With the Senate Energy and Natural Resources Committee quickly making its way through its first round of energy bill markups this week, what can we expect once the committee takes up more controversial provisions? During today's OnPoint, E&E reporters Ben Geman, Peter Behr and Katherine Ling discuss the legislative challenges posed by transmission siting, the renewable electricity standard and the smart grid. They also assess the Democrats' strategy to move both climate and energy legislation in the same package.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With me today are E&E reporters Ben Geman, Pete Behr, and Kate Ling. Thank you all for coming on the show.
Katherine Ling: It's good to be here.
Monica Trauzzi: Some fresh faces at the table, I like it. Ben, the Senate Energy and Natural Resources Committee begins marking up a series of proposals linked to the big energy bill that we're expecting later this year. They're getting the easy stuff out of the way first. Sort of walk us through what we can expect this week from the committee and then moving forward throughout the month of April.
Ben Geman: Well, that's right. They're marking up a series of four proposals this week and these are essentially things that have buy-in on both sides of the aisle. You know, that said, just because there's buy-in doesn't mean they're not also quite consequential. I mean a lot of it deals with energy efficiency issues which are quite important. One of the proposals is aimed at helping the manufacturing sector in particular, which is a big energy user, become more efficient. Another one is aimed at some further adjustments to the Energy Department's appliance standards program, which has been notoriously slow and so this would create some new deadlines and make some other changes as well. And then there's a couple of other provisions as well. One of them addresses basically just sort of studying how to have the energy sector use less water. And then sort of separate from the efficiency part of that they're also trying to sort of retool the Energy Department's research and development programs through a number of steps. They would increase some of the funding authorizations, but they would also provide for some expedited hiring at the Energy Department, especially for very sort of high level and technical positions. And the reason that's important is because, one, the new Energy Secretary, Steven Chu, has vowed to really kind of boost these R&D programs and especially this sort of need to get technologies from the kind of research stage and bridge that gulf and get them sort of out into the more deployment and real world stage. And there's also a huge amount of money coming to the Energy Department from the recent stimulus bill, you know, on the order of $40 billion. And so there's really going to need to be some new people brought on and there's a thought that, one, they need to be able to pay them and, two, they need to be able to bring them on with some speed. And that was also addressed in the stimulus bill itself. And then from there it's going to get a little bit more difficult. They're going to do this markup this week and then they're going to go on the April recess and start to bring up a series of proposals that have sort of much less buy-in all around and some of the knotty issues, which I think we'll probably talk about more are, of course, electricity and transmission issues and several others too.
Monica Trauzzi: Kate, one of those issues, transmission siting, very controversial, basically focusing on who should hold jurisdiction over the siting of new transmission lines. Is FERC winning the battle here? Where does the debate exist and where do you see this going over the next several weeks?
Katherine Ling: Well, I don't know if FERC is winning the battle, but there's certainly a push right now to get the transmission siting going faster than it is, especially with the push for renewable energy. A lot of it is located in remote locations that aren't near cities and demand centers. So in order to get more renewable energy generation, they need to build the transmission lines. And a lot of that goes across interstate. And this current state commission just takes too long going from state to state to state. So that's where the push for expanded federal siting in Federal Energy Regulatory Commission expanded authority. But the issue is certainly not settled. There are some questions about whether the new transmission lines should just be for renewable energy and if that's possible. There's also questions about FERC itself because some of the states like Connecticut and Oregon have had interesting experiences with FERC as far as siting liquefied gas terminals and they don't think that FERC should have the expanded authority. There's also questions about should be actual planning of the transmission, should it be regional? Should they try to do sort of smaller access to closer renewable energy? Should it be more national or something called the interconnects? There's an Eastern and a Western one in Texas. And then the state regulators are also pushing for sort of a bottoms-up approach as opposed to a top-down approach. While they seem to be giving a little bit more, saying, okay, maybe we could think about having expanded federal authority, but we would like more say in how it's planned. And then there's the issue of cost allocation, which is a huge issue and they haven't really even touched that yet and it's going to come up. It came up a little bit in the hearing earlier in March where a senator said, "Well, why should our constituents pay for a transmission line that just goes through our state and we don't get any power?"
Monica Trauzzi: Okay, and Pete, the renewable electricity standard, something near and dear to Senator Bingaman's heart. It's come close to the finish line in previous years. Do you think this is the year for the RES to actually pass? Where do you see this debate going?
Peter Behr: I don't think it's clear. It should pass given the Democratic majorities in the House and the Senate. But a lot of Republicans don't like it and so the first question is whether Senator Bingaman can get a renewable standard out of his committee, whether there's some meeting ground between the Democrats and Republicans. If he has to pick a lower number for the target than the House is likely to pass, then that sets up a difficult struggle with the House if they got to a conference committee. His other option is to just forget about it in the committee and then try to pass it on the floor as they've done before. So I think that there are still a lot of question marks about how the renewable standard is going to go forward.
Monica Trauzzi: And Kate, another issue that's come up recently is the lack of standards and policies relating to the smart grid. It's a huge hurdle for the implementation of smart grid technology. So what's being done on that front to get these standards and policies in place?
Katherine Ling: It is a big hurdle right now. The stimulus package gave the Energy Department $4.5 billion, basically matching grants to get the smart grid projects going. A lot of the utilities and state regulators have not wanted to implement projects yet because there are no standards in utilities and regulators don't want to have stranded investment, don't want to have technology that becomes obsolete and can't communicate with the other technology. The smart grid includes everything from generation, transmission, distribution, all the way to the meters in the consumer's home, which has been getting more attention. So there are also issues with cybersecurity and part of that is the standardization, that you can't protect something if you don't know exactly the different technologies are going to be. So that's something that DOE, the National Institute of Standards and Technology, FERC and industry have all been sort of struggling to get together. Right now most people are saying it's going to be at least a year before the standards can be completed and that's with everyone pushing hard. I know the chairman of FERC, John Wellinghoff and Frederick Butler, the president of the National Association of Regulatory Utility Commissioners, NARUC, they're pushing hard. And I know the Senate has been putting a lot of pressure on them to get it done. Secretary Chu has suggested locking them all in a room to get it done, but I think it's going to take a little bit more than that.
Monica Trauzzi: Pete, so clearly there's a lot of controversy, a lot to still be debated here, but there's also a lot of urgency in the Senate and House to get this legislation moved quickly. Do you think that there's a little too much urgency and are they leaving enough time to actually vet these issues appropriately?
Peter Behr: Well, they are complicated. Kate mentioned this issue that Senator Reid brought up, possibly getting electrons from renewable generators priority on new transmission lines that are built to help get more renewable energy on to the grid. Senator Bingaman is just dead set against that and his technical advice is that you can't do it, that there really isn't a practical way to connect major new transmission lines with the grid and then try to decide whether they're going to take green electrons or brown electrons. So he'll hold to that position and to me it illustrates how complicated a lot of these issues are when you start making huge changes to the grid. Do they have enough time? You know, they're going to take as much time as they have and the committee understands these issues. The Senators will deal with them when they have to and it will just play itself out and we'll hope for the best.
Monica Trauzzi: Ben, I'll throw the final question out to you. Both the House and Senate leadership continue to say that they plan to combine energy and climate into the same package later this year. What's the strategy behind this move? I mean explain the reasoning there and what some of the pitfalls can be of approaching it in this way.
Ben Geman: Well, I think there's a few reasons why we're seeing, on both sides, this effort to have a one-bill strategy and I think we're supposed to see some language actually later this week from the House side specifically. One of the reasons to do it is simply there's a logic to combining energy and climate change related measures because so much of the greenhouse gas emissions that lawmakers are looking to reduce are coming from the energy sector in one way or another. And I also think that there's a question of schedule. You know, it's a very packed agenda with a lot of priorities for the Democrats and for the administration, you know, education and health care and many other things. And any type of big bill, especially on the Senate floor can often take multiple weeks. There's also some other pressures as well. There is, of course, a big international climate conference in Copenhagen later this year and I think there is an effort to sort of try and have the U.S. have its climate policy more settled by that time. All that said, you know, this creates a huge number of problems. I mean as we've been discussing, there's already a number of controversial provisions simply on the energy part of it here. Tacking on a cap-and-trade piece brings up a whole other set of issues, so if I and to predict I think that like with any negotiation you sort of start off with perhaps you shoot for the moon and try and put it all together. And I think then from there we might be likely to see some of the energy parts happen more quickly if there's a thought that they can't get a climate bill off the floor. You know, Bingaman, for example, has already said he doesn't want to see some of these energy provisions "held hostage to a climate bill." So yeah, to bring it back around, right now, the strategy is a one-bill strategy, but I think it's very up in the air whether or not it stays that way. In fact, now that I think about it, in 2007 maybe there's a little bit of a precedent here. There was a big energy bill and originally on the Senate side they tried to have it include a renewable electricity standard as well as a whole slew of oil and gas related tax provisions and they gave it a shot. Didn't get there, stripped that stuff right out and passed the bill with much more support. So, to the extent that that provides an example I think perhaps later this year we could see, I'm often wrong, but we could see the energy provisions come out and move more quickly.
Monica Trauzzi: Very interesting. All right, a lot to watch over the next few months. Thank you all for coming on the show.
Peter Behr: Thank you.
Ben Geman: Sure.
Katherine Ling: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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