Viohl & Associates

A Government Relations Firm

header photo

Blog posts February 2009

Energy Update, February 24, 2009

In the States
SC – Governor Mark Sanford has announced his opposition to the construction of a new coal-fired power plant, though the plant’s fate is up to state regulators.  Shortly after the Governor’s announcement, the Public Service Commission agreed to grant permits for a new nuclear reactor by the same company that is seeking to build the coal plants, Santee Cooper.   The Governor cited environmental reasons for his opposition to the coal plant, as well as rising costs for coal and the potential for federal regulation of greenhouse gases.  Sanford opposes coal plantCharleston Post & Courier
TN – Governor Phil Bredesen has unveiled a new plan for a solar research center to be housed at the University of Tennessee and the Oak Ridge National Laboratory.  The goal of the project would be to develop solar technologies that would lower the price of solar energy by as much as 90%, manufacture those products, and export them to the rest of the country and the world.  The State has already approached the private sector in search of funding and will require a great deal of federal funding to complete the project.  Governor proposes solar research lab involving ORNL, UT Oak Ridger
VT – The Vermont Yankee nuclear power plant will be shut down in 2012 unless it can convince the administration of Governor Jim Douglas that it should be allowed to continue producing power for another 20 years – something it has been unable to do thus far.  The plant has entered into a revenue-sharing agreement with utilities, the economic benefits of which are estimated at between $200 million and $800 million for Vermont, but the administration and some legislators claim its benefits are too uncertain.  The plant owners have also not contributed to the plant’s decommissioning fund since taking over the plant seven years ago.  Douglas: Yankee must prove its worthRutland Herald
WV – Governor Joe Manchin announced his intention to modernize energy use in West Virginia during his State of the State speech, in which he proposed requiring electric utilities to obtain 25% of their power from alternative sources by 2025.  The standard is written in a way that would allow coal plants to comply by using carbon capture and sequestration or other clean coal technologies.  Governor’s energy plan gets mixed reviewsCharleston Gazette
Federal News
Stimulus – On February 17, President Obama signed the American Recovery and Reinvestment Act (ARRA) of 2009, which is intended to stimulate the economy and create millions of jobs through $787 billion in appropriations and tax cuts.  The final bill approved by Congress includes more than $66 billion of energy initiatives; $44.7 billion in appropriations and $21.6 billion in tax cuts.
Appropriations – Under the legislation, the Department of Energy will receive more than half of the energy funding, or $27.3 billion, mostly through Office of Energy Efficiency and Renewable Energy (EERE).  Funding includes:
  • $5 billion for the Weatherization Assistance Program;
  • $3.1 billion for the State Energy Program;
  • $3.2 billion for Energy Efficiency and Conservation Block Grants, of which $2.8 billion will be distributed by formula and $400 million will be awarded on a competitive basis;
  • $2.5 billion for renewable energy and energy efficiency research, including $800 million for biomass and $400 for geothermal projects;
  • $2 billion for grants to manufacture advanced battery systems and vehicle batteries, including advanced lithium ion batteries, hybrid electrical systems, component manufacturers, and software designers;
  • Other EERE funds include $400 million for support for electronic technologies for vehicles, $300 million for the new Alternative Fueled Vehicles Pilot Grant Program, and $300 million in rebates for energy-efficient home appliances and the Energy Star program.
The Department of Energy is also provided $4.5 billion to be spent on R&D, pilot projects, and federal matching funds to modernize the electricity grid and allows DOE to provide financial assistance to utilities for up to 50 percent of the cost of qualifying advanced grid technology investments. Another $6 billion is appropriated for loan guarantees to support more than $60 billion in loans for renewable energy systems including new installations and upgrades of incremental hydropower and electric power transmission systems that are commenced prior to September 30, 2011.  Up to $500 million may be used for biofuel projects that will substantially reduce life-cycle greenhouse gas emissions compared to other transportation fuels.
DOE’s Fossil Energy Research and Development program will receive $3.4 billion in grants for the development of emission-reducing technologies, including $1.5 billion for carbon capture and sequestration projects.
The Department of Housing and Urban Development will receive $4.76 billion to retrofit public, low-income, and Native American housing to increase energy efficiency.  Similarly, the General Services Administration will receive $4.5 billion to retrofit federal buildings.
The ARRA also authorizes $3.5 billion in additional borrowing power for the Western Area Power Administration (WAPA) and the Bonneville Power Administration to help finance projects that expand and update transmission lines or facilitate the transmission and delivery of electricity generated by renewable energy projects.  In addition, $500 million is appropriated to the Department of Labor for green job training and $400 million is provided to the Advanced Research Projects Agency – Energy.  Conference Report [pdf]Government Printing Office and American Recovery and Reinvestment Act of 2009 (H.R. 1) [pdf]Government Printing Office
Tax Provisions – Energy-related tax cuts are expected to reach $21.6 billion.
The largest component is the multi-year extension and modification of the renewable energy production tax credit, which would extend the placed-in-service deadline to receive a tax break on energy produced by wind, biomass, geothermal, or other alternative sources for three years, at a cost of $13.1 billion.  Other provisions include tax credits for:  energy-efficient improvements to existing homes ($2 billion); purchasing plug-in electric vehicles ($2 billion); investments in certain Treasury Department-approved advanced energy projects ($1.6 billion); and refueling infrastructure for alternative fuels ($54 million).  The bill also includes $1.4 billion for renewable energy and conservation bonds, $872 million for an elimination of the cap on individual alternative energy production credits, and $285 million for a temporary option for alternative energy producers to claim the investment tax credit in lieu of the production tax credit.  Summary of Tax Provisions in the American Recovery and Reinvestment Act of 2009 [pdf]House Ways and Means Committee
In an effort to speed up the process of dispersing grants and loans for the provisions included in the stimulus, the Department of Energy has begun reorganizing the way it accepts, processes, and approves applications.  The Department says it should begin offering loan guarantees under the previous program by early May and under the new recovery funds by early summer, with 70% of the stimulus funds spent by the end of 2010.  DOE to OK stimulus energy projects by early summer - Reuters
Despite $2 billion of investment in transmission lines included in the recently-enacted economy recovery legislation, and another $6.5 billion provided by the U.S. House and Senate for low-interest loans to two federal power authorities, alternative energy faces significant transmission challenges.  In order to make use of solar and wind power generated in remote locations such as the desert and hilltops, thousands of miles of new power lines will be required to connect these energy sources with the existing national electricity grid.  Some experts predict this effort will cost $100 - $200 billion.  In addition, proposed transmission lines must undergo a lengthy review process and will have an impact on the local environment, often making their siting controversial.  Alternative energy still facing headwindsWashington Post
Other news – Rep. Edward Markey, Chairman of the Select Committee on Energy Independence and Global Warming and Rep. Todd Platts have introduced a bill in the US House of Representatives that, if passed, would create a federal renewable energy standard, while a similar discussion draft is being circulated in the US Senate by Sen. Jeff Bingaman, Chairman of the Energy and Natural Resources Committee.  The Markey-Platts bill would require that utilities gradually increase the amount of electricity generated by renewable energy starting at 6% in 2012 and ending at 25% by 2025.  The Senate draft would require that 4% of electricity come from renewable sources by 2012 and gradually increasing every two to three years to 20% by 2020.  Separately, Rep. Markey has introduced a bill that would require that appliances and buildings meet certain standards to reduce the amount of energy they consume.  The goal of the legislation would be to reduce electricity consumption nationwide 15% and natural gas consumption 10% by 2020.  American Renewable Energy Act [pdf]Reps. Edward Markey and Todd Platts and Renewable Portfolio Standard Legislation [pdf]Sen. Jeff Bingaman and Markey, Platts introduce renewable energy legislation to create jobs, build clean power and fight global warming [press release]Select Committee on Energy Independence and Global Warming and Save American Energy Act [pdf]Rep. Edward Markey
The Environmental Protection Agency is currently reviewing the policy of former president George W. Bush that the agency would not regulate carbon dioxide emissions under the Clean Air Act.  If the EPA decides that carbon dioxide is a pollutant and therefore regulated under the act, anyone emitting more than 250 tons of carbon dioxide would be subject to EPA regulations.  The EPA is expected to decide to regulate utilities and other major polluters of carbon dioxide under the Clean Air Act, but provide exemptions for smaller polluters such as schools or hospitals.  E.P.A. expected to regulate carbon dioxideNew York Times

Go Back

Energy Update, February 10, 2009

In the States
MI – Governor Jennifer Granholm renewed her commitment to reviving the state’s economy through green jobs.  She proposed the Michigan Energy Corps, which would hire thousands of unemployed workers to weatherize 100,000 homes and state buildings.  The Governor also proposed a new program that would be carried out in conjunction with the State’s utilities.  Homeowners would be able to install new energy efficient equipment with no up front cost and the improvements would be paid off through energy savings achieved over time.  These and other new initiatives are intended to help realize the goal she set for the state of reducing the use of fossil fuels by 45% by 2020.  Granholm delivers State of the State, vowing to cut fossil fuels, protect familiesCrain’s Detroit Business
NM – Governor Bill Richardson has signed an executive order creating a new Green Jobs Cabinet, whose job it will be to help facilitate the creation of more jobs and economic development related to clean energy and technology.  The Cabinet’s first report is due in six months and will include energy efficiency, education, and utility-scale renewable energy production among other topics.  Richardson rolls out green jobs cabinetNew Mexico Business Weekly
NV – Governor Jim Gibbons has proposed a system in which new power transmission lines may be built to carry renewable energy at little or no cost to the government.  Under the plan, the state would create a nonprofit corporation that would issue an estimated $3 billion in tax-free bonds to build the power lines.  Governor Gibbons wrote about the plan in a letter to President Obama, in which he also requested changes in the tax code that would facilitate the tax-exempt status of the bonds.  Nevada Governor urges tax-exempt bonds for power linesReuters and Letter from Governor Jim Gibbons to President Barack ObamaOffice of Governor Jim Gibbons
Federal News
Stimulus – On January 28, the US House of Representatives passed HR 1, economic recovery legislation, with no support from Republicans.  This legislation included $43 billion for the Department of Energy (DOE) to use on renewable energy and additional clean energy tax incentives.   
Yesterday, the U.S. Senate overcame a procedural hurdle to pass a similar plan on a 61-36 vote, with three Republicans joining all 58 Democrats and Independents in voting to move forward with consideration a new compromise bill that Senators Susan Collins of Maine and Ben Nelson of Nebraska helped to negotiate.  The Senate bill, which would cost a total of $838 billion, is likely to pass today and includes $39 billion for DOE’s renewable energy programs and many of clean energy tax incentives included in the House legislation.  Both the Senate and House versions now include many of the “green” economy investments promoted by President Obama.
Congressional Democratic leadership hope the differences between this legislation and the House bill, which would cost $819 billion, can be resolved in time for Congress to formerly approve a final version prior to the Presidents’ Day recess next week.
While many of the House bill’s energy provisions are mirrored in the Senate legislation, there are some differences.  The House legislation provides $6.9 billion for Energy Efficiency and Conservation Grants to local governments, while the Senate compromise includes $4.2 billion.  The House bill provides $6.2 billion for the Weatherization Assistance Program, which helps low-income homeowners make energy efficiency improvements.  The Senate provided less than half this amount, or $2.9 billion.  The Senate bill provides a higher amount for fossil fuel R&D, including carbon capture demonstration projects, while the House spends more on federal energy efficiency investments outside the Department of Energy, including upgrades to the federal vehicle fleet to add more alternative fuel and plug-in hybrid vehicles and to improve the federal energy efficiency of federal buildings.
Both the House and Senate bills extend the existing renewable energy production tax credit (PTC) and investment tax credit (ITC) and allow eligible facilities placed in service in 2009 and 2010 to elect to claim the investment credit in lieu of the production tax credit and to also “carry back” the credits against prior profits.  Additionally, the House version allows the owner of a qualified project to receive the value of a tax credit in the form of a grant.  Both also authorize an additional $1.6 billion of clean renewable energy bonds, used to finance facilities that generate electricity from renewable resources, and extend and increase the value of the existing federal tax credits for alternative refueling infrastructure and energy efficiency improvements to existing homes.
Senate Finance and Appropriations committee summaries of the new Senate bill’s tax incentives and spending provisions are attached, as well as a comparison of the Senate bill’s appropriations with the House-passed legislation prepared by Senator Ben Nelson’s office.
Efficiency standards – Congress has ordered that 30 categories of products be more energy efficient over the past 30 years, and each administration in that time has failed to create regulations to enforce the standards mandated by Congress.  Only after the Bush administration was sued in 2005 did the U. S. Department of Energy begin drafting rules, and even then only on 7 of the 30 categories.  President Obama has ordered the Energy Department to immediately begin drafting stricter energy regulations on those products which include home appliances and light bulbs and said that doing so would spur innovation, create jobs, and reduce energy consumption.  Obama orders stricter energy efficiency rulesNew York Times and Obama wants home appliances to be more energy-efficientUSA Today

Go Back

2 blog posts

Contact Us

Hall of the States

444 N. Capitol Street NW

Washington, DC 20009

Phone: 202-624-1478