Friends,

Well, I don’t about your NCAA pool performance, but mine pretty much blew up after the Florida Gulf Coast’s run to the Sweet 16, among other surprises.  It has been four exciting days though with many surprises.  But not surprised were Louisville, KU, Michigan/MSU, Indiana, Miami, Duke, etc.  Still lots of high-seeds remain.  Back to the NCAA grind on Thursday, but not before some golf today (Bay Hills/Tiger).

The NCAA Frozen Four draw is out following this past weekend’s conference tournaments.  Quinnipiac is the overall #1 seed (they do more than just high-stakes public opinion polling), with UMass-Lowell, Minnesota (yah-sure) and Notre Dame (the final CCHA Champ) rounding out the top seeds.  As always, dangerous teams are North Dakota (their longest-in-the-nation 11th straight NCAA appearance despite being scrubbed of their longstanding “Fighting Sioux” nickname), Miami (Ohio), UNH, Boston College, Wisconsin and Yale.  Oh, and in case you missed it, UW-Eau Claire knocked off Oswego State 5-3 to win the NCAA D-III hockey title Saturday night.

Before we get to other things though, it seems the right time to take this week to reflect on the two of most important religious days we celebrate: Passover today and Easter Holy days this upcoming weekend.  My best wishes to all this week.  Please enjoy the time with your families.

As it is the Passover/Easter holiday week, there is not much happening.  Of course, much of the action on Congressional budgets and on ethanol and RINs went down last week.  I added a special section on the Senate Budget Vote-fest that occurred all-day/night Friday and into early Saturday morning.  The most politically-significant (but substantively-meaningless) budget vote was the Senate’s 62-37 endorsement of the Keystone XL pipeline with 17 Democrats supporting it.  You know that is going to really anger KXL opponents and true enviro believers.  Maybe billionaire Tom Steyer will bring his transformer Keystone billboards to DC after the Massachusetts Senate election he was “asked” to stay out of ends.  If they act this way over non-binding Budget votes, can you imagine how these groups/individuals may come unglued if/when the President approves Keystone?

I also have a special section on the debate over ethanol and RIN costs that goes beyond the silly finger pointing between “Big Oil” and Big Corn.”  While you all saw the back-and-forth between the API and RFI, our friends at Valero ought to be your interest point.  Valero is the world largest independent refiner and the second largest producer of ETHANOL.  They can get away from the finger pointing because they are involved on both sides and have more credibility.  My friend Bill Day at Valero (210-345-2928) is ready to help.

By the way, mark your calendars for next Thursday at the Press Club for an April 4th Newsmaker that I will be hosting on the battle over bottled water.  I will have Nestle Water CEO Kim Jeffrey available to take your questions about the on-going effort to ban bottled water over environmental concerns in places like the University of Vermont and Concord, Massachusetts.   More than 90 colleges and universities have banned or restricted the sale of bottled water on campus.  It should be an interesting discussion.

Call with any questions.

Frank Maisano
(202) 828-5864
c. (202) 997-5932

BUDGET IN THE NEWS

Budget Votes Making Noise – The late Friday night Budget “vote-a-rama” had several interesting environmental twists, including a significant win for Keystone supporters.  In a politically-significant, but substantively-meaningless budget vote, the Senate endorsed Keystone XL pipeline with a 62 to 37 vote.  In the vote, 17 Democrats supported Keystone.  The Senate’s final budget resolution was approved 50-49 around 5:00 a.m. Saturday.

Which Democratic Senators Supported Keystone? – The Democrats who supported the measure were Sens. Max Baucus (Mont.), Mark Begich (Alaska), Michael Bennet (Colo.), Tom Carper (Del.), Bob Casey (Pa.), Chris Coons (Del.), Joe Donnelly (Ind.), Kay Hagan (N.C.), Heidi Heitkamp (N.D.), Tim Johnson (S.D.), Mary Landrieu (La.), Joe Manchin (W. Va.), Claire McCaskill (Mo.), Bill Nelson (Fla.), Mark Pryor (Ark.), Jon Tester (Mont.) and Mark Warner (Va.).  Maybe the only real surprises were Nelson, Coons and Carper…maybe Bennet, but Colorado is a big oil/gas state.

Enviros Outraged – Shockingly, enviro groups and other Keystone supporters were incensed over the vote and took to social media to express their outrage.  As I am on many enviro listservs I just think it is funny how many of the true believers are seriously clueless about Keystone, politics, elections, public opinion, energy and the make-up of many states.  Of course, the enviro community will respond and is already threatening Delaware Sens. Carper and Coons, Colorado’s Bennet.

Other Votes on Budget – There were a number of other budget energy votes.  The votes on the nonbinding budget resolutions were largely symbolic, but they illustrate the political reality that we have seen for some time:  that there seems to be a majority in the Senate oppose restrictions on oil and coal producers, power plants and other sources.  Some other Notable votes included a vote on a climate change amendment by Sheldon Whitehouse, who Has been saying he was going to try and put climate votes in to many bills.  Senator, probably not a good idea since 13 Democrats opposed his measure that would move any carbon tax revenues to deficit reduction.  The leadership also blocked a vote on Roy Blunt’s plan to offer a straight-up vote on a carbon tax.  Maneuvering prevented the actual vote and only allowed a procedural vote where only kept 8 Dems jumped ship.  I suspect Majority Leader Reid didn’t want another 60-plus vote on an environmental issue.   One amendment that did fall short was one offered by Sen. Inhofe to block GHG rules.  It only garnered 3 Dems and 47 total votes.  Sen. Barrasso (R-Wyo.) successfully offered an amendment to bar federal agencies’ analyses under NEPA from considering GHG emissions produced outside the United States by exported goods.

ETHANOL/GASOLINE IN THE NEWS

RINs Price Shows Hitting Blend Wall – While the budget votes took lots of attention on Friday, the rest of the week belonged to a new twist in the long-standing argument over ethanol and gasoline.  Back in 2007, the Congress set an ethanol mandate – the renewable fuel standard (RFS) – at 36 billion gallons by 2022. In years in between, EPA sets an annual number to keep the country on the path.  This year’s 16.5 billion is arguably already more than the current gasoline pool can absorb in light of environmental constraints (called the blend wall) and the overall shrinkage of the gasoline pool because of energy efficiency gains and the recession.  Accordingly, the market price for RINs – or renewable identification numbers needed as evidence of compliance if you can’t produce ethanol – was $0.05 as recently as late-2012. However, recent prices for RINs have spiked to as high as $1.02.  Reports have cited several reasons for the sudden price increase, such as: declining gasoline demand; the ethanol “blend wall”; unrealistic RFS mandates; and recent instances of fraud in the RIN market which have increased uncertainty among obligated parties.

Results: Higher Prices Likely – The current projected RINs impact will result in large price increases at the pump.  Recent reports make clear that, as RIN prices continue to move higher, refiners will be forced to: pass along the increased costs to consumers; export more product overseas; or lower refinery utilization rates.  These concerns are not mere analyst speculation as a March 8th article in Platts cited a report that “RIN costs have added 10 cents to a gallon of gasoline at retail.”  Valero, one of the largest refiners and also largest ethanol producers, says costs over last year could be $500-750 million.

EPA Never Thought It would go This Way – EPA did not anticipate or plan for this run-up in RINs prices.  In the Regulatory Impact Analysis and Summary and Analysis of Comments for the RFS itself – EPA seemed to think that the “cost of RINs should be very low—near the level of transaction costs,” and they did “not foresee RINs adding any significant costs to the use of renewables.”  This is because they mistakenly anticipated excess RINs would be available. Comments were submitted on the issue of speculation in the market, and EPA responded that they did not anticipate this being an issue.

Wyden Letter Asks Key EPA Questions – After a midweek letter from Lisa Murkowski and David Vitter raised the RINs issue, Senate Energy and Natural Resources Chairman Ron Wyden penned one to EPA asking for data to help explain why corn ethanol renewable identification numbers fluctuated widely between pennies on the gallon to more than $1 in recent weeks.

“Some industry analysts have blamed the increase on a glut of ethanol, while others have blamed it on a shortage. What is abundantly clear is that this level of market volatility is unprecedented,” Wyden wrote acting EPA Administrator Bob Perciasepe. “Given that ethanol is an increasingly important factor in the cost and supply of motor fuel in the U.S., it is critical that the committee have a better understanding of the causes and effects of RIN market volatility and developments.” 

But What About the Tier III Rules – Some industry folks see the increasing oversight by Congress as an opportunity to address cost concerns over EPA’s “Tier III” fuel and vehicle rule.  The plan is at OMB and is expected soon.  The Tier III rule and high RFS targets could create a “perfect storm” that will continue to increase gasoline prices – especially though the summer driving season which traditionally sees higher prices anyway.  Something to monitor…

IN OTHER NEWS

EIA Says Production will Pass Imports – EIA’s Short-Term Energy Outlook released last week says the amount of domestic crude oil produced in the United States could exceed the amount imported this year for the first time since 1995. EIA credits a rapid rise in oil production from shale and other tight rock formations in Texas and North Dakota and the steady decline of net oil imports. The federal agency forecasts that, by the end of 2013, the U.S. will be pumping 2 million more barrels than it imports each day.

EnergyBiz Honors SoCo EnergyBiz magazine has named Southern Company “Energy Company of the Year” for its demonstrated business leadership in technology innovation, insight and sustained achievement in 2012.  CEO Tom Fanning accepted the award last week at the EnergyBiz KITE Awards ceremony in Washington, D.C.  An industry leader in energy innovation, Southern Company has been actively engaged in robust, proprietary research and development since the 1960s. Company-managed research and development investments – which totaled more than $1.8 billion from 1970 through 2012 – have yielded technologies that will change the way America produces electricity. Southern’s 582-megawatt Kemper County, MS advanced coal energy facility and its new nuclear units at Plant Vogtle were examples of Southern’s innovation and leadership.  The EnergyBiz KITE Awards are presented to executives and organizations in the energy industry that exemplify the characteristics of knowledge, innovation, technology and excellence as a cornerstone of success.  Recent past winners include our friends at Trans-Elect.

Super Bowl Outage Caused by Device to Prevent Outages – If the irony of losing a portion of one of the most–watched events to a blackout doesn’t get any better, a new report says the New Orleans Superdome Super Bowl XLVII blackout was caused by a relay device that was intended to improve reliability and prevent outages.  The device had a design defect that malfunctioned and cause the partial outage.  Entergy, which supplies electricity to the Superdome, and the stadium’s management company hired forensic engineer John Palmer to perform an independent analysis of the big game’s outage. Palmer’s report says the primary cause of the disruption was a malfunction or “misoperation” of the relay.  The report also notes the relay had a design defect, and under testing it did not perform entirely as its instruction manual said it was supposed to. It says the factory default setting of the relay was inappropriate. Finally, it says there was “inadequate communication between the manufacturer and the utility.”

GOING ON THIS WEEK 

Bush 43 To Headline International Refiners Conferences – following last week’s American Fuel and Petrochemical Manufacturers annual meeting, the International Petrochemical Conference starts at the Grand Hyatt San Antonio today and tomorrow.  The event, which always follows AFPM’s annual meeting, is the world’s largest and most prestigious conference representing the petrochemical industry and will feature former President George W. Bush as its luncheon speaker.  The meeting consists of sessions covering key political, economic, and environmental issues affecting the petrochemical industry.  The sessions emphasize global competitiveness in the petrochemical business and are presented by recognized experts in the areas of petrochemical markets, economics and politics. 

Market Transformation Symposium Set – The American Council for an Energy Efficient Economy and the Consortium for Energy Efficiency will host the 17th annual National Symposium on Market Transformation today and tomorrow at the Marriott Wardman Park Hotel. The Symposium will offer an opportunity for a diverse group of attendees to network, compare programs, learn about new MT approaches, and discuss the latest issues facing the energy efficiency and market transformation communities.  Participants will include policymakers; energy efficiency program implementers; local, state, and federal agency personnel; utility staff; NGOs; energy efficiency professionals; consultants; and behavioral scientists.  This year’s ENERGY STAR Partner of the Year Awards Ceremony will also be held the tomorrow evening.

Interior to Hold Public Hearings on Drilling EIS – The Interior Department will hold public hearings this week on its recent draft environmental impact statement for two proposed oil and gas lease sales in the Gulf of Mexico’s Eastern Planning Area and is seeking public comment on the document. Lease Sales 225 and 226, scheduled for 2014 and 2016, are part of the Outer Continental Shelf Oil and Gas Leasing Program: 2012-2017 (Five Year Program). The hearings will be held in Tallahassee, Florida tomorrow, (Hilton Garden Inn Tallahassee Central), Panama City Beach, Florida on Wednesday  (Wyndham Bay Point Resort), Mobile, Alabama on Thursday (Five Rivers-Alabama’s Delta Resource Center), Gulfport, Mississippi on Friday (Courtyard by Marriott Gulfport Beach) and New Orleans (BOEM Offices).  All meetings begin at 1:00 p.m. CDT.

Oak Ridge Experts to Report on Geo-Spatial Modeling for Nuke Capacity – Nuclear Policy Talks and Institute for Nuclear Studies will host a seminar with GWU’s Elliott School tomorrow at 3:00 p.m. to present the results of a recent study conducted at Oak Ridge National Laboratory that applied the principles of geo-spatial data modeling on siting ISFSIs. The study identified two key factors namely transportation distance and population along the route as the optimization variables to formulate the problem in a mathematical way. Application of sound siting principles and subsequent simulations revealed potentially favorable locations for ISFSIs given the current quantity and distribution of UNF as well as future quantities based on three growth scenarios for nuclear capacity. The study also addresses some key recommendations of the BRC.  Oak Ridge’s Dr. Sacit M. Cetiner, of the Advanced Reactor Systems & Safety Group Reactor & Nuclear Systems Division will speak.  

Forum to Look at Oil, War – The Woodrow Wilson International Center for Scholars will hold a forum on Wednesday at 10:30 a.m. on Petro Aggression Issues.  Oil is the world’s single most important commodity and its political effects are pervasive.  Wilson’s Jeff Colgan extends the idea of the resource curse into the realm of international relations, exploring how major oil-exporting countries form their foreign policy preferences and intentions. Petro-Aggression shows that oil creates incentives for both aggression and peace in its biggest producers. The net effect depends critically on a petrostate’s domestic politics, especially the preferences of its leaders. Revolutionary leaders are especially significant. Using case studies including Iraq, Iran, Libya, Saudi Arabia and Venezuela, this book offers new insight into why oil politics has a central role in global peace and conflict.

Stanford Climate Data to Be Discussed – On Thursday at 8:30 a.m. at the National Press Club’s Murrow Room, Stanford University Professor Jon Krosnick will present key findings from a March 2013 survey of public attitudes on preparing for climate change and extreme weather. Co-sponsored by the Stanford Woods Institute for the Environment and the Center for Ocean Solutions, the national survey includes oversampling of New York and California. The poll focuses on risk reduction in coastal areas, how to pay for adaptation strategies, and implications for the economy and jobs at the local, state and national levels. Following Professor Krosnick’s presentation, representatives from government, the nonprofit world and the private sector will discuss the results, their concerns and strategies for making communities more resilient in the future.  The panel will be moderated by Woods Senior Lecturer Meg Caldwell, Executive Director of the Center for Ocean Solutions and Director of the Environmental and Natural Resources Law and Policy Program at Stanford Law School.  Other panelists include NYC Deputy Mayor Cas Holloway, NOAA’s Laurie McGilvray and EESI head Carol Werner.  EESI will also host a similar event on Capitol Hill in 2318 Rayburn at 3:00 p.m.

Shelk to Address NatGas Roundtable – The Natural Gas Roundtable will host John Shelk, President and CEO of Electric Power Supply Association will be the guest speaker at the next luncheon on Thursday at Noon at the University Club.  Shelk has been EPSA President and CEO, the national trade association representing leading competitive electricity suppliers, since 2005.

Forum to Discuss Defense Biofuel Plans – The Atlantic Council Will hold a discussion on Thursday at 3:00 p.m. looking at the risks and benefits of the US Department of Defense’s (DoD) biofuels policies and the ongoing efforts to reduce the department’s petroleum footprint. As the largest organizational user of petroleum in the world and with fuel costs that continue to rise, the DoD faces financial, operational, and strategic risks. The discussion will focus on DoD’s alternative fuels policy, will provide a critical analysis of this policy, will offer potential pathways for the commercial biofuels industry to mature enough to meet capacity and be cost-competitive, and will provide views from an industry leader.  Following the presentations, the panelists will answer questions from the audience. The roundtable will provide a particularly timely discussion with the arrival of the new Secretary of Defense Chuck Hagel and the unknown impacts of the federal budget crisis.  Panelists will include RAND’s James Bartis, Jan Koninckx of DuPont Industrial Biosciences, DoD’s Adam Rosenberg and Bloomberg New Energy Finance Biofuels Industry Specialist Alejandro Zamorano-Cadavid

FUTURE EVENTS

Former AIG CEO Greenberg Returns to DC for Chamber Talk – The US Chamber Foundation will hold a book discussion with former AIG CEO Maurice R. “Hank” Greenberg April 2nd at 5:30 p.m. focused on Greenberg’s book, The AIG Story,with GWU professor Lawrence Cunningham.  The book is Greenberg’s firsthand account of American International Group’s rise and near-destruction.  In this story, AIG’s CEO of forty years, Maurice R. “Hank” Greenberg, and corporate governance expert, Lawrence Cunningham, relate the complete, inside story of the rise and near-destruction of AIG. Readers are regaled with tales from Hank Greenberg’s firsthand experience at AIG, combined with Cunningham’s additional research and interviews.  The book tells the story of Greenberg, who transformed a scattered collection of insurance businesses into American International Group, a global financial colossus with nearly $1 trillion in assets on its balance sheets-and how, in the process, he revolutionized the insurance industry.   At the same time, The AIG Story is an account of the world’s rough ride toward globalization and the triumph of free and open markets over communism, nationalism, protectionism, and isolationism, and the significant role Greenberg and AIG played.  Integral to the story is the authors’ take on the 2008 global financial crisis. Through Greenberg’s direct involvement and Cunningham’s craftsmanship, The AIG Story reveals much about those events that until now, has been kept hidden from the public.

WRI to Release NatGas Emissions Working Paper – On Thursday, April 4th at 9:00 a.m., the World Resources Institute will roll out a new working paper, “Clearing the Air on Natural Gas: Reducing Upstream Greenhouse Gas Emissions from U.S. Natural Gas Systems”.  The rapid expansion of unconventional natural gas development has reshaped the U.S. energy picture through increased production and reduced prices of natural gas. The shale gas production boom has also ignited divisive debates over its near- and long-term environmental impacts. The new study looks to clarify what is known about leakage rates of methane, a potent greenhouse gas, from the U.S. natural gas sector, what progress has been made to reduce those emissions, and what more can be done to further reduce leakage.  The paper outlines tools that federal and state governments can employ to reduce these harmful emissions, helping to clear the air and slow the rate of climate change.

Nestle CEO to Discuss Bottled Water Ban at NPC Newsmaker – The National Press Club Newsmakers Committee will host Kim Jeffery, Chairman of Nestlé Waters North America, at a Newsmaker forum in the Club’s Zenger Room at 10:00 a.m. Thursday, April 4th.  Jeffery will focus on policy issues, health benefits and environmental controversies surrounding the growth of bottled water. Concord, Massachusetts made history this year by becoming the first town to ever ban the sale of water, citing environmental concerns over the plastic bottles. Critics question the logic of banning bottled water at a time when the nation faces a serious obesity crisis. Nestlé Waters North America is the number one bottled water company in the United States and the third largest non-alcoholic beverage company in the country.

Moniz Nomination Hearing Set – On Tuesday, April 9th at 10:00 a.m. , the Senate Energy Committee will hold a hearing to consider the nomination of Dr. Ernest Moniz to be the next Secretary of Energy.

International Geothermal Forum Set – The Geothermal Energy Association will hold its International Geothermal Energy Finance Forum on Thursday April 11th at New York’s Marriott Marquis. The full day Forum will provide a day long discussion featuring the leaders of geothermal development, private and public financing, and project risk and reward.  Confirmed speakers include The World Bank Group’s Energy Sector Management Assistance Program Manager Rohit Khanna, Jennifer Graham of the Prudential Capital Group, JP Morgan’s John Eber, Bloomberg New Energy Finance’s Head of Geothermal & CCS Research Mark Taylor, and MidAmerican Energy’s Jonathan Weisgall.

McCarthy, Nichols, UNFCCC Figueres to Address Carbon Conference – The 11th annual Navigating the American Carbon World (NACW) will be held in San Francisco’s Palace Hotel April 16th through 18th.  The event is the largest and most comprehensive gathering for information and discussion around climate change policy and carbon markets.  NACW will take an in-depth look at California’s historic cap-and-trade program, including discussions on market structure, revenue allocation, legal issues and forecasts. The conference will also delve into other established and emerging carbon markets around the world and potential linkages. And, NACW will provide a platform for discussing offsets and offset supply, U.S. federal policies, and business leadership.  Speakers will include EPA’s Gina McCarthy, CARB head Mary Nichols, UNFCCC Executive Secretary Christiana Figueres and NWF President Larry Schweiger.

Farrell to Headline Chamber Energy CEO Leadership Event – The Institute for 21st Century Energy and the U.S. Chamber of Commerce Foundation will hold a CEO Leadership Series luncheon on Thursday, April 23rd at Noon featuring Dominion Energy CEO Thomas Farrell. 

The American Foundry Society (AFS) is hosting their annual Government Affairs Conference on Wednesday, May 1, 2013 at the J.W. Marriott Hotel in Washington, D.C.  My colleague Jeff Holmstead will address over 80 owners and plant managers  on what they can expect from EPA in the next 12 to 24 months, including new regulations to limit greenhouse gas emissions at existing power plants.  Of particular interest to these manufacturers is the upcoming ozone rule.

WINDPOWER 2013 – May 5th through 8th in Chicago, IL.