Washington Energy Updates

    Contact: Carol Connors
Director of Government Relations
February 2014
  Power Grid Attack? - Former FERC Chairman Jon Wellinghoff publicly warned the week of February 3 that he believes a real terrorist assault occurred last April on PG&E's Metcalf substation in California, the Wall Street Journal reported. He was then chairman and investigated the incident, along with Pentagon officials and the FBI. Snipers fired into 17 transformers with semiautomatic weapons through a chain-linked fence, resulting in the leakage of thousands of gallons of oil and causing them to overheat. Grid operators scrambled to reroute power from elsewhere to keep the lights on. While the FBI, the lead agency in the investigation, does not believe at this time it was an act of terrorism, Wellinghoff is convinced that the attackers were professionals and were systematically trying to sabotage California's electricity grid. The shooters opened two 75 lb. manhole covers and cut fiber-optic cables, possibly to disable security cameras. They avoided shooting into the equipment where the bullets would cause an explosion and attract attention. If Wellinghoff's assumptions are correct, the vulnerability of the United States electrical infrastructure to physical attacks is very real. FERC Acting Chairman LaFleur issued a statement February 12 announcing that FERC and the North American Electric Reliability Corporation (NERC) will coordinate efforts on whether to issue a mandatory electric reliability standard to protect against physical threats to the U.S. power grid. She also requested from Congress on February 11carefully crafted legislation to exempt sensitive grid security data from Freedom of Information Act (FOIA) requests. FOIA allows outside sources to obtain information from federal agencies in an effort to keep to the government open and available to the public. With respect to cybersecurity incursions, the House Homeland Security Committee approved on February 5 H.R. 3696, the National Cybersecurity and Critical Infrastructure Protection Act of 2013 (NCCIP) to solidify authorities within the U.S. Department of Homeland Security (DHS) to address liability issues related to cybersecurity threats, remove information-sharing barriers and provide for continuous monitoring.

Climate Change Matters - President Obama is charging ahead to promote his June 2013 Climate Action Plan (CAP) to reduce U.S. greenhouse gas emissions by 2020 in the range of 17 percent below 2005 levels. The White House's Domestic Policy Council (DPC) has created a new deputy director post for climate policy headed by Rick Duke, who is also the associate director for energy and climate change at the Council on Environmental Quality. Duke's role is to implement the mitigation measures in the CAP and integrate the United States climate change actions into international efforts in this arena. Another change is that Ali Zaidi, the senior director for Cabinet Affairs, will return to the DPC as deputy director for energy policy with a strong focus on alternative fuels, foreign oil issues, R&D, and federal lands. Internationally, the Administration is preparing GHG emission targets to present to the United Nations in early 2015, ahead of UN Paris talks on climate. The White House is also urging France to support U.S. efforts to terminate public financing of many overseas coal facilities, as noted during French President Hollande's recent visit to Washington, DC. With regard to EPA's upcoming proposed regulations for existing power plants, some in the natural gas and business communities are arguing for broad brush standards to allow electric generating operators to use natural gas combined heat and power (CHP) and direct use of natural gas to comply, viewed as energy efficient. Further, is it also desirable by some for EPA to widen the opportunities to comply with whatever standards are adopted to reduce carbon emissions. The EPA draft regulations are due in June this year with final regulations to be issued in June of 2015 and state compliance plans ready by June of 2016. As concern grows about the economic impact of these regulations, twenty-two U.S. Senators sent a letter February 7 to President Obama urging him to consider the enormous costs to American consumers.

NARUC Winter Meeting Events - The National Association of Regulatory Utility Commissioners (NARUC) held their annual winter meeting in Washington, DC February 9 - 12. It was widely attended by state utility commissioners and staff, legislators, federal officials and lobbyists and many key energy issues are topics for panel discussions-distributed generation, smart grid, renewable energy development, energy efficiency, climate policy, and natural gas pipeline safety, among others. Invited to speak were five U.S. Senators-Alexander (R-TN), Landrieu (D-LA), Manchin (D-WVA), Pryor (D-AR) and Murkowski (R-AK). They addressed pending energy legislation and issues and the chances of congressional action on them in 2014, a midterm election year. Senator Murkowski, ranking member of the Senate Energy and Natural Resources Committee, urged EPA to collaborate with FERC and NERC to analyze the impact its new draft regulations for power plants will have on electric grid reliability, particularly in light of the recent "polar vortex" and other cold weather episodes. She emphasized that coal plants, the primary targets for closures to reduce carbon emissions, are critically needed during such weather events to sustain power. In closing, Murkowski released a white paper addressing the effects of environmental rules on baseload generation. Senator Manchin is seeking congressional hearings on electric reliability impacts due to EPA rules. He is concerned that limiting fuel choices during bad weather by forcing coal plant retirements is especially risky now because natural gas-fired generation has faced infrastructure constraints and price spikes this winter. Senator Alexander supports permanently eliminating the tax credit for wind energy and channeling the savings into research and development for clean coal, arguing that traditional fuels are more reliable than intermittent renewables.

Camp Tax Reform Move - Reliable sources claim that the tax-writing House Ways and Means Committee Chairman Dave Camp (R-MI) is ready and eager to unveil his comprehensive tax overhaul measure shortly after the House returns from its current congressional recess later this month. He wants to do so before President Obama releases his budget plan for the next fiscal year, which is scheduled for March 4. Rep. Camp has been delaying revealing his major tax reform proposal until he received reinforcement from the rank and file Republicans at the House GOP retreat in January. He thinks the time is politically ripe as well because he envisions tax reform as a key piece of an economic package promoting jobs and a strong economy, a positive approach embraced by the public, rather than dwelling on budget deficit issues. Meanwhile, Senator Ron Wyden (D-OR), the new Chairman of the tax-writing Senate Finance Committee, is still intent on pursuing tax extenders to include energy rather than major overhaul.

CCS Congressional Hearing - The House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing February 11 to investigate DOE's carbon capture and sequestration (CCS) programs. CCS is facing stiff scrutiny, since EPA's draft GHG emissions rule for new power plants proposes that they use CCS, seen as extremely costly and unproven. The Subcommittee members queried DOE officials about when DOE would spearhead a significant CCS demonstration project and when "second generation and transformational CCS technologies" would be available. Deputy Assistant Energy Secretary for Clean Coal Friedmann defended DOE's CCS research, highlighting that it has prepared an $8 billion loan guarantee solicitation and poured $9.4 billion into CCS investments, allegedly spurring private investment in emerging clean coal technologies.

Energy Efficiency - As mentioned in the WADE January news alert, the Shaheen-Portman legislation to provide incentives for building efficiency investments failed to pass in the Senate in 2013. However, it is likely to be reintroduced the week of February 24, 2014. A major change from the 2013 measure is the adoption of a provision from the Hoeven-Manchin bill that would repeal the ban of fossil fuel-generated energy use in new and renovated federal buildings. For that matter, Senator Shaheen has announced that approximately 10 new amendments would be added to her 2013 act. Currently, the other provisions are:

Streamlining Energy Efficiency in Schools - S.1084
Better Buildings Act of 2013 - S. 1191
Benchmarking - S. 1206
Data Centers
Low-Income Housing Retrofits
Energy Star Third-Party Certification
Green Building Certification Changes
Standards for Grid-Enabled Electric Water Heaters
The Sensible Accounting to Value Energy Act of 2013 (The SAVE Act) - S. 1106
Third Party Testing for Appliances


U.S. Senator Mary Landrieu (D-LA) - Senator Landrieu succeeded in landing the powerful chairmanship of the Senate Energy and Natural Resources Committee on February 12. This is the first time this Committee has been chaired by a woman. Her positions on a number of energy matters are a far cry from the former Committee Chairman, Ron Wyden (D-OR). She favors the construction of the Keystone XL oil pipeline, supports giving oil companies the right to export crude oil as well as natural gas, and wants to protect tax breaks or incentives for oil drilling, among other key issues.

Norman Bay Nominated for FERC Chair - President Obama nominated Bay on January 30 to replace former FERC Chairman Jon Wellinghoff. Bay is currently the Director of FERC's Office of Enforcement and a former professor of Law at the University of New Mexico. The White House would like to avoid a Senate clash over a politically charged nominee, similar to the President's previous nomination of Colorado Utility Commissioner Binz. Bay awaits Senate confirmation.
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