How will the Senate's June 10 vote on Sen. Lisa Murkowski's disapproval resolution affect the climate debate? During today's OnPoint, David Brown, senior vice president of federal government affairs and public policy at Exelon Corp., gives his take on the impact of the vote on the Alaska Republican's measure. He also discusses the nuclear provisions in the Kerry-Lieberman climate bill and explains how the inclusion of nuclear in the legislation may affect the bill's final vote count.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is David Brown, senior vice president of Federal Government Affairs and Public Policy at Exelon. David, thanks for coming on the show.
David Brown: Thank you.
Monica Trauzzi: David, news coming out of the Senate that there will be a vote on Senator Murkowski's disapproval resolution on June 10. It's a vote on whether EPA should regulate emissions through the Clean Air Act. It needs 51 votes to pass the Senate. Do you believe that this could pass the Senate and, if it does, what then does it do for the prospects of the Kerry-Lieberman bill?
David Brown: Right, I think that most observers think that they're probably in the mid-40s right now. That could change over the next week or so, but I think people have had enough time to kind of digest the dynamics associated with the resolution. I think if it did pass, certainly, opponents of the bill would make a lot of political hay out of that, but at the same time I think this isn't really a total test vote on where we might be on Kerry-Lieberman. I think that some people who will vote for this resolution would actually support legislation. They just don't think that EPA should take the lead. You may have others who oppose it who would go the other way on legislation. So, we'll see how it plays out, but it will certainly be an interesting debate.
Monica Trauzzi: On the Kerry-Lieberman bill, a nuclear title was included. There's been some criticism of it already. There are concerns that it doesn't adequately address safety issues. Do you believe that more can be done on nuclear safety in that bill?
David Brown: I think the nuclear industry has got a phenomenal track record on safety and I'm not sure what opponents would point to in terms of what's lacking there. I think that the operational record of the industry is unprecedented and it's something that we look forward to continuing. It's certainly job one at Exelon and I know that others in the industry share that perspective as well.
Monica Trauzzi: So, should the Nuclear Regulatory Commission be given a timeline for approving licensing new plants or should they do things at their own pace?
David Brown: Well, I think if you set a goal that's good to have and I think even the commission recognizes that that's beneficial. At the same time, things can come up and do come up in proceedings that could delay things past any kind of a deadline, so they should retain the flexibility to deal with things on a case-by-case basis. But having a goal is a healthy thing for a regulator I think.
Monica Trauzzi: How significant is the inclusion of the nuclear title?
David Brown: I think it's very significant. I think we've seen growing bipartisan support for new nuclear. I think that this is yet more evidence of that fact and I think it goes a long way towards getting the nuclear renaissance kind of jump started here. There's been a lot of debate and a lot of criticism that doesn't go far enough from some and if you look at the modeling that's been done on climate legislation in the past it kind of anticipates that you'd need 125 or so new nuclear plants over the next several decades. This clearly doesn't get you there, but that's a debate for another day perhaps, but I think this is a good, good start.
Monica Trauzzi: Does the inclusion of the nuclear title help secure additional votes and, if so, who might jump on board?
David Brown: Sure, well, I think it's one of those that's kind of necessary, but not sufficient for a lot of members. I mean you've seen Senator Graham pushing for new nuclear. You've seen a lot of other Republicans as well and even Democrats fighting for a robust nuclear title and I think that this bill accurately reflects that desire.
Monica Trauzzi: So, how would the inclusion of the nuclear title impact your company's day to day and your short-term outlook?
David Brown: Right, well, we've got a short-term and a long-term. Short term I think that we will proceed with our plans for upgrades at our existing fleet. We think that we can add another 1500 megawatts in new power from our current fleet and that those will be economic under a carbon constrained environment. Longer term, I think there's still a lot to be seen. John Rowe, our chairman has said that we basically need a $25 price on carbon and eight dollar natural gas before we would build in a merchant environment and I think this bill is kind of the first step towards getting us there. I think the bottom line is…the most important component is that it starts to put a price on carbon so that we can make informed investment decisions going forward.
Monica Trauzzi: So, do you think that Senators Kerry, Lieberman, and also Graham hit the sweet spot with this bill enough to please both industry and environmentalists?
David Brown: I think it's a good start. I think it's an excellent start and I think the momentum that it generates is very, very positive as well. I think for the first time you had members going out and actively engaging other senators in a debate about what it would take to get their support. And that's a conversation that hasn't happened a lot in the past and members have been reluctant to engage in that kind of debate, but I think this is a great starting point and a great jumping off point.
Monica Trauzzi: You say it's a good start, what's missing then?
David Brown: Well, I think that's for individual senators to decide and I think that as part of the debate that will play out here in the next several months. For us, I think that we think it's a very well-balanced package and we're very supportive of the Senate moving ahead this year.
Monica Trauzzi: Does it get across the finish line?
David Brown: Well, I think the chances are still remote. I think that John, in some remarks a couple of weeks ago, said that he put the chances between five and 25 percent. I think the chances of the bill passing as it is now it would remain remote, but with a little work that we could get there.
Monica Trauzzi: Exelon 2020 is your company's plan to reduce its own emissions.
David Brown: Yes.
Monica Trauzzi: Does it require a federal emissions plan to be passed in order for that to happen?
David Brown: No, not at all. We've set out a very aggressive goal of eliminating, displacing or offsetting all our emissions by 2020. We're over a third of the way there. We're using a variety of techniques to get there, whether it's the retirement of fossil plants, redoing our facilities. We've got a goal of improving our energy efficiency by 25 percent at each of our facilities. Our corporate headquarters is the largest LEED certified platinum commercial interior renovation in the world, so we're very proud of that. We've also got perhaps one of the largest alternative fuel vehicle fleets as well. I think we're the first or second largest biodiesel user in the country.
Monica Trauzzi: But are there still certain guarantees or incentives that you need from the federal government?
David Brown: Not to implement the plan for ourselves, but, at the same time, we are a very, very clean company. As the largest nuclear utility in the country we're uniquely situated to set that kind of a goal for ourselves.
Monica Trauzzi: So, the economics of a cap and trade, a climate plan are always at issue. What kind of certainty do you think there is that by passing a climate bill we won't further damage the economy?
David Brown: Well, I think the price collar that's in Kerry-Lieberman is very critical. It was a huge issue for industry and I think it gives people a lot of comfort to know that there is a cap on what we're looking at. I think setting a price on carbon is going to get us into a new environment where we can actually make informed investment decisions. EIA has said that we probably need about 25 percent more power by 2030 just to maintain the raw ability of the system. A study that's been done for the Edison Electric Institute says that that takes a trillion to a trillion and a half dollars in new investment in transmission, distribution, and generation. Most of that is in generation and most of those investments are 60-year investments. So, it's critical that we get this locked in so we can move ahead.
Monica Trauzzi: OK, we'll end it there. Thanks for coming on the show.
David Brown: Great, thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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