuer to refinance a bond when interest ratesare lower.

 

Thune-Schatz Legislation on Pole Attachments Reintroduced

 

On June 4, Senators John Thune (R-SD) and Brian Schatz (D-HI) introduced the Streamlining the Rapid Evolution and Modernization of Leading-Edge Infrastructure Necessary to Enhance (STREAMLINE) Small Cell Deployment Act. They introduced this bill last year during the previous Congress, though it never received a hearing and was not marked up. The bill aims to address perceived barriers to broadband deployment by imposing federal requirements on municipal utilities for pole attachment fees and application processes. The requirements contradict public power’s longstanding statutory exemption from federal pole attachment regulation. The bill would require pole attachment applications to be processed within 60 days and would undermine many public power utility fee structures. The bill resembles the September 2018 order by the Federal Communications Commission, which took effect in January and is subject to a legal challenge by the American Public Power Association.

 

5-2019 NEPPA Newsline

In This Edition:

  • Energy Policy: FERC approves PJM Variable Resource Requirement Curve …
  • Budget: Administration officials testify on the FY20 budget request …
  • Energy Policy: President issues orders on energy infrastructure …
  • Cybersecurity: FERC proposes modified control center standard …
  • Cybersecurity: Report examines cyber risks faced by small utilities

 

FERC Approves PJM’s Revision to Variable Resource Requirement Curve

 

On Apr. 15, the Federal Energy Regulatory Commission (FERC) issued a series of orders affecting entities within PJM Interconnection. Among the orders, and of interest to NEPPA, FERC approved PJM’s desired changes to its variable resource requirement (VRR) curve, which affect what clears its Reliability Pricing Model (RPM) capacity auctions. Every four years PJM is required to conduct a review of its RPM involving analysis and stakeholder feedback. Commissioner Glick dissented from the decision, noting that PJM’s capacity market has been chronically oversupplied as a result of the price signals sent by the demand curve. He suggested that the Commission should “take a holistic review of the capacity market” given the evidence that it has resulted in PJM overproducing resources. He lamented the Commission did not hold a hearing to develop a record on the myriad issues at play and then address them accordingly.

 

FY20 Budget Issues Dominate Agenda Before Easter Recess

 

Administration energy and environment officials were among the many questioned about their FY20 budgets in the days before Easter recess commenced. Most Members of Congress have expressed opposition to the deep cuts the Administration has proposed for energy programs and the Environmental Protection Agency (EPA), as well as the lack of focus on climate change-related research and development.

 

As committees focused on the President’s request, the House of Representatives attempted to raise budget caps for the next two years. Progressive and moderate House Democrats were not able to come to agreement on what the levels should be for defense and non-defense accounts, so legislation was pulled and the House voted instead on a non-binding $1.3 trillion level for FY20. This level will help appropriators begin writing FY20 bills after the upcoming recess, but Congress will still need to raise budget caps that are currently binding due to sequestration.

 

President Signs Executive Orders on Energy Infrastructure, Agrees to $2T Bill

 

On Apr. 10, President Trump issued two Executive orders aimed at streamlining permitting for energy infrastructure projects (primarily natural gas pipelines, but also hydropower projects). The first directs EPA to revise its rules to limit state authority to reject or delay projects under the Clean Water Act and directs the Department of Transportation to allow trains to carry liquefied natural gas. The second order concentrates authority to approve cross-border projects in the President himself.

 

The move was immediately challenged in court by Washington State Governor Jay Inslee, and Democratic lawmakers such as Senate Environment and Public Works Ranking Member Tom Carper (D-DE) blasted the orders. Some organizations, such as the Western Governors’ Association, took a more nuanced tone, expressing concerns about the new limits on state authority and interest in working with the Administration on different process improvements under the Clean Water Act.

 

Separately, the President and congressional leaders announced a general agreement to advance a $2 trillion infrastructure bill that may include energy infrastructure. It is not yet clear how the plan will advance or how it will be paid for.

 

FERC Proposes Change to Cyber CIP Standard for Control Center Communication

 

FERC held its monthly public meeting on Apr. 18. At the meeting, the Commission proposed changes to a critical infrastructure protection (CIP) standard developed by the North American Reliability Corporation (NERC) relating to the cyber security of information and data communicated between control centers. While FERC proposed to adopt much of the standard as presented, it noted that some risks to the bulk electric system “may not be fully addressed.”

 

For example, FERC contends the standard does not clearly define “real-time monitoring,” which affects what type of communications would be covered by the standard. Additionally, the standard does not address communication links or data sent between bulk electric system control centers. The standard would apply to transmission operators and transmission owners of control centers, balancing authorities, generator operators, and reliability coordinators. The proposed changes will be published in the Federal Register and entities will have 60 days from then to submit comments.

 

New Chief of Staff Announced

 

Separately, FERC Chairman Neil Chatterjee announced that Maria Farinella has been appointed to be the new Chief of Staff for the Commission. She has worked at FERC for many years, most recently serving as a senior legal advisor in the Office of General Counsel. She also was an advisor to former Chairman Joe Kelliher. Farinella replaces Anthony Pugliese.

 

Report Examines Cyber Defenses of Small Utilities

 

On Apr. 15, Vermont Law School’s Institute for Energy and the Environment released a report that casts a spotlight on the cyber vulnerabilities of small distribution electric utilities. Some states have begun imposing mandatory cybersecurity requirements on small utilities not subject to NERC/FERC standards, the report notes. California, for example, requires distribution-level utilities to report cyber intrusions to their systems. The Office of Utility Security at the New York Public Service Commission conducts regular cybersecurity audits of its small utilities. Most states, however, recommend voluntary cyber security defensive measures. Connecticut, for example, encourages small utilities to follow the Department of Homeland Security’s cyber framework to assess their cyber vulnerabilities and report their findings. The report notes the costs of hiring cybersecurity experts and deploying sophisticated technical defenses are more expensive than what most small utilities can afford. While the report does not recommend a particular approach to enhance cyber defenses, it encourages states to consider making investments and “expand agency jurisdiction or create new agencies as needed” to address ever present and evolving cyber threats.

 

4-2019 NEPPA Newsline

In This Edition:

  • Energy Policy: FERC issues NOIs, Nominations process slows …
  • Budget: President Trump issues FY20 budget proposal …
  • Environmental Policy: Green New Deal stalls in Senate …
  • Cybersecurity: President issues Order on EMP …

 

FERC Issues NOIs on Transmission and Pipelines; Nomination Process Stalls

 

On Mar. 21, the Federal Energy Regulatory Commission (FERC) held its monthly public meeting and issued two notices of inquiry (NOI) The first NOI relates to Order 679 regarding transmission incentives. That order was first issued in 2006, and the Commission is seeking input on whether transmission incentives should still be provided based on project risks or whether they should instead be based on project benefits. The second NOI relates to the Commission’s policy for determining return on equity for public utilities and oil and gas pipelines.

 

Both NOIs will be open to comment for 90 days following their publication in the Federal Register. NEPPA has advocated for transmission policies that avoid “rubber-stamping” transmission owners’ requests for incentives, particularly when the incentive is available for something the transmission developer is doing anyway. NEPPA plans to participate in the development of comments by the Transmission Access Policy Study (TAPS) group, which often files comments at FERC on similar technical issues.

 

Separately, the expected nomination of attorney David Hill to the open Republican seat at FERC appears to have been scuttled amid pushback from Secretary of Energy Rick Perry and several coal company executives. Hill, a former DOE official and lobbyist for NRG Energy, is a noted supporter of organized energy markets. His opposition to DOE’s proposal to aid coal and nuclear plants in organized markets prompted the Secretary and others to weigh in against him. The halt in his expected nomination means that the naming of a new nominee is likely now several weeks away. Rumored potential nominees include Barry Smitherman, a former Texas utility regulator; Ellen Nowak,a former Wisconsin utility commissioner; and Pat McCormick, a former advisor to Sen. Lisa Murkowski (R-AK). There has been no mention of a replacement for Commissioner Cheryl LaFleur.

 

President Sends FY20 Budget to Capitol Hill

 

On March 11, President Trump released a blueprint of his FY20 Budget Request, proposing an overall five percent cut for all non-defense discretionary programs. Congress will likely create funding bills that vary significantly from this proposal.

 

The President’s budget request provides $31.7 billion for the Department of Energy (DOE), down 11% from FY19 enacted levels. Nuclear weapons accounts are prioritized, while research is cut. Cybersecurity receives a small boost of $10 million from FY19 levels. Funding for the EPA would be slashed, at $6.1 billion, down 31% from the $8.8 billion Congress appropriated for FY19. Plans for “infrastructure” saw $200 billion in the budget, but the blueprint provides few details about how this money should be delineated. The President’s Budget also proposes to cut a number of programs, including the 30D electric vehicle tax credits and the Low-Income Home Energy Assistance (LIHEAP) program. Congress will likely reinstate both.

 

Senate Blocks Green New Deal Resolution

 

On Mar. 26, the Senate failed to gain the requisite votes to proceed to consideration of the Green New Deal resolution. Senate Majority Leader Mitch McConnell (R-KY) had scheduled the vote in an attempt to get Democrats on the record supporting the controversial measure, particularly those running for the Democratic nomination for President. However, 43 Democrats voted “present” on the procedural question, with Sens. Joe Manchin (D-WV), Kyrsten Sinema (D-AZ), and Doug Jones (D-AL) voting “no” along with all Republicans. The final vote was 0-57. Even the bill’s sponsor, Sen. Ed Markey (D-MA), decried the vote as a “sham.” However, debate on the resolution was notable in that McConnell acknowledged, for the first time, that climate change is real and man-made, and Sen. Lamar Alexander (R-TN) spoke at length about his proposal to address climate change with a “New Manhattan Project” focusing on clean energy innovation and research at the National Labs.

 

A few days prior to the Senate vote, Chairman Paul Tonko (D-NY) of the House Energy and Commerce Subcommittee on Environment and Climate Change released a set of principles intended to guide the development of legislation aimed at addressing climate change. The principles call for scientific targets for greenhouse gas neutrality by 2050; a strong and competitive economy; investment in sustainability; a just and equitable transition; protection for low-income households; empowering state, local, tribal, and territorial governments; community resilience, and stable and predictable policies. The principles echo many of the economic goals of the controversial Green New Deal, but Tonko’s effort is expected to court moderates and Republicans. In related news, staff for the Senate Energy and Natural Resources Committee indicated that introduction of a Clean Energy Standard was imminent, and that the Committee would be holding additional climate hearings in April that would discuss such legislation.

 

President Trump Issues Order to Address EMP Threat

 

Amid growing concern by national security and intelligence officials, President Trump issued an Executive order on Mar. 26 designating the Department of Homeland Security (DHS) responsible for defending the nation from an electromagnetic pulse (EMP), including the electric grid. The order primarily focuses on gathering more information on the potential impact of and existing vulnerabilities to an EMP event. It requires DHS to identify “National Critical Functions” whose disruption due to an EMP would cause severe damage to public health, safety, and national security. Additionally, it requires DHS to coordinate with DOE and other agencies to study the possible effects an EMP would have on the grid and to consider mitigation strategies. The order also requires DOE to consult with industry on existing standards and policies. Nevertheless, DHS does not have legal authority to compel grid operators to take any action.

 

3-2019 NEPPA Newsline

In This Edition:

  • Appropriations: President Trump signs remaining FY19 appropriations …

  • Environmental Policy: Wheeler confirmed as EPA Administrator, Green New Deal introduced, Committees hold climate hearings

  • Cybersecurity: Senate committees examine threats to the grid …

 

President Signs FY19 Omnibus Bill, Ending Stalemate

 

Just 24 hours before the Continuing Resolution was set to expire on Feb. 15, the Senate passed a seven-bill omnibus spending package, providing Fiscal Year 2019 funding for agencies such as the Department of the Interior, the Environmental Protection Agency (EPA), Department of Transportation, and dozens of other federal agencies. The House took up and passed the bill late on Feb. 14, and the President signed the measure the next day. Six of the bills included in the omnibus were already agreed upon by House and Senate appropriators in the fall but were entangled in a funding dispute on border security within the Homeland Security appropriations bill. No extraneous items (such as tax extenders or disaster aid) were attached to the omnibus. The bill includes $1.38 billion in funding for border barriers, far less than the $5.7 billion President Trump had initially requested.

 

Facing pressure from conservatives, President Trump declared security at the U.S.-Mexico border a national emergency and plans to direct $8 billion in additional funds to build a border wall without congressional approval, spurring congressional action to block the emergency and possibly resulting in President Trump’s first veto.

 

Now that all federal agencies are funded for Fiscal Year 2019, the Office of Management and Budget (OMB) can focus on the President’s FY2020 budget request. Usually issued in February, OMB staff furloughs delayed the rollout of the President’s bSudget request and the document is now expected Mar. 11.

 

Senate Committee Advances Wheeler’s EPA Nomination

 

Following a party-line committee vote on Feb. 5, the Senate voted 52-47 to confirm Andrew Wheeler as the Administrator of the EPA on Feb. 28. The vote of the full chamber also fell along party lines with the exception of Sen. Susan Collins (R-ME) who opposed the nominee, citing a lack of action on climate change and the EPA’s efforts to roll back vehicle emission standards. Sen. Joe Manchin (D-WV), the lone Democrat still in the Senate who voted for Wheeler to be deputy administrator, withdrew his support due to concerns over progress on water quality regulations. Since becoming Acting Administrator last July, Wheeler has largely avoided the management and ethical scandals that dogged his predecessor but has continued to push the Trump Administration’s aggressive deregulatory agenda, including a scaled back WOTUS rule and tail pipe emission standards that are expected to be finalized later this year.

 

Green New Deal Proposal Released by Senate and House Sponsors

 

On Feb.7, Sen. Ed Markey (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY) released a blueprint for the policy known as the “Green New Deal.” The resolution does not call for 100% renewable power as activists had advocated, but cites the need for “clean, renewable, and zero emissions” energy sources.

 

The proposal is in the form of a non-binding resolution, which means it acts as a policy statement or messaging piece to rally behind rather than a specific legislative proposal. The resolution goes beyond just energy measures and seeks to manage the economic effects of an energy transition, funded by federal appropriations.

 

Reactions to the Green New Deal resolution were mixed, even among Democrats. House Speaker Nancy Pelosi (D-CA) stopped short of endorsing the resolution, calling it one among many plans put forward to combat climate change while GOP leaders largely panned it as expensive and unworkable. Seeking to challenge skittish Democrats to vote on the controversial resolution, Senate Majority Leader Mitch McConnell (R-KY) announced a vote could come sometime in March. In response to this pressure, all 47 Senate Democrats unveiled a slimmed-down resolution on climate change on Feb. 28. In contrast to the Green New Deal, the new resolution simply states the sense of Congress that climate change is real and caused by human activity, and that immediate action should be taken to address it.

 

Committees Hold Hearings with Focus on Climate

 

The House held a slew of climate-related hearings across several committees in February, ranging from clean energy infrastructure, workforce development, and inaction on the Paris Agreement in the Energy and Commerce Committee, to how infrastructure can help adapt and mitigate climate impacts in the Transportation and Infrastructure Committee. On Feb. 6, Governor Charlie Baker (R-MA) testified before the House Natural Resources Committee. He shared lessons learned from various wind generation projects in Massachusetts and extolled the value of hydropower in a renewable energy portfolio. Democrats used their time to paint a broad and urgent picture of the climate crisis, while Republicans questioned the ability of renewable sources to meet the nation’s energy needs in the near future, part of a noticeable shift in Republicans’ stance on climate issues. At a separate hearing of the Environment and Climate Change Subcommittee of the House Energy and Commerce Committee, Ranking Member John Shimkus (R-IL) said that Republican concerns about the methods suggested to address the problem do not amount to a denial of the issue.

 

Senate Committee Considers Cyber Threats to the Grid

 

On Feb. 14, the Senate Energy and Natural Resources Committee held a hearing on cybersecurity efforts underway to protect the electric grid. Witnesses from the Federal Energy Regulatory Commission (FERC), the North American Reliability Corporation (NERC), and DOE described the current process for developing and enforcing mandatory reliability standards. They also described the importance and benefits of other efforts, such as the biannual GridEx simulations and information sharing through the Electricity Information Sharing and Analysis Center (E-ISAC). Sen. Angus King (I-ME) expressed frustration that the government does not appear to be acting with a sense of urgency to secure the grid. The witnesses acknowledged that more can be done, but also gently resisted assertions by senators that their agencies do not take the matter seriously and are not actively engaged in protecting the grid.

 

Additionally, the Senate Homeland Security and Governmental Affairs Committee (HSGAC) held a roundtable discussion on Feb. 27 with a large slate of government and private sector experts to explore ways to protect the electric grid in the event of an electromagnetic pulse (EMP) or geomagnetic disturbance (GMD). Chairman Ron Johnson (R-WI) repeatedly expressed frustration that the federal government does not appear to take EMP and GMD risks seriously and has not implemented more rigorous standards to secure the grid. Most participants disputed Chairman Johnson’s assertions that very little has been done, pointing to the GMD standard FERC approved last year and ongoing communication among utilities through the E-ISAC on best practices for mitigating EMP and GMD risks.

 

2-2019 NEPPA Newsline

In This Edition:

  • Advocacy: NEPPA members head to Washington, D.C. for APPA Rally…

  • Appropriations: Partial government shutdown ends as FY19 negotiations continue...

  • Energy Policy: McIntyre passes away, LaFleur to depart FERC…

  • Environmental Policy: Wheeler nomination to EPA Administrator advances …

  • Broadband: Rep. Eshoo (DCA) introduces bill to reverse FCC order affecting pole attachments...

  • Drones: FAA proposes loosening commercial drone restrictions...

 

NEPPA Members Head to Washington, D.C. for APPA Rally

 

NEPPA is once again supporting New England public power systems making the trek to Washington, D.C. for the annual APPA Legislative Rally Feb. 25-27. NEPPA is assisting with scheduling meetings on behalf of its members with the congressional delegation, as well as preparing helpful talking points and briefing documents on legislative issues of particular interest to our region: capacity markets, climate change, hydropower relicensing, broadband and pole attachments, and municipal bonds. NEPPA will host an educational prep webinar Feb. 19 for members making the trip.

 

Government Reopens as Lawmakers Hash Out Border Wall Funding

 

On Jan. 3, the 116th Congress was sworn in amid a protracted dispute with the President over funding for a border wall with Mexico that resulted in a partial government shutdown. The impasse ended on Jan. 25 after Congress voted and President Trump quickly signed a three-week Continuing Resolution (CR), keeping the government open until Feb. 15 as lawmakers work to find a longer-term agreement on border security funding. The 35-day shutdown, which withheld pay from approximately 800,000 federal employees, was the longest in history. Congressional leaders have formed a conference committee to work on a longer-term deal.

 

President Trump continues to press for border wall funding in tweets and public statements and appears willing to declare border security a national emergency, which the White House has asserted could allow him to order the wall’s construction without congressional approval. Leaders on both sides of the aisle have expressed that they remain hopeful all parties can be satisfied by Feb. 15, thus avoiding both another government shutdown and a national emergency declaration, which would likely be the subject of a lawsuit. The six other appropriations bills entangled in this temporary CR appear fully negotiated and ready for passage. A disaster relief package and an extension of expired tax provisions, including some energy-related tax credits, are part of the negotiations.

 

FERC Commissioner Kevin McIntyre Dies; LaFleur Announces Departure

 

On Jan. 2, Federal Energy Regulatory Commissioner Kevin McIntyre passed away. He was 58. Commissioner McIntyre was diagnosed with brain cancer in 2017 and underwent treatment, which he acknowledged in a statement in March 2018. His colleagues on the Commission offered tributes at the January public meeting, and they announced the FERC public meeting room will be named in his honor.

 

The vacancy created by his absence leaves the Commission with four commissioners, two Republicans and two Democrats.

 

One of the Democrats, Commissioner Cheryl LaFleur, announced on Jan. 31 via Twitter that she will leave the agency later this year. Her term expires on June 30, though if a successor is not appointed by then she can remain until one is confirmed or until the end of the year, whichever happens first. She had expressed a desire to be re-nominated for a third term, writing that her departure was “not the outcome I had hoped for.” A strong supporter of organized energy markets, LaFleur has served on the Commission since 2010. Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-AK) and Ranking Member Joe Manchin III (D-WV) recently disclosed that they have not heard anything from the White House regarding potential nominees to fill McIntyre’s seat, although Senate Minority Leader Chuck Schumer (D-NY) reportedly floated the name of Allison Clements, an attorney focused on climate issues, as a potential nominee. LaFleur’s pending departure makes a bi-partisan pairing of nominees likely, though Murkowski said she would not wait for a second nominee if only one name is sent up.

 

President Formally Nominates Wheeler for EPA

 

On Jan. 9, President Trump formally nominated Andrew Wheeler to serve as Administrator of the Environmental Protection Agency (EPA). Wheeler has been serving in an Acting capacity since the departure of former Administrator Scott Pruitt in July 2018, and was Pruitt’s top deputy at the agency. Prior to his time at EPA, Wheeler was a lobbyist in Washington, D.C., serving clients that included some fossil fuel interests. Democrats have objected to potential conflicts of interest and opposed Wheeler’s nomination in a Feb. 5 vote of the Environment and Public Works Committee. Wheeler’s tenure has not been marked with the same level of scandal and mismanagement as his predecessor’s, however Democrats have still objected to EPA’s policy agenda in areas such as automobile emissions, hydrofluorocarbons, and drinking water contaminates. A vote in the full Senate has not been scheduled, and Democrats have urged the Republican majority to allow more time for Wheeler to respond to questions before proceeding with his confirmation.

 

House Bill Would Overturn FCC Pole Attachment Ruling

 

Rep. Anna Eshoo (D-CA) introduced legislation on Jan. 14 that would overturn the Federal Communications Commission (FCC) Declaratory Ruling from September 2018 that undermines the public power exemption from federal pole attachment regulation. In an attempt to remove perceived barriers to expanding highspeed internet access, the FCC asserted that local government and public power procedures and fee structures governing pole attachment applications must meet FCC standards. The standards would cap application fees and require applications to be processed within 60 days, promoting free-ridership, undermining local control, and threatening community safety. APPA and nearly 100 other entities have sued to block the FCC’s order from taking effect. Rep. Eshoo’s bill, if passed, would ensure the FCC’s order “shall have no force or effect.” While it is unlikely he bill would become law under President Trump, the more support it garners could hinder other lawmakers from introducing legislative proposals that encroach upon the public power pole attachment exemption.

 

FAA Proposes Regulations Allowing Drone Operations at Night, Over People

 

On Jan. 14, the Federal Aviation Administration (FAA) announced that it will propose regulatory changes to allow unmanned aircraft systems (UAS or “drones) to fly over people and at night without obtaining a waiver. These general prohibitions have significantly limited the potential drone technology could have for electric utility applications. The FAA Reauthorization law Congress passed in October 2018 requires the FAA to explore how to safely relax these prohibitions. The formal proposal will be published in the Federal Register in the coming weeks.

 

1-2019 NEPPA Newsline

In This Edition:

  • Appropriations: Partial Government Shutdown Persists Over Border Wall Impasse …

  • Energy Policy: McNamee seated at FERC…

  • Environmental Policy: Administration releases scaled back WOTUS Rule…

  • Broadband: Congress passes Farm Bill, includes broadband and forestry provisions…

 

Partial Government Shutdown Continues Over Border Wall Impasse

 

At midnight on Dec. 21, funding for several federal agencies lapsed, as Congress and the President could not reach agreement on an appropriations measure that would keep the government open. The impasse centers on President Trump’s desire to provide funding for a border wall with Mexico, a measure that cannot pass the Senate. On Dec. 19, the Senate passed a Continuing Resolution (CR) extending funding for federal agencies within seven appropriations bills at FY18 levels until Feb. 8. The House had been expected to take up and pass the CR on Dec. 20, but Republican leadership canceled the vote and instead passed a bill that included funding for the wall. With no time or plan to resolve the impasse, the chambers departed for the Christmas holiday break without passing any appropriation for the unfunded agencies, leading to a partial government shutdown over the holidays. The chambers returned to work Dec. 27, but ended the week no closer to an agreement. The House, transitioning to Democratic control, is expected to pass a spending bill on Jan. 3, the first day of the 116th Congress.

 

Five FY19 appropriations bills were passed earlier in 2018, which accounted for roughly 2/3 of the federal budget, including the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC). Funding for the Department of the Interior and the Environmental Protection Agency (EPA) was not included and those agencies and others have shut down, operating with only personnel deemed “essential” to core agency activities. Most of the outstanding bills are packaged and ready to be passed once the dispute on border wall funding is resolved.

 

McNamee Seated; FERC Holds December Meeting

 

Bernard McNamee was officially sworn in as the newest FERC Commissioner on Dec. 18, restoring the Commission’s complement of five commissioners. Senate Democrats renewed their calls for McNamee to recuse himself from certain matters related to his previous work at DOE, in a letter addressed to McNamee that requested he commit to recusing himself from “any future matters before FERC that might be characterized as pitting one fuel source against another.” Commissioner McNamee did not directly address this criticism at FERC’s monthly public meeting on Dec. 20. In an opening statement, he emphasized the complexity of FERC’s work and the importance of listening before reaching conclusions. He did not take any substantive votes on FERC’s meeting agenda, saying that he was still getting up to speed.

 

Among the actions taken by commissioners, FERC proposed an update to its requirements for “horizontal market power” analysis. Additionally, the commission finalized a rule that eliminates Form 80, the Licensed Hydropower Development Recreation Report. The form required entities to provide information regarding recreation activities at hydro facilities. Also, this was the fourth consecutive meeting Commissioner Kevin McIntyre missed for health reasons.

 

Administration Releases Scaled Back WOTUS

 

Rule On Dec 11, the Trump Administration released its long-expected revision to the Waters of the United States (WOTUS) rule, which defines which bodies of water are covered by federal Clean Water Act protections. The new rule significantly scales back the Obama-era definition critics claimed was overly broad and burdensome for land and water users. The joint proposal by the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers identifies six types of water resources as Waters of the United States: traditionally navigable waters, tributaries, impoundments, wetlands adjacent to traditionally navigable waters, some ditches, and some lakes and ponds. Most small creeks, streams and man-made ditches would not be covered unless they flow regularly and drain into other covered bodies.

 

The biggest change from the 2015 definition concerns wetlands and ephemeral streams. Only those wetlands with a direct surface connection to adjacent covered waters would be subject to the revised WOTUS definition. Wetlands separated from covered waters by land, dikes or other natural or artificial barriers would be left out, and therefore not subject to Clean Water Act permitting requirements for development or other land use activities. Also left out of the revised rule are ephemeral streams or those that flow only after rainfall or snowmelt – a hydrologic feature common across the West.

 

Proponents of the rule change have cheered the move as a win for property owners and business interests such as agriculture and real estate development. Critics have accused federal agencies of ignoring the science demonstrating the interconnectedness of water systems and have promised to challenge the issue in court. Also at play are several broad questions posed to commenters that may justify a further narrowing of the definition in the final rule. The proposed rule will be subject to a 60-day public comment period once it is published in the Federal Register and is expected to be finalized in early 2019.

 

Farm Bill Passes with Broadband, Forestry Provisions

 

After months of negotiating the 2018 Farm Bill, Congress swiftly passed compromise legislation that was released by House and Senate Agriculture Committee leaders Dec. 11. The final text tacked closely to the Senate version which had bipartisan support in the upper chamber. Of interest to not-for-profit utilities, the bill contained a significant increase to broadband deployment funding from $25 million up to $350 million per year. The increased funding for grants and loans will be targeted to the most underserved areas through more narrow eligibility requirements. The bill also expanded funding eligibility to “middle-mile” broadband infrastructure such as datacenters, backhaul, and interoffice connectivity projects, which can be a major expense when trying to connect rural areas.

 

The legislation also advanced several forest management provisions aimed at improving forest health and reducing the risk of wildfire. A pilot program will be created that allows utilities to partner with the Forest Service to perform extended vegetation management within and adjacent to utility rights of way (up to 150 feet) in an effort to protect critical utility infrastructure. Expanded “good neighbor authority” will allow states, counties and Indian tribes to perform forest management activities on federal land to restore forest health, improve habitat and reduce the risk of wildfire along the urban-wildland interface and other neighboring parcels of land.

 

12-2018 NEPPA Newsline

In This Issue:

  • Energy Policy: McNamee confirmed to FERC, FERC approves interim fuel security proposal, FERC dismisses complaint calling for capacity market construct in CAISO, National Lab report highlights small hydro…

  • Environmental Policy: Bipartisan carbon tax legislation introduced in House…

  • Cyber Security: FERC approves GMD reliability standard…

  • Pole Attachments: APPA challenges FCC pole attachment order…

 

Bernard McNamee Confirmed to FERC

 

On Nov. 15, the Senate Energy and Natural Resources Committee held a hearing on several pending nominees, including Bernard McNamee for the Federal Energy Regulatory Commission (FERC). McNamee faced tough questioning from Democrats, specifically on policy decisions he has promoted as a political appointee for the Department of Energy (DOE). In his testimony, McNamee noted that he would work to maintain the autonomy of FERC by being an “independent arbiter” for the agency, but declined to recuse himself from reviewing anything related to Energy Secretary Perry’s resiliency proposal. The nomination became more controversial following the hearing as past critical statements by McNamee regarding renewables came to light. The committee advanced McNamee to the full Senate on Nov. 27, by a vote of 13-10 with Sen. Joe Manchin (D-WV) crossing party lines to advance the nominee. However, Sen. Manchin voted against a procedural vote to confirm the nominee Dec. 5, saying he had reservations about the nominee’s position on climate change. Manchin, who is expected to assume the Ranking Member position on the Senate Energy Committee if Sen. Maria Cantwell relinquishes it to take the top spot on the Commerce Committee, has been the subject of protests from environmental groups concerned about his pro-coal stance. McNamee was ultimately confirmed Dec. 5 by a party-line vote of 50-49.

 

FERC Approves Interim Fuel Security Proposal

 

On Dec. 3, FERC approved 2-1 an interim measure aimed at keeping open Mystic 8 and 9, two units slated for retirement that the Commission agreed were needed for fuel security purposes. The order allows the units to remain in the market as price-takers. The proposal also called for a fuel security review process for resources set to retire before the next three forward capacity auctions. FERC also directed ISO-New England to quickly develop a longer-term solution. Chairman Chatterjee dissented from the order, saying that allowing the units to act as price-takers would suppress prices and potentially force otherwise economic units to retire instead, and he also took issue with the sunset provision because it could allow the tariff to revert to the underlying model without fuel security provisions.

 

FERC Dismisses Complaint Calling for Capacity Market Construct in CAISO

 

On Nov. 19, FERC denied a complaint by natural gas plant owner La Paloma, LLC calling for the establishment of a mandatory capacity market in the California Independent System Operator (CAISO) market. The complaint alleged that the existing resource adequacy framework is unjust, unreasonable and unduly discriminatory because it fails to adequately compensate generators that are needed for grid flexibility. FERC’s order denied the complaint on the grounds that it did not identify any specific tariffs that are unjust or unreasonable, and did not demonstrate that the existing tariff failed to assure reliability. FERC noted that market participants are not entitled to a profitable return.

 

National Lab Report Highlights U.S. Small Hydro

 

The Oak Ridge National Lab has released a report titled “Small Hydropower in the United States.” Small hydro (defined as 10MW or less) makes up just 3.6 GW of generation across the country, but represents the largest potential for growth in hydropower with 420 MW currently planned and another 6,800 MW of untapped potential in existing and new stream-read development. The report also noted the potential impact of recent federal actions to encourage the development of small hydropower, such as the Water Resources Development Act legislation signed into law Oct. 10.

 

Bipartisan Carbon Tax Legislation Introduced in House

 

On Nov. 28, a bipartisan group of House members introduced legislation to impose a $15 fee on carbon emissions from oil, gas, and coal industries, increasing by $10 each year until emissions standards are met. Revenues would be returned as a dividend to taxpayers and the tax would preempt certain existing greenhouse gas regulations. The bill’s sponsors are members of the bipartisan Climate Solutions Caucus, but, notably, are not members of the committees of jurisdiction for tax or environmental legislation. The bill could be one of many competing approaches to address climate change in the 116th Congress, but is unlikely to move in the near term.

 

FERC Approves GMD Reliability Standard

 

On Nov. 15, FERC approved a reliability standard requiring covered entities to develop response plans for potential geomagnetic disturbances (GMD). In addition to the proposal, FERC decided to require covered entities to prepare for localized impacts related to GMD event vulnerabilities. Also, FERC directed a stricter standard in awarding deadline extensions to entities requesting more time to complete their compliance plans. Trade associations, including the American Public Power Association (APPA) and the National Rural Electric Cooperative Association, had opposed both of these modifications to NERC’s proposal.

 

APPA Challenges FCC Pole Attachment Order in Federal Court

 

On Nov. 15, APPA filed a suit challenging the Federal Communications Commission’s (FCC) declaratory order asserting authority over pole attachment fees and application timelines for municipal utilities. APPA believes this order is not lawful given public power’s longstanding exemption to federal pole attachment regulation, codified in Section 224 of the Communications Act. Several other parties have filed suits against the FCC’s order in multiple federal circuit courts for various reasons in addition to APPA’s objections. The Communications Act establishes a lottery system to consolidate multiple cases in one circuit court jurisdiction based on the first ten challenges that are made. The 10th Circuit; which includes district courts in Colorado, Kansas, Oklahoma, New Mexico, Utah, and Wyoming; has been chosen, and APPA expects its case to be batched with the other cases.

 

11-2018 NEPPA Newsline

In This Issue:

  • Election 2018: House flips as New England delegation welcomes new Members of Congress…

  • Energy Policy: Chatterjee named FERC Chair, FERC proposes amending transmission ROE…

  • Cyber Security: FERC approves supply chain standard…

  • Personnel: Kavanaugh sworn in as Justice...

 

House Flips as New England Welcomes New Members of Congress

 

Voters went to the polls Nov. 6 and delivered a mixed verdict on the President’s first two years in office, as midterm elections are often a referendum on the sitting president. In this case, the House turned to Democratic control for the first time in eight years. With several races still remaining to be called, Democrats will have a slim majority but will nevertheless control the chamber and, importantly, its committees - which will likely be used to investigate and criticize the Administration. The Senate remains in Republican control, where the GOP will be able to control the political appointee confirmation process. In the New England delegation, newcomers Jahana Hayes (D-CT), Ayanna Presley (D-MA), Lori Trahan (D-MA), and Chris Pappas (D-NH) will join the House in January.

 

Chatterjee Named FERC Chair

 

On Oct 24, President Trump designated Republican Commissioner Neil Chatterjee to be chairman of the Federal Energy Regulatory Committee (FERC). Outgoing Chairman Kevin McIntyre, also a Republican, will remain on the Commission but chose to relinquish the chair after a series of health issues impacted his ability to perform the additional duties, according to a letter he sent to the President Oct. 22. As a native of coal-heavy Kentucky and a former energy aide to Senate Majority Leader Mitch McConnell (R-KY), some stakeholders speculate Chatterjee’s appointment could make the Commission more receptive to the Administration’s efforts to prop up baseload coal and nuclear plants. However, Chatterjee voted against the Department of Energy’s initial plan in January 2018 after at first appearing to support it. FERC remains a split commission with two Republicans and two Democrats after Commissioner Robert Powelson stepped down in August. The Senate Energy and Natural Resources Committee has scheduled a hearing for Nov. 15 to consider the President’s nominee to fill the panel’s vacant fifth seat, Bernard McNamee.

 

FERC Proposes to Modify ROE Methodology

 

On Oct. 19, FERC responded to a 2017 court ruling on transmission investment return on equity (ROE) and proposed new methodologies for calculating whether ROE is just and reasonable and for setting new ROE. In both instances, FERC would use four separate financial models to establish a “zone of reasonableness” to establish a cap on ROE. The new approach would likely result in higher ROE’s than the current model and be more difficult to challenge once applied. Comments from stakeholders are due Dec. 19.

 

FERC Approves Final Supply Chain Standards

 

On Oct. 18, FERC issued an order approving three reliability standards regarding supply chain cyber security. The three standards require utilities to develop plans for addressing cyber risks to industrial control system hardware and software, as well as network systems. The standards emphasize remote access protections and vender risk management. The final rule requires NERC to determine how to apply the standards to Electronic Access Control and Monitoring Systems (EACMS) within 24 months. NERC’s initial proposal did not apply to EACMS, but commissioners found their absence represented a significant risk. Also, utilities will have 18 months to comply with the standards, more than the 12-month implementation period initially favored by FERC.

 

New Supreme Court Justice Sworn In

 

Judge Brett Kavanaugh was confirmed and sworn into the Supreme Court following a bitterly partisan confirmation process. In the final vote, Sens. Joe Manchin (D-WV) and Lisa Murkowski (R-AK) bucked their parties and longundecided Sen. Susan Collins (R-ME) cast the deciding vote in favor of the nominee after a lengthy floor speech.

 

10-2018 NEPPA Newsline

In This Issue:

  • Nominations: McNamee named for FERC, High-profile hearing examines allegations against SCOTUS nominee…

  • Energy Policy: FERC plans technical conference on winter reliability, Courts uphold state public policy programs in organized markets…

  • Appropriations: Congress Passes $854B Minibus Appropriations Bill…

  • Infrastructure: FCC asserts jurisdiction over pole attachments, FAA bill includes drone and disaster reform sections, water resources bill includes hydro provisions...

  • Cyber Security: New CESER office head testifies...

 

McNamee Named for FERC

 

On Oct. 3, President Trump nominated Bernard McNamee to fill the open seat on the Federal Energy Regulatory Commission (FERC). McNamee currently heads the Department of Energy (DOE) Office of Policy and was previously Deputy General Counsel for Energy Policy; earlier in his career he practiced energy law and served four Attorneys General. He is seen as a decisive vote in favor of action on the Administration’s efforts to rescue coal and nuclear plants, particularly with respect to organized markets. Robert Powelson, who vacated the seat in August, was an outspoken critic of those plans. McNamee may face opposition from both market advocates and environmental champions during his confirmation process.

 

High-Profile Hearing Examines Allegations Against SCOTUS Nominee

 

On Sept. 27, the Senate Judiciary Committee heard testimony from Dr. Christine Blasey Ford, a woman who has alleged that Supreme Court nominee Brett Kavanaugh assaulted her at a party when both were minors, and from Kavanaugh himself. The hearing ranged from intensely emotional to highly technical, with both witnesses visibly distraught. The Judiciary Committee approved Kavanaugh’s nomination Sept. 28, but Sen. Jeff Flake (R-AZ) conditioned future support on completion of a oneweek FBI probe to examine the allegations further.

 

FERC Plans Conference on Winter Reliability

 

FERC has announced plans for an Oct. 18 technical conference to examine winter reliability issues. The conference will be staff-led and will focus on testimony from the RTOs on their efforts to ensure reliable and economic system performance during the 2018-2019 winter season. For RTOs that are not winter-peaking, remarks will focus on efforts to prepare for other seasons that may challenge the region’s reliability

 

Courts Uphold State Public Policy Programs in Organized Market Regions

 

Two Circuit Courts have upheld state programs aimed at supporting specific generation resources in organized markets. On Sept. 13, the U.S. Circuit Court of Appeals for the Seventh Circuit upheld an Illinois program that provides a contract-based Zero Emissions Credit to nuclear plants. On Sept. 28, the U.S. Circuit Court of Appeals for the Second Circuit upheld a similar program in the state of New York. Both courts rejected claims that the Federal Power Act preempts state public policies that may have an effect on market prices. The courts found that the state programs were aimed at public policy objectives other than suppressing wholesale prices, even if they may have the effect of driving those prices down.

 

Congress Passes $854B Minibus Appropriations Bill

 

On Sept. 26, the House of Representatives voted in favor (361-61) of a FY19 “minibus” appropriations package that included funding for several areas of government, including defense. Also included in the package was a Continuing Resolution (CR) through Dec. 7 allowing funding to continue at FY18 levels for any agency not receiving FY19 appropriations by the end of the fiscal year. Of note, the Low-Income Home Energy Assistance Program (LIHEAP) is funded at $3.69 billion, roughly $50 million more than in FY18. President Trump signed the measure, despite earlier rhetoric decrying the lack of funding for his priority, border security

 

FCC Asserts Authority Over Municipal Pole Attachments

 

The Federal Communications Commission (FCC) on Sept. 26 issued an order limiting the fees local authorities can charge wireless providers to attach 5G facilities to public assets, including electric poles owned by municipal entities. The order, approved by a 4-0 vote, represents a reinterpretation of public rights-of-way and wireless service section under the Communications Act. The Commission asserts these sections allow it to prevent fees and delays that undermine the deployment of wireless services. The order requires municipalities to process pole attachment applications within 60 days for existing poles and 90 days for new structures. A separate provision of the Communications Act provides not-for-profit electric utilities an exemption from federal pole attachment regulations and therefore the order’s legality is likely to be challenged, which could delay its implementation.

 

Congress Tees Up FAA Reauthorization, Disaster Recovery and Reform Act

 

On Sept. 22, congressional leaders reached an agreement on the pending Federal Aviation Administration (FAA) Reauthorization bill. The final agreement includes several provisions relating to drones, including requiring the FAA to begin a process to establish drone “no-fly” zones over critical electric infrastructure. The agreement also directs FAA to test ways to integrate drone use beyond-the-visual-line-of-sight, nighttime operations, and operations over people – considerations important for the effective application of drones by electric utilities. Of interest to utilities, the bill also includes a provision that would prevent FEMA from de-obligating (or “clawing back”) emergency disaster funding more than three years after disbursement.

 

Water Resources Bill Moving Through Congress

 

A “pre-conferenced” version of the Water Resources Development Act (WRDA) was unveiled Sept. 10 by House and Senate committee leaders as a compromise package that ironed out differences between the chamber’s respective bills, and is expected to become law before the November election. The bill contains several important hydropower provisions not in prior versions: it grants FERC authority to extend start of construction deadlines for licensed projects up to 10 years, increases the maximum capacity for small conduit hydro up to 40 megawatts, sets a two-year deadline on the permitting process for non-powered dams and closed loop systems, and ensures licensees will be given credit during the relicensing process for “early action” investments. The bill will also allow entities who experience a rate hike due to inaction by FERC to appeal the Commission to rehear the issue.

 

House Energy Panel Conducts Oversight of the DOE’s New Cyber Office

 

On Sept. 27, the House Energy and Commerce Subcommittee on Energy held an oversight hearing on the Department of Energy’s (DOE) Office of Cybersecurity, Energy Security, and Emergency Response (CESER). Karen Evans, the recently confirmed Assistant Secretary of this office, was the only witness. In her testimony she walked members of the committee through the legal authority DOE possesses as the sector specific agency for energy and described several of the ongoing information sharing efforts between industry and government entities designed to mitigate cyber risk. She described to members that she would like to “cultivate an ecosystem of resilience” within the electric sector and that she was not confident utilities could presently withstand a sophisticated cyber attack.

 

9-2018 NEPPA Newsline

In This Issue:

  • Energy Policy: ISO-New England files interim tariff to compensate “fuel secure” generators…

  • Appropriations: Congress makes progress on funding bills…

  • Environmental Policy: EPA proposes Clean Power Plan replacement...

  • Cyber Security: Senate examines cyber threats to critical infrastructure...

  • Telecom & Tech: Senate panel reviews blockchain technology; Senate Commerce holds FCC oversight hearing…

 

ISO-New England Files Interim Tariff to Compensate “Fuel-Secure” Generators

 

In the latest development in the ongoing dialogue about “fuel security,” on Aug. 31 ISO-New England filed an interim tariff with the Federal Energy Regulatory Commission (FERC) that would treat “fuel secure” generators as price-takers in the markets. The interim tariff is the ISO’s response to FERC’s earlier rejection of its bid to offer a cost-based contract to two units thought to be necessary for reliability reasons. If accepted, the tariff would be in effect for forward capacity auctions 13 through 15, covering years 2022-2025, while ISO-New England prepares a more robust, permanent tariff to respond to FERC’s directive.

 

Congress Makes Progress on Funding Bills

 

The Senate remained in session in August to process nominations and make progress on funding bills. On Aug. 1, the Senate passed a fourpart “minibus” appropriations bill that contained Interior-Environment funding, as well as Transportation, Financial Services, and Agriculture spending bills. Though a number of amendments were debated and agreed to, Senate appropriators held steadfast against policy decisions, or riders, being added to appropriations bills. On Aug. 23, the Senate passed its third FY19 minibus funding bill – a large package containing nearly two-thirds of the federal discretionary budget. The bill, which includes Department of Defense funding and Labor, Health and Human Services, and Education funding, passed 85-7. Of interest to NEPPA, the bill allocates $3.69 billion for the Low-Income Home Energy Assistance program, which was zeroed out in the President’s budget. No policy-related amendments were considered, in keeping with the Senate’s bipartisan effort to keep controversial issues off this year’s funding bills.

 

The Senate has now passed nine out of 12 appropriations bills, which Senate Appropriations Committee Chairman Richard Shelby (R-AL) noted has not happened since 1999. Members and staff from both sides of the Capitol are aiming to have at least some of the bills conferenced, passed, and signed before the Sept. 30 fiscal year deadline.

 

EPA Proposes Clean Power Plan Replacement: The Affordable Clean Energy Rule

 

On Aug. 21, the Environmental Protection Agency (EPA) announced a proposed rule titled the Affordable Clean Energy (ACE) rule, which will replace the 2015 Clean Power Plan (CPP) regulating carbon dioxide emissions from coal-fired power plants. The ACE rule uses the same statutory provision as the much-broader CPP, but would scale back the ambitious reductions sought by the previous administration that would transition the overall power sector away from coal-fired plants and toward renewable electricity generation.

 

The proposed rule would allow individual states to not only develop plans to reduce greenhouse gas emissions from existing coal-fired plants, but to set the performance standard for units within their borders (In contrast, the CPP featured state targets set by EPA). States may also be allowed to opt-out of regulation by setting a performance standard that does not require any emissions reductions. The rule includes a list of “candidate technologies” that can be applied to individual coal plants, which states can use to establish a standard of performance. The ACE rule contains an updated definition of the “best system of emissions reduction” (BSER) to include only on-site efficiency upgrades, or heat rate improvements, to reduce emissions per unit of electricity generated. The CPP envisioned a BSER made up of combined actions across the electric sector.

 

In addition to the main text of the rule, the proposal includes revised applicability standards for the New Source Review (NSR) permitting regime that focus on monitoring changes to a plant’s hourly emissions – thereby expanding the efficiency, physical, or operational upgrades that can be made to an existing plant without triggering the NSR process. The proposed rule will be available for public comment for 60 days after it is published in the Federal Register.

 

Senate Examines Cyber Threats to America’s Critical Infrastructure

 

On Aug. 21, the Senate Judiciary Subcommittee on Crime and Terrorism held a hearing to discuss cybersecurity challenges to critical infrastructure. The hearing consisted of witnesses from varying industries including Thomas Fanning, CEO of Southern Company and Co-Chair of the Electricity Subsector Coordinating Council (ESCC). During his opening statement, Fanning stated that threats to the grid are constantly evolving, which necessitates a “defense-in-depth” approach. He noted that unlike other sectors of critical infrastructure, the energy sector is “subjected to mandatory cyber and physical security regulations” known as Critical Infrastructure Protection (CIP) standards. Ranking Member Sheldon Whitehouse (D-RI) also addressed his concerns with the need for a lead agency to work with Congress to avoid a cyber catastrophe that “everyone predicted but did nothing about.”

 

Senate Energy Panel Examines Impact, Potential of Blockchain Technology

 

On August 21, the Senate Energy and Natural Resources Committee held a hearing titled “Energy Efficiency of Blockchain and Similar Technology.” The hearing examined two main intersections of blockchain and energy, including the technology’s intense electricity demands and its potential application in grid security and operations. Blockchain technology is the process of recording digital transactions in a virtual ledger distributed among individual computer networks to create secure and verifiable records. Closely associated with cryptocurrencies like bitcoin, the technology can enable peer-to-peer transactions without the need for a third-party authenticator such as a bank. Paul Skare, Chief Cyber Security and Technical Group Manager at the Pacific Northwest National Laboratory, testified how the intense computing process behind blockchain and cryptocurrencies has created immense new demands on the electric grid. As a result, individual cryptocurrency developers, or “miners,” seek out localities with cheap electricity costs as a base of operations. Dr. Narayanan of Princeton University discussed how local policies such as time of use rates and tax incentives can help to better manage the impact on the grid by steering the operations and location of cryptocurrency mining.

 

Another theme of the hearing was how blockchain can be applied across the energy sector in the future. Claire Henly from the Energy Web Foundation discussed how the distributed nature of blockchain makes it a valuable tool in developing a more decentralized electricity grid that would be less vulnerable to cyber attacks and disruption. She also highlighted how blockchain could be adapted to allow individual users to purchase energy directly from distributed renewable generators securely and efficiently. The witnesses generally agreed that many of the potential commercial applications of blockchain beyond digital payment management are still years away. They warned against attempts to regulate the technology on the federal level while it is still in its infancy, but encouraged more robust research investments by the Department of Energy and other federal entities.

 

Senate Commerce Committee Conducts FCC Oversight Hearing

 

Four of the five commissioners of the Federal Communications Commission (FCC) appeared before the Senate Commerce Committee on Aug. 16 to discuss the current direction of the agency. The hearing touched on many issues, including net neutrality and the expansion of highspeed internet access to rural communities. “The STREAMLINE Small Cell Deployment Act” (S. 3157), which seeks to assert federal regulations on pole attachments in the public right-of-way, was not the focus of the hearing, but Chairman John Thune (R-SD) referenced the bill in his opening statement. He went on to say the committee would seek to balance “accelerating broadband deployment” with “preserving local authority” as it continues to consider this legislation. A hearing on S. 3157 is expected in September.

 

8-2018 NEPPA Newsline

In This Issue:

  • Energy Policy: FERC finalizes order on reporting cyber intrusions …

  • Appropriations: Interior-Environment bill clears both chambers…

  • Cyber: Senators Cantwell and Graham urge cyber analysis...

  • Environmental Policy: House weighs in on carbon tax…

  • Personnel: Powelson, Pruitt resign; Kavanaugh named to court…

 

FERC Issues Order on Cyber Intrusions

 

On July 19, FERC finalized Order 848, which requires the North American Electric Reliability Corporation (NERC) to revise its reliability standards to require utilities to report nearly all cyber intrusions that could compromise Electronic Security Perimeters (ESPs) and related Electronic Access Control or Monitoring Systems (EACMS). The final rule requires NERC to revise what it considers a reportable cyber incident so that more incidents are captured, though it does give NERC some discretion to focus on the threat level, potential consequences to EACMS systems, and to prioritize reporting incidents that threaten reliability. The order also requires utilities to report cyber incidents to the Department of Homeland Security in addition to NERC’s Electricity Information Sharing and Analysis Center (E-ISAC). NERC will be required to provide FERC an annual report on the incident data it collects as a result of this order.

 

Congress Continues Work on FY19 Appropriations Bills

 

Congress continued progress on the Fiscal Year 2019 appropriations process utilizing several “minibus” legislative packages that pair multiple spending bills together for floor consideration. The conference process to work out differences between each chamber’s Energy and Water minibus (which also included legislative branch and veterans funding) stalled over how to provide funding for a veterans program that the Trump Administration recently shifted from mandatory to discretionary funding.

 

The House approved the second FY19 minibus appropriations bill, comprised of the Interior-Environment and Financial Services bills, on July 19. The Senate added Transportation and Agriculture appropriations bills to the package and passed the bill on Aug. 1. The House-passed version included $44.7 billion for the InteriorEnvironment portion but added several contentious policy riders, while Senate appropriators provided $43.7 for that section and kept it clear of riders.

 

Cantwell, Graham Urge Investigation of Russian Threat to Grid

 

On July 25, Sens. Maria Cantwell (D-WA) and Lindsey Graham (R-SC) sent a letter to President Trump asking that he order an analysis of Russian cyber threats to grid infrastructure. The letter notes a recent story by the Wall Street Journal that reported Russian hackers penetrated industrial control systems of utilities last year, though they did not cause blackouts.

 

Further, the letter praises the formation of the new Office of Cybersecurity, Energy Security, and Emergency Response at the Department of Energy, but suggests additional action by the federal government is needed and cites proposed cuts to DOE as being counterproductive to maintaining grid reliability.

 

The letter asks the President to provide an assessment of Russian cyber capabilities, a report describing what is known about Russian penetration of electric infrastructure, and steps the Administration is taking to respond to the threat. This is the third such letter from Cantwell, and the addition of Graham makes it stand out as a bipartisan effort, though the Administration is not required to provide the requested information.

 

House Postures on Carbon Tax

 

On July 19, the House voted 229-180 to pass a non-binding resolution expressing the sense of Congress that a carbon tax would be detrimental to the U.S. Seven Democrats crossed the aisle to vote for the resolution, and six Republicans voted against it. A similar resolution in the previous Congress had no Republican defectors. The resolution, advanced by Republican leaders, was designed to counter an effort by Rep. Carlos Curbelo (RFL), co-chair of the bipartisan Climate Solutions Caucus. Curbelo introduced carbon tax legislation on July 23 that would put a price on emissions and redistribute the revenue as a dividend to taxpayers. The Republican leadership resolution makes clear that the party will not advance the measure being circulated by Curbelo despite growing momentum for a market-based approach to controlling carbon emissions.

 

Powelson Resigns from FERC, Potential Replacements Floated

 

Republican FERC Commissioner Robert Powelson announced on June 28 his plans to resign effective midAugust to become President and CEO of the National Association of Water Companies. A Republican, he had been sharply critical of the administration’s efforts to shore up financially struggling nuclear and coal plants. Powelson’s tenure was to last until June of 2020. In the absence of a fifth commissioner, FERC will be a split panel, with two Democrats and two Republicans until President Trump nominates and the Senate approves another Republican commissioner. With other items crowding the Senate’s schedule, it is unclear when the Administration and Senate will move forward with a replacement. Several names have been rumored to be under consideration, including: Travis Kavulla, vice chairman of the Montana Public Service Commission and former President of NARUC; Tim Echols, member of the Georgia Public Service Commission; Douglas Little, Deputy Assistant Secretary of Intergovernmental and External Affairs at DOE; Bruce Walker, Assistant Secretary of the Office of Electricity at DOE; and Sean Cunningham, Director of DOE’s Office of Policy.

 

Trump Names Brett Kavanaugh to Replace Kennedy on Supreme Court

 

On July 9, President Trump announced his nomination of Brett Kavanaugh of the D.C. Circuit Court of Appeals to fill the Supreme Court vacancy created by Justice Anthony Kennedy’s retirement. Judge Kavanaugh has opined on numerous Obama-era environmental regulations and found that the EPA overstepped its authority. Early reviews of his record also suggest he may be more open to reexamining the Chevron doctrine of deference to federal agencies. No Judiciary Committee hearings have been scheduled yet but Judge Kavanaugh has begun meeting with Senators individually. Majority Leader Mitch McConnell (R-KY) has promised a swift confirmation process with the goal of having the new Justice seated before the high court’s new term starts in October.

 

Wheeler Takes the Helm of EPA in Wake of Pruitt’s Resignation

 

On July 5, Environmental Protection Agency (EPA) Administrator Scott Pruitt tendered his resignation after a relentless torrent of headlines about improper behavior and financial mismanagement at the agency. Deputy Director Andrew Wheeler assumed the role of Acting Director July 9. Wheeler previously served as a staff member for Sen. Jim Inhofe (R-OK) as well as an aide for the Senate Environment and Public Works Committee. While Wheeler’s style has already been notably different from Pruitt’s with respect to transparency and internal and external relations, the agency’s deregulatory agenda is not expected to significantly change with the new leadership at the top.

 

7-2018 NEPPA Newsline

In This Issue:

  • Energy Policy: FERC rejects Mystic reliability petition, FERC rejects PJM state policy accommodations…

  • Appropriations: Energy and Water Bills headed for conference…

  • Pole Attachments: 5G Broadband bill introduced in Senate...

  • Environmental Policy: Clean Power Plan held in abeyance (again)…

  • Personnel: Justice Kennedy to retire…

 

FERC Rejects Mystic Petition, Opens Docket on New England Fuel Security

 

On July 2, the Federal Energy Regulatory Commission (FERC) rejected ISO-New England’s request for waivers to provide costof-service payments to keep two generators running after their planned retirement in June 2022. The units are critical for operating reserves and to keep open the liquefied natural gas terminal that is economically dependent on the units as customers, the ISO filing claimed. However, FERC’s rejection says the requested waiver is an inappropriate approach to address fuel security and opens a new docket to address that issue.

 

FERC directs ISO-NE to submit within 60 days either interim tariff revisions providing for short-term cost-of-service agreements to address fuel security concerns, to be followed by permanent market design changes, or to show cause as to why its tariff remains just and reasonable such that these filings are not necessary.

 

Four Commissioners wrote separately: Commissioner LaFleur wrote a concurring opinion pointing out that the order does not indicate an approach to deal with resilience; Commissioner Chatterjee wrote a concurring opinion expressing pleasure that the order called for swift action along the lines of what he had originally championed in response to last year’s Department of Energy directive. Commissioner Powelson drafted a partial dissent to indicate his opposition to granting cost of service payments to generators without fully exhausting other options, and Commissioner Glick wrote a partial dissent warning that the lack of a clearly defined reliability threat was likely to open the door to a “parade” of similar cost-of-service requests claiming fuel security challenges.

 

Members of Congress have not yet weighed in on the order.

 

FERC Rejects PJM State-Sponsored Resources Proposals

 

At the May 17 FERC open meeting, Chairman Kevin McIntyre announced the Commission will be conducting On June 29, the Federal Energy Regulatory Commission (FERC) released a 3-2 order rejecting PJM Interconnection’s bid to address state public policy impacts on its capacity market. PJM offered two alternatives, both of which were rejected by FERC: one would have re-priced capacity bids after accounting for state-sponsored benefits, and the other would have extended the current Minimum Offer Price Rule (MOPR) to most units.

 

Saying the market’s current tariff is unjust and unreasonable, FERC’s order directed PJM to develop a new tariff, noting that a full expansion of the MOPR or a modification of the market’s Fixed Resource Rule to force state-supported units to exit the capacity market with their commensurate load, would be found just and reasonable. Commissioners LaFleur and Glick dissented, saying the timetable for action would not allow for full development of the alternatives.

 

Energy and Water Appropriations Headed for Conference

 

On May 17, the Senate Energy and Natural Resources Committee advanced 22 pieces of legislation including On June 25, the Senate passed the first of its FY19 “minibus” appropriations bills: a package of three funding bills, including Energy and Water Development. The Trump Administration’s proposed cuts to the Office of Science and Renewable Energy programs were rejected, and a number of programs the President zeroed out, like Loan Guarantees and the Advanced Research Projects Agency-Energy (ARPA-E), were maintained. Both chambers appear to be readying to begin conferencing the bills as soon as possible; the House passed its version on June 8.

 

LIHEAP funding maintained in draft FY19 bill

 

In related news, the House Labor, Health and Human Services, Education Appropriations subcommittee approved its FY19 funding bill on June 15. Funding for the Low Income Home Energy Assistance Program (LIHEAP), though proposed to be eliminated in the President’s budget, was included at the same level as in the FY18 omnibus bill, at $3.64 billion. In the Senate, the FY19 Labor-HHS appropriations bill was considered by the subcommittee on June 26 and the full committee on June 28. The LIHEAP program received a $50 million increase in that version, bringing it to $3.7 billion.

 

5G Broadband Bill Introduced in Senate

 

Senate Commerce Committee Chairman John Thune (R-SD) and Sen. Brian Schatz (D-HI) introduced “the Streamlining the Rapid Evolution and Modernization of Leading-edge Infrastructure Necessary to Enhance (STREAMLINE) Small Cell Deployment Act” on June 28. The bill aims to remove barriers to 5G broadband infrastructure deployment. Wireless carriers have complained to Congress and the Federal Communications Commission (FCC) that state and local siting policies and procedures are delaying expansion of broadband. A draft version of the bill released in November 2017 would have encroached upon a longstanding public power exemption to FCC pole attachment regulations. The introduced bill allows for market-based pole attachment fees, but it still contains provisions that may be of concern, such as strict timelines for processing pole attachment applications. Sen. Thune has said the Senate Commerce Committee could hold a hearing on the bill in July.

 

Clean Power Plan Held in Abeyance, Likely for the Last Time

 

On June 26, the D.C. Circuit Court of Appeals issued a 60-day abeyance of the litigation challenging the Obamaera Clean Power Plan, with several concurrences indicating that further extensions will not be granted. Two judges gave notice that they would not grant further abeyances, and two chastised EPA for using the Supreme Court stay to avoid the legal responsibility to issue a new regulation. The order is the fifth temporary delay since the Trump Administration took office, and EPA will be required to give updates to the court every 30 days.

 

Justice Kennedy Announces Retirement, Political Clash to Upset Senate Calendar

 

On June 27, moderate Supreme Court Justice Anthony Kennedy announced that he would retire from the bench at the end of July. Senate Majority Leader Mitch McConnell quickly announced that the Senate would act to confirm whoever President Trump nominates prior to November’s election, meaning the debate on a nomination will take precedence over other items on the Senate’s agenda. If Sen. John McCain (R-AZ) remains away from Washington for health reasons, a single Republican “no” vote could sink a nomination in the closely divided Senate.

 

6-2018 NEPPA Newsline

In This Issue:

  • Energy Policy: White House directs DOE to take “immediate steps” to protect coal and nuclear, FERC announces PURPA review; Senate committee advances hydro bills…

  • Appropriations: Energy and Water Bills advance…

  • Cyber Security: DOE releases cyber security strategy...

  • Environmental Policy: House panel considers New Source Review reform…

 

White House Directs DOE to Take Steps to Protect Coal and Nuclear

 

A leaked draft White House memo foreshadowed a June 1 order from the President to have the Department of Energy (DOE) take “immediate steps” to shore up coal and nuclear power plants at risk of retirement, in what is being called a “Strategic Electric Generation Reserve.” The memo relies on both Sec. 202 of the Federal Power Act and the Defense Production Act, authorities related to emergencies and national security, respectively. However, it is not clear what exactly DOE will do in response to the memo and order.

 

As recently as May 25, news outlets had reported that the National Security Council (NSC) planned to evaluate the reliability risk of coal and nuclear plant retirements and “take the lead” on developing solutions for grid reliability. The President’s action appears to take up the mantle of national security while keeping DOE in the lead. It is also unclear whether there will be a role for the Federal Energy Regulatory Commission (FERC), which is still grappling with a docket on resilience that resulted from DOE’s previous attempt to keep coal and nuclear plants online by mandating cost recovery in organized markets. The current effort appears to be broader in scope, rather than tailored to market regions.

 

The leaked memo hits at the center of concerns over the ability of baseload generation, such as coal and nuclear, to remain competitive in regions where organized markets favor cheap natural gas. However, experts dispute that an acute reliability or national security threat exists outside these regions.

 

FERC Announces PURPA Review

 

At the May 17 FERC open meeting, Chairman Kevin McIntyre announced the Commission will be conducting a review of the Public Utility Regulatory Policies Act (PURPA). The Commission had already been engaged in a review of the law, but McIntyre’s announcement intends to “reenergize” the effort now that a full complement of Commissioners is on board. McIntyre did not provide a timetable or scope of the review, but said the staff would be tasked with identifying what, if any, actions the Commission can take to improve and update its practices with respect to PURPA. Commissioners Chatterjee and Glick noted at the FERC meeting that any major changes would need to come from Congressional action.

 

Senate Committee Passes Hydro, WAPA Transparency Bills

 

On May 17, the Senate Energy and Natural Resources Committee advanced 22 pieces of legislation including several hydro-related bills. The water power bills contain policy updates that would require FERC to study the benefits and challenges of requiring licenses for small non-powered dams; extend the deadline to begin construction on newly licensed dams up to six additional years; and promote the development of small conduit hydropower facilities by requiring FERC to make an eligibility determinization within 30 days and scrapping the five-megawatt limit.

 

Energy & Water Appropriations Bills Advance through Committee

 

On May 24, the Senate Appropriations Committee marked up and passed its FY19 funding bill. The $43.8 billion bill funds DOE, U.S. Army Corps of Engineers, and the Bureau of Reclamation. The measure represents a $566 million increase over FY18 spending levels, and $7.2 billion more than the President’s request. Energy Efficiency and Renewable Energy programs receive a sizable increase from President Trump’s request, at $2.3 billion, and the Office of Science, which funds basic energy research, is also increased from FY18 levels. Nuclear Energy research and development is funded at the same level as FY18, at $1.2 billion. The Bureau of Reclamation, funded at $1.49 billion, receives a $500 million increase from the President’s budget.

 

The House advanced its version of the Energy and Water bill through committee May 16 and is set to pass it June 13. The bill includes $267.7 million in funding to support efforts for nuclear waste disposal at Yucca Mountain, $100 million above the budget request. Also, per the administration’s request, the Office of Electricity Delivery and Energy Reliability would be split to include a new office, “Cybersecurity, Energy Security, and Emergency Response (CESER),” at a combined increase of $41 million from last year. The bill maintains Advanced Research Projects Agency – Energy (ARPA-E) and the Innovative Technologies Loan Guarantee program – two items that were targeted for elimination in the President’s budget.

 

DOE Releases Cyber Strategic Plan

 

On May 14, DOE released a five-year strategic plan to mitigate cyber vulnerabilities and risks to the electric grid. The plan will be the guiding document for the new Office of Cybersecurity, Energy Security, and Emergency Response (CESER). It emphasizes that cyber threats are increasing faster than the energy sector can respond, and therefore DOE intends to “develop game-changing solutions that will create inherently secure, resilient, and self-defending energy systems.” The plan sets three broad goals: enhance preparedness, coordinate response actions, and expedite development of more resilient systems. Increasing utility participation in the cybersecurity risk information sharing program (CRISP), operated by the Electricity Information Sharing and Analysis Center (E-ISAC), is a central plank in the strategy, as are investing in technological applications that can detect intrusions early and working trainings to reduce risk of human error.

 

House Environment Panel Considers New Source Review Reform

 

On May 16, the House Energy and Commerce Subcommittee on the Environment held a hearing on draft legislation to reform the Environmental Protection Agency’s (EPA’s) New Source Review program under the Clean Air Act, which governs new and modified emissions sources for a range of pollutants. With a few exceptions, support for the draft broke down along party lines, with Republican members speaking to the program’s unintended disincentive to install new pollution controls while Democrats generally said the program was not “unworkable” but that companies simply do not like how it works. EPA Assistant Administrator for Air and Radiation Bill Wehrum testified on EPA’s actions to reform its internal guidance and interpretations of the program, and in the question and answer period he praised the discussion draft for aligning the definition of “modification” with other statutory definitions. Kirk Johnson of NRECA testified in the second panel, which included state officials, academics, and other industry representatives.

 

5-2018 NEPPA Newsline

In This Issue:

  • Energy Policy: Energy and Commerce Panel Hears from FERC Commissioners in Broad Hearing…
  • Appropriations: Perry Testifies on FY19 Budget for Department of Energy (DOE), Embattled EPA Administrator Testifies Before Two House Subcommittees…
  • Cyber Security: Energy Subcommittee Marks Up Four Cyber Bills...
  • Environmental Policy: Agencies Sign Agreement to Streamline Environmental Reviews…

 

Energy and Commerce Panel Hears from FERC Commissioners in Broad Hearing

 

On April 17, the House Energy and Commerce Subcommittee on Energy hosted all five members of the Federal Energy Regulatory Commission (FERC) for a wide-ranging hearing on energy issues and the agency’s budget for FY19. Top themes included cyber security of the grid, market structures, the Public Utility Regulatory Policies Act (PURPA), and the transformation of the industry.

 

Members of Congress thanked the Commissioners for their thoughtful response to the Department of Energy’s Notice of Proposed Rulemaking (NOPR) on resilience, but had differing areas of concern about organized markets. For example, Ranking Member Bobby Rush (D-IL) expressed concerns about the NOPR favoring coal and nuclear power while “disrupting” markets, while full Committee Chairman Greg Walden (R-OR) lamented the markets’ inability to differentiate between varying attributes of generation sources, which is becoming increasingly important.

 

On the interplay between markets and state public policy, Commissioner Powelson said he would be evaluating state policies based on their impact to wholesale markets, and Commissioner Chatterjee suggested that the Commission’s ability to respond to these challenges is constrained by statute – noting that Congress could act to change those constraints. Commissioner Glick emphasized that the Federal Power Act gives states authority over resource decisions.

 

In the question and answer period, all five Commissioners indicated they thought PURPA needed reform, but did not give details on how they might pursue such reform or how Congress could amend the act.

 

Perry Testifies on FY19 Budget for Department of Energy (DOE)

 

Secretary Rick Perry testified on both sides of the Capitol regarding his agency’s FY19 budget request. On April 11, he appeared before the Senate Appropriations Subcommittee on Energy and Water. Perry defended President Trump’s FY19 budget request, despite members from both sides of the aisle expressing concern over the proposed severe cuts to science and research and development programs. On April 12, Secretary Perry testified before the House Energy and Commerce Committee. Many of the same concerns about sharp cuts to the Office of Science – especially affecting National Labs – were brought before the Secretary. Cybersecurity was another topic on many members’ minds, and Perry took the opportunity to tout the DOE’s new Office of Cybersecurity, Energy Security and Emergency Response.

 

Embattled EPA Administrator Testifies Before Two House Subcommittees

 

On April 26, Environmental Protection Agency (EPA) Administrator Scott Pruitt appeared before two separate House Subcommittees in back-to-back hearings intended to address the agency’s FY19 budget request, but they became forums on recent controversies concerning Pruitt’s use of taxpayer funds and alleged misconduct.

 

At the first hearing, House Energy & Commerce Subcommittee on the Environment Chairman John Shimkus (R-IL) focused on Superfunds and largely steered clear of the controversies, but Full Committee Chairman Greg Walden (R-OR) said he was concerned that the agency’s agenda was being undermined by the headlines about Pruitt’s behavior. Ranking Member Paul Tonko (D-NY) and other Democrats expressed concern about the agency’s recent move to restrict the types of scientific studies EPA may rely on in future rulemakings, with Pruitt justifying the action by saying that EPA had gotten into the practice of relying on third-party summaries rather than studies with hard data.

 

Administrator Pruitt’s testimony focused on the agency’s progress toward environmental outcomes while removing red tape for companies. He also spoke to the numerous headlines, taking responsibility for some of the decisions he made while pushing back on “half-truths” in the media. The House Interior Appropriations Subcommittee met less than an hour after the conclusion of the Energy and Commerce hearing. There, Pruitt further noted that although he is still learning how to handle the agency, he is proud of the work that the Trump Administration is doing to relieve regulatory burdens. Several members questioned Pruitt on current allegations within the media as well as the agency’s decision to roll back air quality standards. Pruitt responded that he will continue to work with states to improve air quality, and he highlighted the agency’s intent to use the Water Infrastructure Finance and Innovation Act (WIFIA) to strengthen water infrastructure.

 

Energy Subcommittee Marks Up Four Cyber Bills

 

On April 18, the House Energy & Commerce Subcommittee on Energy marked up four bills related to cybersecurity and unanimously reported them to the full committee. One of the bills (H.R. 5174) would codify Secretary Perry’s new Office of Cybersecurity, Energy Security, and Emergency Response (CESER). Another bill (H.R. 5175) would help states improve the security of natural gas pipelines. Of interest to NEPPA, H.R. 5240 would have DOE provide training and technical assistance to utilities to enhance their cybersecurity preparedness. This is similar to an existing pilot program between DOE and the American Public Power Association and the National Rural Electric Cooperative Association. The fourth bill, HR 5239, would create a voluntary testing program to identify products and technologies that are secure for the electric grid.

 

Agencies Sign Agreement to Streamline Environmental Reviews

 

Twelve federal agencies, including DOE and FERC, have signed a memorandum of understanding (MOU) to consolidate and expedite federal environmental reviews for permitting infrastructure projects. The MOU follows an Executive order issued by President Trump on Aug. 15, 2017 to streamline environmental reviews required under the National Environmental Policy Act (NEPA) for major infrastructure projects, those requiring multiple permits and approvals from federal agencies. One federal agency will take the lead for coordinating a single federal review, setting deadlines for other agencies and aiming to complete the review within a two-year period. The lead agency will also coordinate the concurrent completion of reviews, as opposed the current sequential process that can greatly extend the length of time of the process.

 

4-2018 NEPPA Newsline

In This Issue:

  • Energy Policy: FirstEnergy Solutions calls for emergency order…
  • Appropriations: Congress passes FY18 spending bill…
  • Cyber Security: Iranian hackers breach FERC, Industry Urges Changes to Supply Chain Standards...
  • Environmental Policy: EPA to reconsider vehicle emissions standards…
  • Broadband: House Subcommittee reviews broadband “barriers”…

 

FirstEnergy Solutions Calls for Emergency Order Days Before Bankruptcy

 

On March 29, FirstEnergy petitioned the Department of Energy (DOE) to use its emergency authority under Sec. 202(c) of the Federal Power Act to require PJM to enter into full recovery contracts with all plants in its footprint with 25 days of fuel on site. Such contracts would remain in effect for four years.

 

The petition cites pending retirements in the market as the emergency condition triggering the need for an exercise of 202 authority. The prior day, FirstEnergy had announced the sale or closure of three of its nuclear plants over the next three years.

 

The petition cites a study released by DOE’s National Energy Technology Laboratory (NETL) on March 27 that highlighted the role coal-generated power played during the “Bomb Cyclone” cold snap that gripped the east coast and significantly increased energy demand at the turn of the new year. The NETL analysis showed coal provided 55 percent of the incremental daily generation during the cold snap and claimed that without coal, energy shortages would have been likely.

 

The following weekend, FirstEnergy and related companies filed for bankruptcy, but noted that the filing did not extinguish their request for relief via the emergency order.

 

DOE may take emergency action under Sec. 202 without notice, hearing, or report on a temporary basis. PJM and trade associations have already weighed in questioning whether an emergency exists, and Secretary Perry has said the emergency order may not be the best way to avoid such an emergency, if one exists. However, President Trump has made comments indicating the Administration is taking a close look at the petition.

 

Congress Passes FY18 Omnibus Spending Bill

 

On March 23, Congress passed a massive omnibus spending bill, funding the entire government for FY18. The Energy and Water appropriations section of the omnibus received a sizeable boost from last year’s levels to $43.2 billion, with the Department of Energy (DOE) seeing across the board increases to the Office of Science, Office of Energy Efficiency and Renewable Energy and the Advanced Research Projects AgencyEnergy (ARPA-E), which was zeroed out in the Administration’s request. The Low-Income Home Energy Assistance Program (LIHEAP) received $3.6 billion, an increase of $250m million over last year. Controversial environmental riders were left out of the final package.

 

Iranian Hackers Breach FERC Systems

 

The Department of Justice (DOJ) indicted nine Iranian citizens alleging that since 2013, these individuals had engaged in large-scale cyber assault on hundreds of public and private entities, including the Federal Energy Regulatory Commission (FERC). Outside observers worry that some e-mails may have contained sensitive security information exchanged with employees at the North American Reliability Corporation (NERC), which could include information about grid vulnerabilities. In response to the indictments, FERC announced that it has taken “corrective action” to ensure “appropriate controls” are in place.

 

Electric Industry Urges Changes to FERC Supply Chain Standards

 

Utilities and trade associations, including the American Public Power Association, asked FERC to reconsider provisions of its proposed supply chain standards issued in January. An earlier draft standard was rejected by industry through NERC’s stakeholder balloting process in 2017 because it would have forced utilities to dictate requirements to technology vendors, like Microsoft. The final standards approved by NERC called for utilities to implement cyber security best practices for supply chains systems determined to have medium or high levels of risk. FERC issued a notice of proposed rulemaking (NOPR) on Jan. 18 to move towards approving these standards. However, FERC’s NOPR amended NERC’s proposal by expanding their scope to cover additional physical control and electronic monitoring systems and shortened the implementation period from 18 months to 12. The trade associations believe that applying the standards to these additional systems would effectively force utilities to negotiate with large tech vendors into achieving compliance – similar to what industry rejected last year. They argue that utilities lack the purchasing power to force large tech vendors to meet the standards and they are concerned they would be held liable to noncompliance fines for vendor behavior outside their direct control. Comments on FERC’s NOPR were due March 26.

 

EPA Reconsiders Vehicle Emissions Standards, Implications for EV Production

 

On Apr. 2, the Environmental Protection Agency (EPA) announced it would reconsider its Jan. 12, 2017 final determination that existing greenhouse gas (GHG) emissions standards for model year (MY) 2022-2025 lightduty vehicles are appropriate (a decision known as the Mid-Term Evaluation or MTE). The reconsideration paves the way for a rollback of GHG standards that would make automakers less likely to manufacture electric vehicles. EPA proposes to coordinate with the National Highway Traffic Safety Administration (NHTSA), the other federal agency with responsibility for automobile standards related to fuel economy. However, any rollback at the federal level would upend the One National Program of harmonized standards, brokered in 2012 and including California. California officials have said they will not consider loosening the existing standards.

 

House Subcommittee Considers Broadband Deployment

 

On March 13, the Senate Commerce Subcommittee on Communications, Technology, Innovation and the Internet held a hearing to consider how broadband deployment could be encouraged in a potential infrastructure bill. The panel heard from representatives from the telecom industry, as well as from Mike Romano of the Rural Broadband Association and Mayor Gary Resnick of Wilton Manors, FL who serves as Chair of the National League of Cities Information Technology and Communications Committee. Chairman Roger Wicker (R-MS) emphasized the importance of broadband expansion for the economic development of communities and said that “outdated rules” were holding back broadband deployment. Mayor Resnick impressed upon the committee that cities and municipalities are not standing in the way of broadband deployment, and that wireless carriers have refrained from investing in rural areas because such areas do not have a large enough customer base. He said that municipalities, residents, and businesses should not be asked to subsidize forprofit wireless carriers.

 

3-2018 NEPPA Newsline

In This Issue:

  • Energy Policy: FERC approves CASPR proposal, RTOs submit filings on resilience, FERC clears the way for storage in RTO markets…
  • Budget and Finance: Trump Administration releases FY19 budget, infrastructure plan, President Trump imposes tariffs on steel and aluminum imports…
  • Environmental Policy: EPA holds listening session on Clean Power Plan…

 

FERC Approves CASPR Proposal for ISO-NE

 

On March 9, the Federal Energy Regulatory Commission (FERC) approved ISO-New England’s proposal to address state public policy objectives with a second capacity auction known as Competitive Auction with Sponsored Policy Resources (CASPR). The CASPR proposal sets up a second capacity auction in which resources that clear the market can offer to accept payouts to exit the market and make way for “sponsored” resources that are supported by state laws in place as of Jan. 1, 2018.

 

Chairman McIntyre and Commissioner Chatterjee approved the order, which endorses the use of the Minimum Offer Price Rule (MOPR), while Commissioner LaFleur concurred with reservations about widespread use of the MOPR as a “standard solution,” and Commissioner Glick dissented in part, saying a better solution is to only use the MOPR to prevent buyer-side market power. The lack of consensus on the use of the MOPR means that its use as a standard solution did not gain a majority of votes, although it could set some precedent in other markets. Commissioner Powelson dissented from the order in its entirety, saying the new auction and the capacity market are at fundamental odds with one another and that the MOPR should apply to sponsored resources even after the first year.

 

While the outcome may be troubling for public power, Commissioner Glick’s partial dissent is reminiscent of former Chairman Bay’s approach. Commissioner Glick said, “a Commission policy of ‘mitigating,’ rather than facilitating, state public policy preferences places the Commission in a role that Congress never intended it to play.”

 

RTOs Submit Filings on Resilience

 

Separately, on March 9 RTOs submitted filings in response to FERC’s request for a report on the state of the markets’ “resilience” – itself a response to the Department of Energy’s proposal to allow coal and nuclear units to recover their full cost of service because of their “resiliency attributes.” Several other groups submitted general comments on the definition of resilience, which is commonly thought of as a system’s ability to withstand and recover from extreme weather events.

 

FERC Clears the Way for Storage in RTOs

 

FERC held a public meeting on Feb. 15 at which it unanimously approved a final rule requiring RTOs and ISOs to develop a regime of market rules that recognize the physical and operational characteristics of storage assets. The rule further specifies what the market regimes must address and provides the RTOs and ISOs nine months to submit their plans to FERC, with an additional three months before the changes must take effect.

 

Initially, FERC had planned to allow distributed energy resource allocators to participate in RTO/ISO markets. However, the Commission decided that it requires more information before finalizing those provisions. The Commission will host a technical conference on April 10 and 11 to inform a final decision on its distributed energy resource aggregation proposals.

 

Trump Administration Releases FY19 Budget, Infrastructure Plan

 

On Feb. 12, the President released his FY19 Budget Request along with a long-awaited infrastructure investment plan. Both proposals come on the heels of the passage of a large continuing resolution (CR) that extended current FY17 funding levels until March 23, nearly six months after the start of the FY18 fiscal year.

 

The proposal would give the Department of Energy a slight boost from FY17 enacted levels, mostly for nuclear security, and, similar to last year, decreases by over 30% the budget for the Environmental Protection Agency (EPA). Funding for Yucca Mountain was included, while the proposal eliminates the Title XVII Innovative Technology Loan Guarantee Program and the Low Income Home Energy Assistance Program (LIHEAP), as in last year’s proposal.

 

The infrastructure plan proposes a few different investment programs to encourage infrastructure development. The programs are mostly focused on surface transportation projects, but would make hydropower facilities eligible for a $100 billion program for infrastructure modernization and rehabilitation. The proposal also includes a rural infrastructure incentives program, and government-run electric infrastructure projects would be eligible for funding. Several hearings on the infrastructure proposal have been held, but it appears to lack significant momentum in Congress due to cost considerations and concerns about shifting costs to state and local entities.

 

President Trump Imposes Tariffs on Steel, Aluminum Imports

 

On March 7, President Trump signed an order imposing 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports. The tariffs were first announced on March 1 and were met with opposition from many corners. Canada, America’s largest trading partner and largest source of imported steel, demanded the U.S. exempt its products from the tariffs, which the order temporarily does. The European Union has threatened retaliation on U.S. exports if the administration follows through, prompting talk of a “trade war.”

 

EPA Holds Listening Session on Clean Power Plan in Kansas City, MO

 

On Feb. 21, the Environmental Protection Agency (EPA) held a “listening session” in Kansas City, MO, to hear interested parties’ thoughts on the agency’s intention to repeal the Clean Power Plan. More than 180 witnesses signed up and spoke on the plan.

 

2-2018 NEPPA Newsline

In This Issue:

  • Tax Reform: Congress passes final tax reform legislation…
  • Energy Policy: DOE grants extension on grid pricing NOPR, House passes two hydro bills, Senate holds hearing on several energy storage bills…
  • Environmental Policy: EPA requests comment on re-proposing the Clean Power Plan…

 

Congress Passes Final Tax Reform Legislation

 

On Dec. 20, the House of Representatives passed the final, conferenced tax reform bill by a vote of 224-201, with several Republicans joining all Democrats in opposition. President Trump signed the bill on Dec. 22.

 

The final bill preserves the general exemption for municipal bond interest, though it ends tax-exempt advance refunding bonds after Dec. 31, 2017. NEPPA urged its Senate delegation against keeping the provision to eliminate tax-exempt advance refunding bonds in its final bill. Some members of Congress have already suggested that there will be a “technical corrections” bill in 2018 to address language and drafting errors contained in the final tax reform bill, and such a bill could be a vehicle for other changes.

 

The bill does not address renewable tax credits, thereby preserving the 2015 agreement that extended the wind production tax credit and solar investment tax credit and their respective phasedown schedules. The tax credit for electric vehicles is also not affected by the bill, a major win for NEPPA after expressing their concerns with the earlier versions of the bill calling for its removal. The bill does not address credits for fuel cells, geothermal, and other renewable technologies that were left out of the 2015 legislation, the so-called “orphan” credits. Senate Finance Committee Chairman Orrin Hatch (R-UT) has already introduced legislation extending those credits, along with the nuclear production tax credit, and indicated that he intends to move the package in early 2018.

 

DOE Grants Extension on Grid Pricing NOPR

 

On Dec. 7, Kevin McIntyre was sworn in as Chairman of the Federal Energy Regulatory Commission (FERC) and immediately filed a request for a 30-day extension from the Department of Energy (DOE) regarding its directive to allow coal and nuclear plants to recover their full cost of service in most organized markets. The additional time is necessary for new commissioners to come up to speed on the voluminous comment record, McIntyre argued in his request. DOE Secretary Perry granted the request late Dec. 8 in a letter that reiterates the urgency of FERC action on the proposal. FERC will now have until Jan. 10 to act on the proposal, which it can accept, reject, or modify. The request for extension may indicate that Chairman McIntyre is cool to providing support for these generators through an interim plan, which had been floated by Commissioner Neil Chatterjee as acting Chairman.

 

House Passes Two Hydro Bills

 

On Dec. 12, the House of Representatives passed by voice vote two bills to promote hydropower development. The Promoting Hydropower Development at Existing Nonpowered Dams Act (H.R. 2872) would allow FERC to make licensing requirement exemptions for hydropower projects at existing dams. The Promoting Closed-Loop Pumped Storage Hydropower Act (H.R. 2880) would promote closed-loop pump storage projects, connected to reservoirs, over a free-flowing natural waterway. The bill would limit FERC’s authority to only impose licensing condition that are necessary to protect public safety; or are reasonable, economically feasible, and essential to protect fish and wildlife resources. Although the bills were seen as non-controversial at the time of the vote, last-minute negotiations altered the bill in ways that concern APPA and the National Hydropower Association, and negotiations continue as the bills move to the Senate.

 

Senate Holds Hearing on Several Energy Storage Bills

 

On Dec. 5, the Senate Energy and Natural Resources Subcommittee on Energy held a hearing on several energy storage bills. Witnesses included Sen. Thom Tillis (R-NC) and the DOE Undersecretary for Management and Performance, Mark Menezes. Throughout the hearing, Mr. Menezes stated that national security is a top priority for DOE. Sen. Ron Wyden (D-OR) noted that his bill, the Reducing the Cost of Energy Storage Act (S. 1876), would help “get technology to the grid” if complemented with his tax code proposals. Sen. Angus King (I-ME) later questioned if FERC could respond to the DOE directive regarding grid resilience and pricing with rules relating to energy storage, since it can strengthen the grid. Menezes responded that the NOPR was written generally for fuel, but said that it could accommodate storage if the device being used met the overall resiliency qualifications.

 

EPA Requests Comment on Re-Proposing the Clean Power Plan

 

On Dec. 19, the Environmental Protection Agency (EPA) released an Advance Notice of Proposed Rulemaking (ANPR) calling for public comment on a potential re-proposal of the Clean Power Plan. The ANPR makes further indications that any new rule will be focused on only measures that can be undertaken at individual units, rather than the fuel-switching envisioned by the previous Administration, and that responsibility for setting a performance standard will be left to the states, not EPA (the prior Administration had set targets for each state). It also opens the door to EPA issuing a new Endangerment Finding focused on power plants; the existing finding assesses the danger from automobile emissions.

 

1-2018 NEPPA Newsline

In This Issue:

  • Tax Reform: Congress passes final tax reform legislation…
  • Energy Policy: DOE grants extension on grid pricing NOPR, House passes two hydro bills, Senate holds hearing on several energy storage bills…
  • Environmental Policy: EPA requests comment on re-proposing the Clean Power Plan…

 

Congress Passes Final Tax Reform Legislation

 

On Dec. 20, the House of Representatives passed the final, conferenced tax reform bill by a vote of 224-201, with several Republicans joining all Democrats in opposition. President Trump signed the bill on Dec. 22.

 

The final bill preserves the general exemption for municipal bond interest, though it ends tax-exempt advance refunding bonds after Dec. 31, 2017. NEPPA urged its Senate delegation against keeping the provision to eliminate tax-exempt advance refunding bonds in its final bill. Some members of Congress have already suggested that there will be a “technical corrections” bill in 2018 to address language and drafting errors contained in the final tax reform bill, and such a bill could be a vehicle for other changes.

 

The bill does not address renewable tax credits, thereby preserving the 2015 agreement that extended the wind production tax credit and solar investment tax credit and their respective phasedown schedules. The tax credit for electric vehicles is also not affected by the bill, a major win for NEPPA after expressing their concerns with the earlier versions of the bill calling for its removal. The bill does not address credits for fuel cells, geothermal, and other renewable technologies that were left out of the 2015 legislation, the so-called “orphan” credits. Senate Finance Committee Chairman Orrin Hatch (R-UT) has already introduced legislation extending those credits, along with the nuclear production tax credit, and indicated that he intends to move the package in early 2018.

 

DOE Grants Extension on Grid Pricing NOPR

 

On Dec. 7, Kevin McIntyre was sworn in as Chairman of the Federal Energy Regulatory Commission (FERC) and immediately filed a request for a 30-day extension from the Department of Energy (DOE) regarding its directive to allow coal and nuclear plants to recover their full cost of service in most organized markets. The additional time is necessary for new commissioners to come up to speed on the voluminous comment record, McIntyre argued in his request. DOE Secretary Perry granted the request late Dec. 8 in a letter that reiterates the urgency of FERC action on the proposal. FERC will now have until Jan. 10 to act on the proposal, which it can accept, reject, or modify. The request for extension may indicate that Chairman McIntyre is cool to providing support for these generators through an interim plan, which had been floated by Commissioner Neil Chatterjee as acting Chairman.

 

House Passes Two Hydro Bills

 

On Dec. 12, the House of Representatives passed by voice vote two bills to promote hydropower development. The Promoting Hydropower Development at Existing Nonpowered Dams Act (H.R. 2872) would allow FERC to make licensing requirement exemptions for hydropower projects at existing dams. The Promoting Closed-Loop Pumped Storage Hydropower Act (H.R. 2880) would promote closed-loop pump storage projects, connected to reservoirs, over a free-flowing natural waterway. The bill would limit FERC’s authority to only impose licensing condition that are necessary to protect public safety; or are reasonable, economically feasible, and essential to protect fish and wildlife resources. Although the bills were seen as non-controversial at the time of the vote, last-minute negotiations altered the bill in ways that concern APPA and the National Hydropower Association, and negotiations continue as the bills move to the Senate.

 

Senate Holds Hearing on Several Energy Storage Bills

 

On Dec. 5, the Senate Energy and Natural Resources Subcommittee on Energy held a hearing on several energy storage bills. Witnesses included Sen. Thom Tillis (R-NC) and the DOE Undersecretary for Management and Performance, Mark Menezes. Throughout the hearing, Mr. Menezes stated that national security is a top priority for DOE. Sen. Ron Wyden (D-OR) noted that his bill, the Reducing the Cost of Energy Storage Act (S. 1876), would help “get technology to the grid” if complemented with his tax code proposals. Sen. Angus King (I-ME) later questioned if FERC could respond to the DOE directive regarding grid resilience and pricing with rules relating to energy storage, since it can strengthen the grid. Menezes responded that the NOPR was written generally for fuel, but said that it could accommodate storage if the device being used met the overall resiliency qualifications.

 

EPA Requests Comment on Re-Proposing the Clean Power Plan

 

On Dec. 19, the Environmental Protection Agency (EPA) released an Advance Notice of Proposed Rulemaking (ANPR) calling for public comment on a potential re-proposal of the Clean Power Plan. The ANPR makes further indications that any new rule will be focused on only measures that can be undertaken at individual units, rather than the fuel-switching envisioned by the previous Administration, and that responsibility for setting a performance standard will be left to the states, not EPA (the prior Administration had set targets for each state). It also opens the door to EPA issuing a new Endangerment Finding focused on power plants; the existing finding assesses the danger from automobile emissions.

 

12-2017 NEPPA Newsline

In This Issue:

  • Energy Policy: Hydropower bill advances along party lines, Congressional interest in disaster recovery intensifies, House committee holds hearing on Energy Star…

  • Tax Reform: House passes sweeping reform, Senate up next…

  • Personnel: Glick and McIntyre confirmed…

 

Hydropower Bill Passes the House

 

On Nov. 8, the House passed H.R. 3043, the Hydropower Policy Modernization Act, by a 257-166 vote. Sponsored by Rep. Cathy McMorris Rodgers, (R-WA), the bill designates the Federal Energy Regulatory Commission (FERC) as the lead agency for hydropower permitting, includes hydropower in the federal definition for renewable energy, and streamlines hydropower licensing by allowing FERC to set a schedule for federal approvals. NEPPA has long advocated for hydropower licensing reform, given the unreasonably lengthy process to relicense even small hydropower projects, and shared its support for the bill.

 

Environmentalists and some Democrats expressed concern that the bill diminishes the role of state resource agencies, and the House Energy & Commerce Committee searched for a bipartisan compromise after passing the bill by a voice vote in committee. Yet such a compromise never materialized before the bill passed the House floor, and the bill passed mostly along party lines with only twenty-six Democrats supporting it. The bill now moves to the Senate, where chances of action on this measure as a stand-alone bill are slim. A bipartisan version of hydropower licensing reform is included in S. 1460, the Senate energy bill, which is awaiting consideration but not expected to advance this year.

 

Committees Hear Testimony on Puerto Rico Recovery

 

Several congressional committees held hearings this month on the government response to hurricanes, particularly the vulnerability of the grid during and after such disasters. On Nov. 2, the House Energy and Commerce Subcommittee on Energy heard from the Department of Energy (DOE) and the U.S. Army Corps of Engineers on the recovery effort and the toll recent disasters have taken on the energy grid in Puerto Rico, including the controversial Whitefish Energy contract. Based in Interior Secretary Ryan Zinke’s rural hometown, Whitefish Energy was awarded a $300 million contract to restore power to Puerto Rico, which raised many flags because of the company’s relative lack of experience and workforce.

 

On Nov. 7, the House Natural Resources Committee held a hearing on Puerto Rico’s hurricane recovery efforts. Two key invited witnesses for the hearing, however, declined to participate. Ricardo Ramos, the executive director of Puerto Rico’s Electric Power Authority (PREPA), and Carmen Yulin Cruz Soto, mayor of San Juan, did not appear to deliver testimony citing their inability to be away at such a “critical time.” Chairman Rob Bishop (R-UT) said that he was “very disappointed” that PREPA was not present and discussed its history of management problems prior to the hurricane’s devastation. “There has to be some kind of oversight, there has to be some kind of transparency, so a situation like Whitefish does not occur again,” Bishop said.

 

On Nov. 14, three committees held hearings on the government response to major hurricanes of 2017, two focusing heavily on the ongoing concerns about the response in Puerto Rico, still without power weeks after the hurricanes hit. The Senate Energy and Natural Resources Committee heard testimony from the governors of Puerto Rico and the U.S. Virgin Islands as well as Ricardo Ramos, CEO of the Puerto Rico Electric Power Authority (PREPA). The House Natural Resources Committee heard from both governors as well, and the House Energy & Commerce Subcommittee on the Environment held a broad hearing on the environmental impacts of the storms. House Resources Committee documents showed PREPA ignored advice from its attorneys to cap the amount of the Whitefish contract and preserve other rights for the utility. Another theme of the hearings centered on Puerto Rico’s request for over $90 billion in supplemental disaster appropriations, nearly twice what has already been spent to respond to the multiple natural disasters of 2017.

 

House Holds Hearing on the Future of the Energy Star Program

 

On Nov. 7, the House Energy and Commerce Subcommittee on Energy held a hearing to consider reforms to the Environmental Protection Agency’s (EPA) Energy Star program. Energy Star is a voluntary program that consumers and businesses can use to make decisions regarding energy efficiency products. Since its inception in 1992, the EPA has been the lead agency for developing guidelines and standards for the program. The discussion draft of the “Energy Star Reform Act of 2017” proposes making DOE the lead agency while giving them the power to bring in the EPA as needed, among other things. Several witnesses argued against DOE assuming primary control. President of the Alliance to Save Energy, Kateri Callahan, testified that due to the already effective, trusted brand accepted throughout the U.S., the subcommittee should avoid “fixing” what is not broken. In contrast, Joseph McGuire of the Association of Home Appliance Manufactures argued that DOE’s “expertise is fair, predictable, open and transparent.” All witnesses opposed eliminating Energy Star, first proposed in the Trump Administration’s FY18 Budget.

 

House Passes Sweeping Tax Reform Bill; Senate Finance Committee Advances Bill

 

On Nov. 16, the House of Representatives passed sweeping tax reform legislation by a vote of 227-205. Thirteen Republicans joined all Democrats in opposing the bill. The bill would cut corporate and personal tax rates, and it removes many deductions and credits. The bill does not remove the deduction for municipal bond interest, but ends the deduction for interest on advanced refunding bonds. The bill also ends the credit for electric vehicles, reduces the value of the wind production tax credit, and terminates the permanent solar investment tax credit.

 

Meanwhile, the Senate Finance Committee advanced its tax reform proposal along party lines. The Senate proposal also cuts corporate and individual tax rates, preserves the deduction for municipal bond interest, and ends the deduction for advanced refunding bonds. Unlike the House version, it makes no changes to the production and investment tax credits for wind and solar technologies, and also does not remove the credit for electric vehicles. However, Republican senators included a provision that would repeal the individual health insurance mandate, dramatically complicating the already fraught politics involved in obtaining support for the bill and raising the stakes of passage further. Several Republican Senators remain undecided on the bill as it advances to the floor for a vote as soon as this week. NEPPA sent a note to its Senate delegation urging removal of the advance refunding provision and expressing concern about removing the electric vehicle and renewables credits.

 

Glick and McIntyre Confirmed

 

FERC Nominees Rich Glick and Kevin McIntyre were confirmed by unanimous consent of the Senate on Nov. 2, bringing the Commission back to a full five members.

 

11-2017 NEPPA Newsline

In This Issue:

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

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

 

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

 

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

 

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

 

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

 

Political Feud Threatens Timely Confirmation of FERC Commissioners

 

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

 

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

 

Energy & Commerce Panel Advances Two Hydro Bills

 

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

 

Budget Resolutions Clear Path for Tax Reform

 

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

 

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

 

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

 

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

 

10-2017 NEPPA Newsline

In This Issue:

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

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

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

 

FERC Nominees Advance

 

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

 

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

 

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

 

“Powering America” Hearings Continue

 

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

 

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

 

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

 

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

 

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

 

Tax Plan Released

 

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

 

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

 

Trio of Storage Bills Introduced

 

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

 

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

 

9-2017 NEPPA Newsline

In This Issue:

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

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

  • Climate: Clean Power Plan pause extended...

 

New DOE Study Calls on FERC to Address Price Formation

 

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

 

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

 

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

 

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

 

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

 

Quorum Restored at FERC

 

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

 

Trump Issues Executive Order on Infrastructure

 

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

 

Clean Power Plan Pause Extended, New Source Rule Paused Indefinitely

 

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

 

8-2017 NEPPA Newsline

In This Issue:

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

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

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

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

 

House Holds First Hearings in “Powering America” Series

 

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

 

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

 

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

 

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

 

NRC Nominees Approved by Senate Committee, Head to Floor

 

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

 

Senate Committee Considers Energy Security

 

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

 

Senators Seek More Information on Cyber Protections at Nuclear Plants

 

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

 

Treasury Reconsiders “Political Subdivision” Rule

 

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

 

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

 

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

 

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

 

7-2017 NEPPA Newsline

In This Issue:

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

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

  • Municipal Finance: Ryan, pence talk tax reform…

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

 

D.C. Circuit Upholds PJM Capacity Performance Plan

 

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

 

Senate Energy and Natural Resources Committee Sends Nominees to Senate Floor

 

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

 

Hydropower Relicensing Reform Bill Clears House Subcommittee

 

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

 

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

 

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

 

“Crash Override” Poses Threat to Grid Security

 

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

 

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

 

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

 

Pence, Ryan Talk Tax Reform to Manufacturers

 

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

 

House Environment Panel Advances Spent Fuel Bill Favoring Yucca Mountain

 

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

 

U.S. to Withdraw from Paris Agreement

 

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

 

6-2017 NEPPA Newsline

In This Issue:

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

  • Budget: FY18 Budget released…

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

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

 

New Commission Nominees Tout States’ Rights in Confirmation Hearing

 

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

 

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

 

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

 

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

 

House Resources, Energy & Commerce

 

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

 

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

 

Trump Administration Issues FY18 Budget

 

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

 

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

 

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

 

President Issues Executive Order on Cyber Security

 

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

 

Chances for BAT Dim After House Hearing

 

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

 

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

 

5-2017 NEPPA Newsline

In This Issue:

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

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

  • Nuclear: Draft spent fuel bill gets hearing…

  • Municipal Finance: White House releases tax plan…

 

Hydro Relicensing, Other Bills Reintroduced

 

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

 

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


Perry Orders Review of Policies Affecting Energy Supply and Reliability

 

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


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

 

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

 

Senate Energy and Natural Resources Committee Considers Cyber Threat


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

 

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


DOE Issues Report on Strategic Transformer Reserve

 

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


House Committee Considers Nuclear Waste Legislation

 

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


White House Releases Tax Plan

 

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

4-2017 NEPPA Newsline

In This Issue:

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

 

FERC to Hold Technical Conference on State Policies in Eastern Markets

 

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

 

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

 

Challenge to FERC’s Delegating Order Dropped

 

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

 

Supply Chain Standard Fails at NERC

 

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

 

President Trump Releases “Skinny Budget” Proposing Sharp Cuts

 

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

 

Republican Health Care Plan Stalls in House

 

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

  

Infrastructure Hearings Proliferate with Hydro in the Spotlight

 

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

 

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

 

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

 

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

 

3-2017 NEPPA Newsline

In This Issue:

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

 

Bay’s Final Concurrence Leaves Roadmap for Public Power

 

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

 

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

 

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

 

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

 

FERC Moves to Facilitate Delegating Orders to Staff

 

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

 

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

 

Portman-Shaheen Energy Efficiency Bill Reintroduced

 

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

 

Gorsuch Nominated for Supreme Court

 

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

 

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

 

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

 

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

 

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

 

2-2017 NEPPA Newsline

In This Issue:

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

 

LaFleur to Lead FERC Without Quorum

 

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

 

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

 

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

 

FERC Issues Policy Statement Allowing Dual Cost Recovery for Storage

 

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

 

FERC Extends Deadline for Comments on Hydro License Terms

  

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

 

Presidential Transition has Rocky First Week

 

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

 

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

 

Speaker Outlines 200-Day Agenda, Including Infrastructure

 

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

 

Cabinet Members Vetted, Confirmed

 

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

 

Energy Department Releases QER 1.2 with Dire Warnings on Cyber

 

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

 

“Analog Control” Cyber Bill Reintroduced

 

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

 

Hultgren, Ruppersberger Circulate Municipal Bond Support Letter

 

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

 

1-2017 NEPPA Newsline

In This Issue:

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

 

Energy Bill Dies at End of 114th Congress

 

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

 

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

 

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

 

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

 

BED Discovers Grizzly Steppe Malware

 

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

 

Defense Auth Passes with EMP/GMD Language

 

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

 

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

 

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

 

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

 

Committee Leaders Named

 

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

 

Trump Nominates Members of Cabinet and Other Administration Posts

 

President-elect Trump has announced several key nominees:

 

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