PUHCA Repeal Still Out of Energy Bill

The U.S. Senate Energy and Natural Resources Committee made some relatively uncontroversial changes to the federal energy bill this week, including preserving regional regulation as well as trying to expand unregulated markets, increasing the potential for new nuclear power plants, and funding coal gasification development technology. ?I believe that we have successfully produced [an electricity] title that will allow each region of the country to develop plans best suited to it,? committee chair Senator Pete Domenici (R-New Mexico) told members May 19. ?And in the process, we have tried to incorporate protections against bad actors who would game the system to the detriment of ratepayers,? he added. Public Utility Holding Company Act repeal nearly made it into the revised bill, known as HR 6. However, members could not agree on repeal language, according to Domenici, who expressed hope that the language could be resolved next week. Senator Maria Cantwell?s (D-Washington) amendment to keep anyone who?s violated the Federal Power Act from trading electricity or being an electric utility director cleared the committee. Another Cantwell amendment allows FERC exclusive jurisdiction to determine whether termination payments required under contracts entered into prior to 2001 and since found to be fraudulent must be paid. The Enron-related language, however, is subject to change to address some senators? concerns. Rejected on a 15-7 vote was an amendment that would have required state utility regulators to conduct a rulemaking on whether power plants should be dispatched on the basis of efficiency rather than economics. Highlights of the new amendments include: Efficiency A 20 percent reduction in federal building energy consumption plus smart meters. Permanent authorization of the energy-saving performance contract program. $1.3 billion for weatherization. $50 million/year for state rebate programs for Energy Star appliances. Transmission Approving an Electricity Reliability Organization that will establish rules for grid operation and may penalize violators. Providing limited federal backstop authority for siting in areas designated as ?national interest transmission corridors.? Allowing FERC eminent domain. Making regional transmission organizations voluntary. Terminating FERC?s standard market design rulemaking. Coal Authorization of $1.6 billion over eight years to develop advanced coal technologies, with 80 percent of the funds to go to gasification projects and the rest used for limiting pollutants and increasing thermal efficiency. Making coal mine leasing easier. The committee noted that coal is expected to provide 53 percent of power in 2025, up from 51 percent today. Hydrogen Transfer of hydrogen and fuel cell technologies from the Department of Energy to the private sector. A goal of enabling the private sector to make a commercialization decision on fuel cell vehicle hydrogen production by 2015. Nuclear Funding the proposed Yucca Mountain radioactive waste dump at $661 million, $10 million above the administration?s request. Directing DOE to select one or more aboveground sites to be ready in 2006 to accept high-level radioactive waste. Under discussion, but not in the current version, is adding incentives for new plants tied to a reduction in global warming by Senators John McCain (R-Arizona) and Joe Lieberman (D-Connecticut). Qualifying Facilities Making the must-buy provision relevant only in closed markets. Grandfathering in of existing QF contracts. These amendments were basically approved by members? staff and interested parties ahead of time, with little debate during the markup sessions. The meaty debates will likely come on the Senate floor next month. Governor Makes Specific Energy Bill Requests In a remarkably detailed letter to the U.S. Senate Energy and Natural Resources Committee in advance of the energy bill markup, Governor Arnold Schwarzenegger requested action on renewables, efficiency, liquefied natural gas jurisdiction, transmission financing, and hydrogen fuel infrastructure, among other issues. The May 13 letter outlines some of the administration?s policy that had recently only been hinted at. While the energy bill remains in flux, Schwarzenegger?s various recommendations include maintaining existing state authority over LNG siting. Other recommendations on key topics include: FERC Authority Supporting greater flexibility to issue refunds when ?energy sellers are found to have overcharged for power.? ?Clean? Coal Supporting research and development. Renewables Extending the production tax credit by 10 years. A tax credit for photovoltaics. Creating tradable tax credits for munis and other providers that do not benefit directly from tax credits. Efficiency Permanently authorizing energy-saving performance contracts. Preserving states? ability to set higher efficiency standards than the feds. Expanding the Energy Star program. Transmission Siting Amending the Public Utility Holding Company Act to more easily allow investors in areas that are not physically contiguous to their existing assets. In case the act is repealed, inserting language ensuring consumer safeguards. Designating a lead agency to expedite permitting by eliminating any redundant environmental reviews. Interstate Transmission Funding Eliminating language in current law that prohibits costs from being assigned to native load customers. Including new language authorizing federal transmission owners, such as the Western Area Power Administration, to accept third-party financial contributions for upgrading facilities. Hydrogen Providing a tax credit for hydrogen-based infrastructure projects.

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PUHCA Repeal Still Out of Energy Bill

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