Energy and Environmental Update
Congress is back in town this week after a very busy week last week. In addition to the various and diverse appropriations-related hearings and activity related to the House Budget that were reported on in last week’s Update, much of Washington was focused on the activity of the Senate Finance Committee, with its newly minted Chair, Ron Wyden (D-OR)(see below).
This week will see a continuation of appropriations work with various senior administration officials coming before Congress. Environmental Protection Agency (EPA) Administrator Gina McCarthy, for example, will testify before the Senate Interior, Environment and Related Agencies Subcommittee on Wednesday. The Interior appropriations bill is typically one that insiders describe as “toxic” for floor consideration because of the possibility of so many amendments being offered given EPA’s ambitious regulatory activity. McCarthy will likely face some tough questions during the hearing. Secretary Moniz will also be busy, especially later in the week, when he defends the Department of Energy budget on Wednesday, April 9, before the Senate Energy-Water Appropriations Subcommittee and on Thursday, April 10 before the House Science Committee.
On the Floor, the House is expected to consider the Ryan 2015 Budget proposal which provides for 10-year budget cuts of more than $5.1 trillion in federal spending but in the short term is consistent with last year’s budget deal (Public Law 113-67), that includes $1.014 trillion in discretionary spending. Leadership anticipates that despite a significant number of GOP Members voting against the bill and no Democrats voting in favor, they will be able to pass the measure. The Senate will not take up similar legislation.
On the Senate side, the upper chamber is anticipated to consider a number of non-energy related items. There is chatter, however, that they might begin debate on the tax extenders package once they return from the upcoming two-week work period.
Both the House and Senate will depart at the end of this week for two weeks. They will return on Monday, April 28, 2014.
Senate Finance Committee Approves Extenders Legislation with Limited Amendments
After the dust settled, the Committee approved a bill that included few of the filed amendments that were circulated earlier last week. Part of the package that was approved was the two-year extension of the Production Tax Credit (PTC) that won approval by voice vote. In addition to providing for the PTC extension, any projects would be eligible for the credit if they were placed under construction before the end of 2015 instead of being completed and then placed in service as a litmus test for eligibility.
Notably, in a move that foreshadows the winding down of the tax incentive and which has been a top of discussion for some time, Senator Thune (R-SD) – traditionally a strong wind proponent – offered and withdrew an amendment that would have extended the tax credit until 2018 but would limit the credit at its current value 2.3 cents per kilowatt hour for those placed in service in 2014. Projects placed in service in 2015 would receive a 10 percent lower credit. The proposal would provide for a similar 10 percent reduction each year until 2018 before being completely phased out. This phase-out initiative resembles a provision included as part of Ways and Means Chairman Dave Camp (R-MI) proposal released earlier in the year.
Of note, the House Ways and Means Committee will hold a hearing Tuesday, April 8, regarding expired tax provisions that Chairman Camp believes should be made permanent. The PTC is not one of those provisions.
Items of Interest
- McCabe Comes Before Environment and Public Works Committee. As anticipated in a previous Washington Energy Update, Janet McCabe, the nominee to head the EPA Office of Air and Radiation, will appear before the EPW Committee for her confirmation hearing on Tuesday, April 8. Insiders anticipate a robust hearing because McCabe has been at the Obama EPA in the number two role in the Office of Air and Radiation (OAR) before her nomination, was also assigned to serve as Acting head of the EPA Air office. Also at the table during the hearing will be Ann Dunkin, nominee to head the EPA Office of Environmental Information.
- Senate Agriculture Committee to Vote on Pending Commodity Futures Trading Commission Nominees. On Thursday, April 10, the Committee will consider and vote on the nomination of Timothy Massad to serve as U.S. Commodity Futures Trading Commission (CFTC) Chairman. Massad has held various roles at the U.S. Department of the Treasury. The Committee also will consider the nominations of two candidates to serve as CFTC Commissioners: J. Christopher Giancarlo, previously employed at GFI Group, an inter-dealer broker, and Sharon Bowen, a partner at Latham & Watkins and acting chair of the Securities Investor Protection Corporation. Insiders anticipate that the nominees will be approved by the Committee.
- Grid Reliability Focus of Energy and Natural Resources (ENR) Committee. Also on Thursday, the ENR Committee will scrutinize issues related to grid reliability with a specific focus on concerns surrounding physical security. The matter has been of specific interest as a result of last year’s sniper attack on a California facility. Sen. Murkowski (R-AK), the senior ENR Republican, remains very focused on whether the disclosure of an internal Federal Energy Regulatory Commission (FERC) report regarding threats to the power grid, which was reported on by the Wall Street Journal recently, was a violation of existing law. Sources indicate that the controversy surrounding the leaked report could spill over into the Norman Bay nomination and could stymie his chances to be confirmed to serve as FERC Chair. Bay is the current head of the FERC Office of Enforcement. Acting FERC Chair Cheryl LaFleur is the expected witness.
- Schumer Calls for FTC Investigation Regarding Electric and Gas Markets. Echoing the sentiments of a similar recent letter addressed to FERC from six of his New England colleagues, Senator Charles Schumer (D-NY) has sent a letter to the Federal Trade Commission (FTC). In his correspondence, he urges the FTC to “directly support ongoing investigative efforts led by the Federal Energy Regulatory Commission to determine whether any wrongful conduct or uncompetitive practices took place this winter as record cold temperatures drove up natural gas and electricity prices to record levels.” His letter asks them to investigate and ensure that the high winter electricity prices did not result from artificial inflation but instead were due “exclusively to market factors such as increases in demand and supply constraints and not by uncompetitive practices or wrongful conduct.” Schumer also noted that the New York Public Service Commission and the New York Independent System Operator have both asked FERC to investigate the performance of natural gas markets during extreme cold weather events. Schumer’s letter can be accessed here.
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