Friends,

It was a tough weekend with the Connecticut school shooting and the ensuing media coverage.  I know all our thoughts and prayers are with the families who are/will endure heartache over their losses.  Clearly overshadowed as events in Connecticut were unfolding was EPA’s Friday announcement rolling out its new soot/PM 2.5 rule.  We cover that below.

With the Fiscal Cliff Discussions still on going, it seems like there are things going on, but really, the activities are winding down rapidly.  Only one other major energy discussion appeared last week and that was centered around the wind PTC.  There are lots of discussions about how it will move forward and what it will entail.  It seems likely that a short-term extension gets you to next year when a longer-term phase out becomes part of the discussion of larger upcoming tax reform next year.  It seems the price of admission for extension is some sort of phase out.

In that same breathe, AWEA’s leader Denise Bode announced her resignation from the wind industry lobby after four tumultuous years.  Denise really helped elevate AWEA to a much-needed higher level in the DC lobby game, but also rankled some at times, which any good industry trade association leader does.  Needless to say, AWEA is in a stronger position today in part because of Denise Bode’s approach and good staff work by folks like Rob Gramlich and the many others that supported and implemented her vision for the group during her tenure.

Two interesting developments as well that you ought to keep track of:

1) Today, South Carolina Nikki Haley appointed African-American/Conservative GOP congressman Tim Scott to the Senate seat occupied by conservative agitator Jim DeMint who left to go to the Heritage Foundation.  While it won’t be much of a change from a political ideology standpoint, Scott will be the first African-American Senator in more than 30 years and only the 7th in history.  He also becomes Republicans 4th (Massachusetts Edward Brooke, 1967-1979 and Mississippi’s Blanche Bruce, 1875-1881 and Hiram Revels, 1870-71).  You are surprised that there are only three Democrats?  And they were all from Illinois and in the same seat: Carol Mosely-Braun (1992-98), President Obama (2004-2008) and Roland Burris (2008-10), now currently occupied by Republican Mark Kirk.

2) The New York Times had an editorial yesterday on the recent DOE natural gas export issue that said it would be good for the economy, highlighting a potential $47 billion boost to the economy by 2020.  It challenged opponents of exports, especially those opposed to natural gas drilling, to address their concerns through tighter regulations on drilling rather than limiting exports.  Finally it called on the President to speed up the terminal approval process and “greenlight” to the four pending terminal permits.

Now with the eight days of Hanukkah complete, there is still lots of shopping to do with Part II of the holiday extravaganza upon us.  For some reason, my wife and kids insist in celebrating both holidays.  I personally think it has to do with presents, but I dare not make that accusation (Oh, did I just do it in a public e-mail to thousands…Oooops)

Regardless of the shopping/holiday agendas, we are still available to discuss both known and unknown issues over the next three weeks.  I, of course, will be busy with holiday wrestling, field hockey, lacrosse and ice hockey tournaments. (My 15th straight year at DC’s Gonzaga HS Purple Puck Tournament, but we also have the Crabtown holiday shootout as well)  Lots to do.

Finally, congrats to our long-time friend Josh Sheinkman who was recently named Senate Energy Committee staff director by incoming Chairman Ron Wyden. Sheinkman served as Wyden’s legislative director since 2006, and he joined Wyden’s staff as an energy and environment adviser in 1993, when Wyden was a congressman.  As well, congrats to our friend and ace Bloomberg transpo reporter Angela Greiling Keane who was elected the 106th president of the National Press Club.

Frank Maisano
(202) 8282-5864
c. (202) 997-5932

 

IN THE NEWS  

EPA Tightens PM 2.5 Rule – EPA tightened airborne fine soot pollution standards for the first time since 1997.  EPA said its new annual fine particulate matter standard of 12 micrograms per cubic meter would bring health benefits of between $4 billion and $9 billion annually by 2020. Costs are estimated to range between $53 million and $350 million annually.  It had proposed setting the standard from 12-to-13 micrograms, compared to 15 micrograms currently. The standards will primarily affect Clean Air Act regulation of power plants, industrial sources and diesel trucks and buses.  The agency did not change the current 24-hour standard of 35 micrograms set in 2006 and, as previously stated, did not change the standard for larger coarse particles.

Holmstead Says Rule Will Be Harmful – My colleague Jeff Holmstead, former Air Administrator at EPA, currently representing power companies at Bracewell Giuliani’s Environmental Strategies Group said the standard will be harmful going forward.  Holmstead said the standard is really quite different from other air quality standards.  “You can’t just look at the change in the number – from 15 to 12 – and understand what the impact will be.  It all depends on how EPA decides to implement the new standard.  Normally, a new standard means a rash of new regulations, but EPA claims that virtually every area of the country will meet the new standard without the need for new regulatory requirements.  If so, then maybe the new standard won’t cause the type of economic disruption that we’ve seen in the past. In recent years, a new air quality standard like this one has caused big delays for companies trying to build new plants or expand existing operations.  I think a lot of people are holding their breath and hoping that we won’t see the same thing this time around.”

Power Groups Says Rule has no Scientific Basis – Power companies in the Electric Reliability Coordinating Council (ERCC) said the scientific and legal issues that have come to light during public comment threaten the legal standing of the rule and asked to delay its release.  ERCC head Scott Segal said “there are a diverse range of uncertainties about PM claims and these uncertainties need to be more fully addressed and resolved before the PM NAAQS rule is finalized.  Segal added increasing the cost of doing business and jeopardizing quality manufacturing jobs in new nonattainment areas will come at a heavy price. As a recent report from the Maguire Energy Institute at the Southern Methodist University states, “Numerous studies find that regulatory burdens of this sort imposed on energy prices and energy supply cause plant closures and maximize the potential that manufacturing jobs will move overseas. For each manufacturing job lost, many other dependent jobs will also exit the economy. One in eight private sector jobs rely upon our manufacturing base.”

API: Rule is First of Many – API’s Howard Feldman pulled no punches as well: “We fear this new rule may be just the beginning of a ‘regulatory cliff’ that includes forthcoming ozone rules, the refinery sector rules, pending greenhouse gas regulations for refineries and the delayed boiler MACT rules.  There is no compelling scientific evidence for the policy decision to develop more stringent standards,” he said, also questioning the agency’s regulatory impact analysis. API also called on the administration to release the scientific data used in the EPA review, charging it would expose the “lack of certainty EPA is applying when changing these standards.”

Enviros, Health Groups Praise Rules – Of course, health and environmental groups praised the new rule.  Environmental Defense Fund, League of Conservation Voters and Natural Resources Defense Council quickly backed EPA’s decision on soot saying almost half of all Americans are considered to be especially vulnerable to the harmful impacts of soot,” said EDF health scientist Elena Craft. “We’re proud that the EPA has finalized this new clean air standard in the face of intense opposition from corporate polluters and their allies,” said LCV President Gene Karpinski. “Because of the Obama administration’s updated standard, our air will be cleaner and thousands of Americans won’t have to face the dangerous health impacts of soot pollution from dirty sources like power plants and diesel trucks.”  Meanwhile the American Lung Association and the American Public Health Association praised the EPA decision saying “The public health community applauds these long overdue stronger standards.”

DOE Announces Offshore Wind Projects – The DOE Wind Program today announced $168 million in advanced technology demonstration awards for offshore wind projects in Maine, New Jersey, Ohio, Oregon, Texas and Virginia. As part of DOE’s broader efforts to launch an offshore wind industry in the United States These projects will evaluate innovative technologies, establish key siting and permitting pathways, validate construction and operation costs, and reduce uncertainties associated with these factors, with the ultimate impact of reducing the overall costs of offshore wind project development in the United States.  In the initial phase, each project will receive up to $4 million to complete the engineering, design, and permitting phase of this award. DOE will select up to three of these projects for follow-on phases that focus on siting, construction, and installation and aim to achieve commercial operation by 2017. Each of these three projects will receive an additional $47 million over four years, subject to congressional appropriations.  The seven projects selected for the first phase of this six-year initiative are 1) Baryonyx Corporation’s Gulf Offshore Wind (GOWind) Project, 2) Dominion Virginia Power’s Demonstration Project, 3) our friends at Fishermen’s Atlantic City Windfarm, 4) Lake Erie Development Corporation’s (LEEDCO’s) Icebreaker Project, 5) Principle Power’s WindFloat Pacific Offshore Wind Demonstration Project, 6) our friends at Statoil North America’s Hywind Maine Project and 7) the University of Maine’s New England Aqua Ventus Project.

Two Studies Also Support Offshore Wind – At the same time that DOE announced it grants, they also rolled out two new reports that chart offshore wind’s path forward.  The Navigant Consortium released two DOE-funded reports that show great promise for the U.S. offshore wind market—including the potential for thousands of jobs in four major coastal regions and the use of larger, more efficient turbines in offshore farms, increasing the amount of electricity delivered to consumers.  The first is an Offshore Wind Market Analysis that provides a comprehensive annual assessment of the U.S. offshore wind market. They will update and publish this report annually for a three-year period.  The second is a Supply Chain report that examines the existing U.S. offshore wind supply chain, identifies current and anticipated gaps, considers the barriers to filling these gaps, and identifies market-entry pathways for new manufacturers.  The Market Analysis report has sections on the role of transmission and transmission policy, which includes several mentions of AWC, praises the project as an innovative way to potentially lower future costs.

Offshore Groups to Consider Whales in Development – Groups developing offshore wind farms from New Jersey to Virginia have agreed to try to protect North Atlantic right whales.  The voluntary measures are the first of their kind.  The developers are pledging to reduce or avoid loud noises that could affect the whales by avoiding building towers and doing other activities at the peak of whales’ migratory season.  The companies also agree to watch for whales and to use tools and technologies to keep the work as quiet as possible.  While environmentalists like the idea of wind energy, many are concerned about the turbines’ effects on migrating birds and sea life.

PTC Debate Picks Up – There was some good back and forth this week on the wind production tax credit (PTC).  AWEA sent a letter to the members of the Senate Finance Committee outlining an analysis of a six-year phase-out of the wind-energy Production Tax Credit with continued priority for a one-year extension for projects that start construction next year, as passed by the Senate Finance Committee. The gradual phase-down “will allow the industry to invest in the cost-saving technologies required to finish the job,” while addressing concerns that the PTC might become a permanent part of the tax code, AWEA said. Under the analysis, the PTC would keep 100% of its value in 2013, declining to 90% in 2014 and 60% in both 2017 and 2018. The credit would end in 2019.  Of course, that phase out isn’t enough for conservatives and others that oppose the credit, including Exelon.

A Plan For Dealing with PTC – Interestingly, Ways and Means ranking member Sander Levin said any long-term PTC renewal in the Congressional Lame Duck would be too much to swallow in the fiscal cliff discussions, urging a one-year extension instead.  This plays right into what we have been predicting for a while now.  A short-term extension gets you to the next year (with a potential change from in-service to commerce construction) with a longer-term phase out  becoming part of the larger upcoming tax reform discussion next year. While AWEA asked for 6 years and opponents said zero, a key to watch is Sen. Grassley who mentioned 4 years in a recent interview with our friends at Energy Daily.

Bipartisan Support for MLPs for Renewables – Not to be outdone, Several politicos sent a letter to President Barack Obama pushing for tax structures known as master limited partnerships and real estate investment trusts to be opened up to renewable energy projects. The partnerships allow access to lower-cost capital and other benefits and are only available under law for investors in oil, natural gas, coal extraction and pipeline projects and explicitly prevented from applying to renewable energy investors.  The lawmakers include Sens. Chris Coons (D-Del.) and Jerry Moran (R-Kan.) and Reps. Ted Poe (R-Texas), Mike Thompson (D-Calif.) and Peter Welch (D-Vt.)  This mirrors a study from SMU’s Maguire Energy Institute earlier this year that held that MLPs could hold incredible potential for renewables.

Gov, AGs Target Interior NatGas Rule – We know recently that a number of more liberal attorneys general threatened to file suit to force EPA to regulate methane emissions from natural gas drilling operations.  Again not to be outdone, the Republican Governors Association and the Republican Attorneys General Association want the proposed Interior rule at the Bureau of Land Management (BLM) rule to regulate natural gas drilling operations withdrawn because they say it ignores states’ track records for regulating the practice and would discourage future development. The groups wrote a letter to President Barack Obama saying the rule institutes “sweeping new regulations” without an expressed need.

THIS WEEK’S GOINGS ON 

Defense Asst Sect to Address Cybersecurity – The Homeland Security Policy Institute will host an event tomorrow at 9:00 a.m. in GWU’s Elliott School of International Affairs as part of the Capstone Series on Cyber Strategy.  The event will feature Paul Stockton, Assistant Secretary for Defense for Homeland Defense and Americas’ Security Affairs. Assistant Secretary Stockton will discuss how to best address vulnerabilities of the electric power grid from physical and cyber threats.

Forum to Look at Senate Foreign Relations Report – The Atlantic Council will hold a discussion tomorrow at 10:00 a.m. with the authors of the recently released Senate Foreign Relations Committee report, “Energy and Security from the Caspian to Europe.” Marik String, deputy chief counsel of the Committee, and Neil Brown, senior professional staff member of the Committee, were commissioned by Senator Richard Lugar (R-IN) to assess the next installment of the Southern Corridor pipeline intended to bring natural gas from the Caspian Sea to Europe. David Koranyi, deputy director, Patriciu Eurasia Center and Adnan Vatansever, independent analyst, will be discussants. Atlantic Council Senior Fellow Ian Brzezinski will moderate.  The report examines the impact of the Obama Administration’s decision to effectively eliminate the position of US Envoy for Eurasian Energy Security; assesses competing pipeline proposals under consideration; and examines the prospect of including gas from Turkmenistan, Iraq, Kazakhstan, and the Eastern Mediterranean in the Southern Corridor. The report will be released in conjunction with legislation offered by Senator Lugar that is intended to increase US exports of liquefied natural gas to NATO allies.  The event will be live-streamed at: www.livestream.com/atlanticcouncil

Chamber to Host Farm Innovation Forum – The U.S. Chamber of Commerce and the National Chamber Foundation will co-host a program on Wednesday, December 19th highlighting the innovations and emerging opportunities that today’s agriculture industry are presenting. This program will identify many of the latest innovations and advances in agriculture and show how America’s agriculture community continues to feed an ever growing global population while at the same time supporting American job creation and competitiveness.  Speakers include USDA Secretary Tom Vilsack, Secretary, Chamber President Tom Donohue, former Education Secretary Margaret Spellings (current President of the National Chamber Foundation), Peter Klein of the University of Missouri, AEI’s Nick Schulz, John Deere FarmSight Director Jerry Roell and Blake Hurst of the Missouri Farm Bureau.

Korean Forum to Look at Green Economy in Developing Countries – The Embassy of the Republic of Korea and the Korea Economic Institute will hold a seminar tomorrow at Noon to discuss green business opportunities in developing countries.  Developing countries present an ideal platform for green business opportunities given their natural resources, economic development, and policy agendas. Korea also has a unique set of green policies that enable green businesses.  The event will feature representatives from the World Bank, Korea Energy Economics Institute, and Inter-American Development Bank share their expertise in green growth and energy policies, sustainable development, and green technology.  Speakers include IADB’s energy chief Leandro Feliciano Alves, KEI’s Energy Woongtae Chung, Korea’s Director of the Ministry of Foreign Affairs and Trade Sang-Pyo Suh, Korean Embassy Economic Minister Gheewhan Kim and KEI President Abraham Kim.

Wind Program to Discuss Next-Year Agenda – DOE’s Wind Powering America Director Jonathan Bartlett and National Technical Director Ian Baring-Gould will provide an overview of programmatic plans for the upcoming year Wednesday, December 19th at 3”00 p.m.   The discussion will include the soon-to-be-released request for proposal for the inaugural National Collegiate Wind Competition and new Regional Resource Centers. This free webinar is part of Wind Powering America’s 2012 webinar series and follows a tradition of fall webinars that provide an overview of program activities for the upcoming year. Ample Q&A time will be available.

Senate Banking to Review Infrastructure Question – The Senate Banking Committee’s Subcommittee on Housing, Transportation, and Community Development will conduct a hearing on Thursday at 11:00 a.m. in 538 Dirksen focused on recovering from Superstorm Sandy and looking at rebuilding infrastructure.  Witnesses will include MTA CEO Joseph Lhota, NJ Transit Executive Director James Weinstein and several other additional witnesses.

Dorgan, NREL Head to Highlight Energy R&D in Webinar – Energy Central will host a webinar on Thursday at Noon looking at the research and development in the energy sector.  The era of massive subsidies may be waning, but the federal government is putting its mighty resources behind a new vision for America’s energy future. Yet tight federal budgets will restrict how money is deployed.  The seminar will focus on what kind of energy R&D will be supported and what are the implications will be to the utility industry.  Speakers will include NREL’s Dan Arvizu and former North Dakota Democratic Sen. Byron Dorgan, now at the Bipartisan Policy Center Energy Project.

FUTURE EVENTS

API to Hold State Of Energy – The American Petroleum Institute will hold its state of the energy industry on January 8th at Noon in the Andrew Mellon Auditorium.  API CEO Jack Gerard will outline the new realities of energy in America and the ways the oil and natural gas industry is working and investing every day to ensure the safe exploration, production and delivery of American-made energy. Energy that is vital to creating jobs, growing businesses and ensuring our quality of life.

USEA Holds Annual State of Energy Forum – The US Energy Association will hold its annual state of the energy industry forum on January 16th (my birthday for any of you thinking about getting me something) at the National Press Club at Noon. Distinguished leaders from the most influential and active energy trade associations as they present the priorities, issues, trends, and challenges affecting the industry in 2013.  Speakers will include Marv Fertel (Nuclear Energy Institute), Jack Gerard, President & CEO, American Petroleum Institute), Regina Hopper (America’s Natural Gas Alliance), Skip Horvath (Natural Gas Supply Association), Tom Kuhn (Edison Electric Institute), Hal Quinn (National Mining Association), Dave McCurdy (American Gas Association), Joe Nipper (American Public Power Association), Rhone Resch (Solar Energy Industries Association), Don Santa (Interstate Natural Gas Association of America),

John Shelk (Electric Power Supply Association) and JoAnne Emerson (National Rural Electric Cooperative Association).