End Market Distortions to Keep Energy Sector Competitive

To call U.S. power sector developments of the last couple weeks “interesting” would be an understatement. Two weeks ago, the Department of Energy issued a Notice of Proposed Rulemaking (NOPR) that aims effectively to bring back or keep online some of the less competitive coal and nuclear power plants. That proposed rule was followed this week by the announcement of a proposal to repeal the Clean Power Plan, a centerpiece of President Obama’s climate agenda. Obviously, if one or both of these plans reach the finish line, in one form or another, it will mean big changes for the sector. But for time being, let’s focus on the first item, which has been called by experts a “grenade lobbed into competitive energy markets.” The NOPR to the Federal Regulatory Energy Commission suggests the adoption of a rule that would require utilities in competitive energy markets to pay each eligible resource its fully allocated costs (their fixed investment costs plus their electricity production) and a fair return on equity if these plants have 90 days of fuel supply on-site. On the surface, requiring 90 days of fuel supply favors nuclear and coal, since natural gas plants receive fuel through pipelines. It’s…

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Only days remain for Senate to repeal methane rule using CRA

Thursday is the final day for the Senate to make use of the Congressional Review Act’s expedited procedures to repeal the Bureau of Land Management’s venting and flaring rule. Members of the Senate are expected to vote Wednesday on a disapproval resolution to nullify the rule. That’s cutting it close for a resolution requiring only a simple majority of those present to pass. Republican leaders have been working for weeks to round up the necessary 51 votes (less if not all Democrats happen to be in town for the vote). The effort has been made more challenging by the early defections of Republican Sens. Susan Collins of Maine and Lindsey Graham of South Carolina. The absence from Washington of Republican Sen. Johnny Isakson of Georgia, who has been recovering from back surgery, has also complicated the logistics of holding a vote. A handful of GOP senators has also kept a close hold on how they would vote on a disapproval resolution. Whether to avoid outside pressures or as leverage in negotiations on other legislative priorities, nearly all Republicans are now expected to support repeal of the methane rule. And then there’s ethanol. Bloomberg reported last week that four Midwest Republicans, led…

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Infrastructure Investment Essential to U.S. Interests in the Arctic

Alaska received a C-minus for the general condition of its infrastructure on its most recent report card from the American Society of Civil Engineers, and even lower grades for the shape of its ports, marine highways, and other facilities. The report highlights one of the biggest challenges facing state leaders grappling to close a nearly $3 billion budget deficit – how to rebuild the economy while simultaneously reducing government outlays. The mediocre marks are doubly troubling given the essential role of infrastructure in providing a strong foundation for economic growth. In the Arctic – a region quickly emerging as a new theater of economic importance – the report underscores the near lack of infrastructure altogether. It’s an open question where the funding will come from to rehabilitate and replace aging infrastructure, while also underwriting the deep-water ports, bridges, roads, pipelines, telecommunications, schools, water treatment facilities and other infrastructure necessary to support an emerging Arctic. Legislators, already tied up in knots over proposals to increase taxes on the oil industry as well as on individual Alaskans, show little appetite for major capital expenditures. Federal coffers are a potential source – particularly if President Trump can be convinced of the national economic…

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Senate has until week of May 8 to vote on methane rule

We all knew there was a possibility of last minute additions to the president’s executive order on energy and environmental policy – and that’s appears to be what happened with the decision to include methane restrictions under the broad call for agencies to review the policies of the previous administration. But while President Trump included the methane in Tuesday’s EO, that action should not be construed to mean Sen. John Barrasso’s (R-Wyo.) Senate Joint Resolution 11 to nullify the Bureau of Land Management’s rule on the venting and flaring of methane is no longer needed. The Congressional Review Act (CRA) process is still preferred. Unraveling the methane rule at the agency level will require months of staff work and will undoubtedly face vigorous legal challenges from environmental groups that could delay it for up to two years. On the other hand, Senate passage of a disapproval resolution under the CRA would be quick and efficient, saving both the agency time and resources. Senate Republican leaders remain committed to bringing up Sen. Barrasso’s resolution as soon as they have the votes. That whip operation continues. A CRA resolution of disapproval requires a simple majority of 51 votes to pass the Senate,…

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Clock is ticking on Senate disapproval resolution on BLM methane rule

Happy Friday. You made it. What now?

If you’re a member of the House of Representatives, you still have a vote on the repeal of Obama’s signature health care law to look forward to later today. While the whip count in the House continues, one thing that is clear is that next week’s Senate calendar will look a whole lot different if the House does not vote on repeal-and-replace legislation today.

The Senate has been holding the floor calendar open in anticipation of health care legislation coming over from the House, and at this moment it’s unclear what could take its place. One piece of unfinished business is the disapproval resolution on the Bureau of Land Management’s methane venting and flaring rule.

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