The Federal Energy Regulatory Commission on July 15 unanimously opened a rulemaking that could lead to significant reforms in transmission planning, cost allocations and generator interconnection processes.
In the rulemaking, FERC will seek public comment on potential reforms in longer-term planning and cost-allocation processes, cost responsibility for network upgrades and “enhanced transmission oversight” over identifying and paying for new transmission lines.
FERC said the commission will look at requiring providers in planning regions to identify zones that have large renewables development potential and plan development to integrate renewable resources. In addition, FERC said it will examine cost allocation “in a manner that satisfies the commission’s cost-causation principle that costs are allocated to beneficiaries in a manner that is at least roughly commensurate with estimated benefits.”
Also, FERC will look into whether it should eliminate “independent entity variations that allow (organized wholesale markets) to use participant funding for interconnection-related network upgrades,” the commission said.
In a joint statement, FERC Chairman Richard Glick and Commissioner Allison Clements said current transmission planning and cost allocation processes are inadequate for a grid transitioning to greater reliance on renewable resources distant from load centers and onsite storage.
They said the status quo “may lead to an inefficient, piecemeal expansion of the transmission grid that would ultimately be far more expensive for customers than a more forward-looking, holistic approach that proactively plans for the transmission needs of the changing resource mix.”
They noted that of 750 GW of generation capacity in interconnection queues, nearly 700 GW are renewable resources, “providing every reason to believe that the dramatic shift toward renewable generation will only accelerate in the years ahead.”
In addition, Glick and Clements said current planning processes “do little to proactively plan for the resource mix of the future, including both commercially established resources, such as onshore wind and solar, as well as emerging ones, such as offshore wind.”
Cost allocation methods in current use result in consideration of reliability, economic and public policy requirements in isolation, resulting in higher costs and some customers “not paying their fair share,” they said.
“The participant funding approach to financing interconnection-related network upgrades will often mean that the interconnection customer(s) alone must pay for all—or the vast majority—of the costs of transmission infrastructure, even where it provides significant benefits to other entities,” Glick and Clements said.
The two commissioners added that the rulemaking would complement a joint federal-state task force FERC established June 17 with the National Association of Regulatory Utility Commissioners.
Comments will be due 75 days after the rulemaking is published in the Federal Register.
Chatterjee Likely On His Way Out
The Federal Energy Regulatory Commission’s July 15 meeting likely was the last one for outgoing Commissioner Neil Chatterjee, whose term expired June 30.
While Chatterjee can serve until the end of the current congressional session or until the Senate confirms a replacement, he said July 8 on Twitter that the commission’s July meeting “is likely to be my last. Tune in for what may be your last chance to (pretend to) laugh at my dad jokes.”
The commission does not plan to meet in August.
Murray: Bill Would Include Clean Energy Standard
A clean-energy standard would be included in a proposed budget resolution forming the basis for infrastructure, tax, health and education legislation that Senate Democrats plan to advance under filibuster-exempt budget reconciliation rules, Sen. Patty Murray (D-Wash.) said July 15.
Murray, who sits on the Senate Budget Committee, said the resolution that the committee will draft also would include “common-sense clean energy tax incentives.”
In addition, the resolution would include federal procurement of clean technologies, weatherization and building electrification funding, Murray’s office said.
“The provisions in our budget resolution will help meet President Biden’s goal to achieve 80 percent clean electricity and cut carbon emissions economy-wide by 50 percent by 2030, all while promoting environmental justice and creating good paying, union jobs,” Murray said.
Senate Budget Committee leaders reached agreement July 13 on the framework for a $3.5 trillion budget resolution.
Biden has proposed a clean-energy standard of 80-percent carbon-free power by 2030.
The legislation that would follow the budget resolution would be separate from a bill to advance a $973 billion infrastructure package negotiated by a bipartisan Senate group.
At a July 14 meeting with the Senate Democratic Caucus, Biden praised both the bipartisan infrastructure package and reconciliation-based legislation.
In remarks to governors and mayors July 14, Biden said “the only way to get it done is having two tracks.”
Legislation potentially in the mix for the infrastructure package includes a $100-billion-plus energy infrastructure bill spearheaded by Sen. Joe Manchin (D-W.Va.), chairman of the Senate Energy and Natural Resources Committee (see story below), as well as surface transportation bills passed by the House and reported out by the Senate Environment and Public Works Committee.
The White House’s fiscal year 2022 budget request proposed $307 billion over 10 years in expanded tax preferences for renewable energy, electric transportation, efficient buildings and the grid. These include new credits for transmission, low-carbon hydrogen production and generation from existing nuclear power plants.
In addition, the request called for eliminating $35 billion over 10 years in fossil-energy tax preferences that include repealing credits for enhanced oil recovery and oil and gas production from marginal wells; elimination of expensing for intangible drilling costs; repeal of oil, gas and coal percentage depletion allowances; and repeal of capital gains tax treatment for royalties.
Biden also has proposed increasing the corporate income tax rate from 21 to 28 percent.
Sen. Bernie Sanders (I-Vt.), chairman of the Senate Budget Committee, said “anybody who watches what’s going on in California, the West Coast today, what’s going on around the world, understands that if we do not get our act together in transforming our energy system away from fossil fuels that the planet, we’re going to be leaving our children and our grandchildren will be increasingly unhealthy and uninhabitable.”
Republican senators are unlikely to support the reconciliation package. Senate Minority Leader Mitch McConnell (R-Ky.) blamed the $1.9-trillion pandemic relief package that Congress passed in March for rising inflation, which the Labor Department said was up 5.4 percent in June, year over year.
“All thanks, in large part, to the Democrats’ half-baked spending spree from the springtime. And now they want an even more absurd, even more damaging summer sequel,” McConnell said.
Panel Reports Out Energy Infrastructure Bill
The Senate Energy and Natural Resources Committee on July 14 reported out a $100-billion-plus energy infrastructure bill to boost transmission expansion, fund technology demonstration projects, spur domestic production of critical minerals and plug orphaned oil and gas wells.
The committee approved Sen. Maria Cantwell’s (D-Wash.) amendment that would expand the Bonneville Power Administration’s borrowing authority by $10 billion.
Scott Simms, executive director of the Public Power Council, praised the increase for BPA, and pointed out that, “significantly, the legislation also includes, for the first time, important mechanisms for customer engagement and financial transparency.”
The committee also approved Cantwell’s amendment touching on Columbia River Treaty issues, including authorization of funds to build transmission lines “that directly or indirectly facilitate non-carbon emitting electric power transactions between the Western United States and Canada.”
Authorized funding would equal the “aggregated amount of the Canadian Entitlement” during the five years preceding the legislation being enacted into law.
In addition, Cantwell’s amendment authorized $100 million to rehabilitate the John W. Keys III Pump Generating Plant that lifts water from Lake Roosevelt to Banks Lake. According to the amendment, the authorized project’s purposes include boosting hydroelectric capacity and ensuring the availability of water for irrigation “in the event that Columbia River water flows from British Columbia into the United States are insufficient after Sept. 16, 2024.” After that date either the U.S. or Canada could unilaterally pull out of the treaty with 10 years notice.
The legislation also authorized $5 billion from fiscal years 2022 to 2026 for grants to utilities for hardening their systems against fire risk, including undergrounding, fire-resistant technologies, utility pole management, fuels reduction, and relocation or reconductoring of power lines. States and tribes would also be eligible for the grants.
Under the legislation, utilities that sell more than 4 million MWh of electricity per year would be required to match grants dollar for dollar. Utilities selling less than 4 million MWh would have to match one-third of grant dollars received.
The legislation carves out 30 percent of the authorized funds for grants to utilities selling below the 4 million-MWh threshold.
Grants would be capped at the amount utilities have spent in the previous three years on grid hardening measures.
The provision is based on legislation that Sens. Ron Wyden (D-Ore.) and Jeff Merkley (D-Ore.) introduced in March. At the committee’s July 14 meeting, Wyden warned that the Western fire season is likely to worsen over the summer.
“These are not your grandfather’s fires. They’re bigger, they’re hotter, they’re more powerful,” Wyden said.
He said more funding is needed for wildfire fuels reduction.
The committee reported the bill on a 13 – 7 vote. Sen. Joe Manchin (D-W.Va.), committee chairman, said “today’s vote is another critical step toward finalizing our bipartisan infrastructure package.”
Opposing the bill was Sen. John Barrasso (R-Wyo.), the committee’s ranking Republican, who objected to a provision authorizing the Federal Energy Regulatory Commission to override states in permitting interstate transmission lines.
The legislation would authorize FERC to approve proposed interstate lines or lines providing interregional benefits if state commissions have denied or not acted on permit applications within a year. FERC’s authority to override state regulators would apply in “national interest” corridors designed by the Energy Department.
Barrasso also said “we are told that, prior to floor consideration, Majority Leader (Charles) Schumer is going to turn these authorizations into mandatory appropriations.”
Among other provisions, the bill would authorize $8 billion over five years to demonstrate hydrogen production, processing, storage and end-use.
The bill includes $4.675 billion for grants to plug and reclaim orphaned oil and gas wells through fiscal year 2030. For fiscal year 2022, the bill would authorize $3.5 billion for weatherization assistance and $550 million for energy efficiency and conservation block grants.
To support economically stressed nuclear power plants, plant operators could apply for per-MWh credits of up to $6 billion over five years that would be authorized in Manchin’s bill .
The bill would also authorize $3 billion for grants to finance demonstrations and commercial-scale plants for manufacturing advanced batteries and battery components as well as for battery recycling.
Republicans Call for Stone-Manning Withdrawal
Republicans on the Senate Energy and Natural Resources Committee on July 14 called on Biden to withdraw his nomination of Tracy Stone-Manning to direct the Bureau of Land Management.
In a letter to Biden, committee Republicans accused Stone-Manning of making “false and misleading statements in a sworn statement” to the committee in connection with a 1989 tree-spiking incident in Idaho’s Clearwater National Forest.
Meanwhile, on July 15, committee Republicans released a letter to the committee from a retired Forest Service special agent, Michael Merkley, who investigated the spiking incident.
In the letter provided by committee Republicans, Merkley wrote that after receiving a “target letter” from a federal grand jury, Stone-Manning hired an attorney “who negotiated a deal with the assistant United States attorney to gain immunity in exchange for her testimony against the other defendants. While she did provide testimony against her co-conspirators, she still was not forthright about the role she herself played in this case.”
Two men were convicted in the case following a 1993 trial.
Merkley wrote that Stone-Manning “was aware that she was being investigated in 1989 and again in 1993 when she agreed to the immunity deal with the government to avoid criminal felony prosecution.”
Stone-Manning in media reports said she believed she had notified authorities in 1989 when she sent a warning letter to the Forest Service about the spiking. She also said she wasn’t sure that the two men who asked her to send the letter had actually carried out the spiking.
Meanwhile, two former directors of the Bureau of Land Management on July 7 urged the Senate to confirm Stone-Manning.
In aJuly 7 op-ed in the Salt Lake Tribune, Neil Kornze and Jim Baca said “people across the spectrum see Tracy as someone they can work with, and the BLM’s ‘multiple use and sustained yield’ mandate requires exactly the type of collaborative approach that she has been known for throughout her career.”
Kornze and Baca said Stone-Manning “has amassed support and respect from a broad range of stakeholders. Westerners like Chas Vincent, a logger and former Republican state legislator from Montana, praise her ability to work with people on all sides of an issue to find workable solutions.”
Kornze headed the BLM from 2014 to 2017, while Baca was the bureau’s director from 1993 to 1994.
Former BLM Director Bob Abbey has said Stone-Manning should withdraw from consideration as a result of her activities in connection with the spiking incident. Abbey headed the BLM from 2009 to 2012.
The committee has not yet acted on Stone-Manning’s nomination, and Sen. Joe Manchin (D-W.Va.), the committee chairman, has not stated his position on her nomination.
Biden Talks with Putin on Cyber Attacks
Biden urged Russian President Vladimir Putin “to take action to disrupt ransomware groups operating on Russian territory,” a senior administration official said in describing a July 9 phone call between the two leaders.
An administration official who was not identified under briefing ground rules said that on his call with Putin, “Biden reiterated that the United States will take necessary action to defend its people and its critical infrastructure in the face of this continuing challenge.”
The official added “our evaluation of Russia’s actions would take time and play out over time. The president said six months or more.”
The official also said strengthening cyber defenses and working with allies are part of a “broad campaign” that “won’t have an immediate on-off effect like a light switch, but we’re going to stay on top of this over a period of time and remain focused on it.”
In response to actions, the official said the U.S. would not “telegraph” responses to cyberattacks. “Some of them will be manifest and visible, some of them may not be. But we expect those to take place, you know, in the days and weeks ahead.”
Following his summit meeting with Putin in Switzerland last month, Biden said he warned the Russian leader that energy and 15 other critical infrastructure “should be off limits to attack—period—by cyber or any other means.”
The official spoke following a ransomware attack earlier this month on Kaseya, a network-management firm.
Financial Board to Study Climate Risk
A federal council overseeing the U.S. financial system will assess climate-related risks to financial stability, Treasury Secretary Janet Yellen said July 11.
Speaking at a global climate conference in Venice, Italy, Yellen said the Financial Stability Oversight Council, which she chairs, also will study “disclosure of climate-related financial risks.
“This will complement the work of the [Securities and Exchange Commission], which is currently reviewing existing guidance on climate-related financial disclosures.”
Yellen said the council’s work will carry out Biden’s May 20 executive order directing federal agencies to develop plans for reducing climate-related risks to financial stability. The order directed Yellen, in her capacity as the council’s chair, to study stronger climate disclosure requirements and incorporate climate risks into supervision of regulated financial institutions.
Yellen also said she plans to convene the heads of multilateral development banks to press them to “align their portfolios with the Paris [climate] agreement and net-zero goals as urgently as possible. We also expect them to take steps to more effectively mobilize private capital so that developing countries can increasingly benefit from private-sector pledges to support climate-aligned and sustainable investments,” she added.
Multilateral development banks are international financial institutions that finance projects in developing countries.
House Panel Moves Energy Funding Bill
A House subcommittee on July 12 reported out a $53.23 billion energy and water funding bill for fiscal year 2022.
The House Appropriations Committee’s Energy and Water Subcommittee advanced the legislation to the full panel for markup, which was scheduled for July 16.
For the Department of Energy, the bill would provide $45.1 billion, up $3.2 billion from the 2021 level, and would boost energy efficiency and renewables research and development funding by nearly a third from $2.86 billion to $3.778 billion. The legislation would increase weatherization funding by $65 million, to $375 million.
Nuclear and fossil-energy R&D also would receive boosts, including an 11 percent increase for nuclear, to $1.68 billion, and 9.3 percent for fossil, to $820 million.
The bill would increase the Advanced Research Projects Agency-Energy budget by $173 million from 2021, to $600 million.
Mayors Press for Climate Funding
More than 140 mayors on July 13 pressed congressional leaders to include expanded funding for a broad range of energy, transportation and community “resilience” projects in infrastructure legislation.
In a letter to Democratic and Republican leaders, 146 mayors said “the climate and equity crises we face are interrelated and have been compounded by COVID-19, and therefore must be addressed through collaborative, holistic thinking and bold, innovative ideas.”
For energy, the mayors asked for $3.5 billion per year for energy efficiency block grants, increasing weatherization assistance to $7 billion annually over five years, $3.6 billion per year in additional funds for the State Energy Program, and $5.1 billion in fiscal year 2022 for low-income home energy assistance.
In addition, they proposed $100 billion over five years for a “clean energy and sustainability accelerator” to finance infrastructure projects. They also requested funds to retrofit all K-12 public schools and for electric-vehicle charging stations.
On community resilience, the mayors asked for $200 million for wildfire defense plans, $1 billion for flood mitigation and $3.5 billion for Western water infrastructure and drought resilience projects.
Signers include 45 Western mayors.
Groups Ask for Electricity Cost Study
Three groups representing industrial and residential customers on July 8 asked lawmakers to request a study exploring the cost and reliability impacts of organized power markets.
In a letter to leaders of House and Senate energy committees, the three groups asked for a Government Accountability Office study examining whether regional transmission organizations and independent system operators have delivered on what they called promises of lower-cost power.
The groups range across the political spectrum: the Electricity Consumers Resource Council representing industrial customers, the free-market Energy Choice Coalition and left-leaning Public Citizen.
In their letter, the groups said a study is needed to produce “objective data” that sheds light on conflicting assertions over organized market costs and benefits.
“Today, battles over wholesale competition are taking place across the country, principally between incumbent utilities and a growing chorus of consumers who want more choice, better access to new technologies, or less exposure to ratepayer risks associated with monopoly utilities,” the letter said.
The groups added, “If both sides are right about the economics—that is, if there are substantial production cost savings from RTOs at the wholesale level, yet retail customer bills in RTO regions continue to climb—then Congress, FERC, and the states owe it to consumers to understand the disconnect and address it.”
They noted that increased electrification, changing resource mixes and consideration of expanding organized markets warrant the study. “Regulators at FERC and the states cannot fulfill their statutory duties without understanding the fundamental relationship between market structure and the cost and reliability of electricity,” they said.
DOE Sets Cost Goal for Long-Duration Storage
Energy Secretary Jennifer Granholm announced a goal of reducing the cost of grid-scale, long-duration storage by 90 percent within the decade.
Long-duration storage is defined as more than 10 hours at a time, DOE said.
DOE’s “long duration storage shot” will consider a range of technologies, including electrochemical, mechanical, thermal, chemical carriers “or any combination” that can meet the target, DOE said.
States Take Sides in Youth Climate Suit
Six states, including Oregon, on July 7 filed a friend-of-the-court brief supporting litigation seeking a judgment that the U.S. energy system violates the constitutional rights of the 21 children and young adults who are plaintiffs in the suit.
Seventeen states, including Montana and Utah, on June 8 filed a motion to intervene in the case to oppose a settlement that might emerge in court-ordered talks between the Biden administration and plaintiffs. The talks were ordered May 13 by U.S. District Judge Ann Aiken of the Oregon District.
Following dismissal of the suit last year by the U.S. Court of Appeals for the 9th Circuit, the plaintiffs on March 9 filed a motion to amend their suit, first filed in 2015, to seek a “declaratory judgment” instead of a court order mandating sweeping policies to limit greenhouse-gas emissions.
In last year’s appeals court ruling, a three-judge panel of the 9th Circuit ruled 2 – 1 that it was “beyond the power of an Article III court to order, design, supervise or implement” remedies the plaintiffs sought at the time. On Feb. 10 this year, the full court rejected plaintiffs’ motion for an en banc rehearing and upheld the panel’s ruling.