Senate Passes Bipartisan Energy Bill; FERC Looks at Storage

Posted by Dylan Reed and Arvin Ganesan on Apr 21, 2016 2:58:45 PM


Just last week, we were ready to say that the Senate had experienced a failure to communicate on energy policy. Momentum had been building to include an energy tax title to the Federal Aviation Administration re-authorization bill, which would have addressed advanced energy technologies left out of the year-end extension of tax credits, but the politics turned sour on the tax provisions. While one bill sank under political pressure, however, the long-stalled energy bill suddenly sprang to life, and passed the Senate in bipartisan fashion. Can this spirit of bipartisanship carry this bill all the way to becoming law? Here is our take. 

With an energy bill not being signed into law in a decade, this bill has caught headlines, especially given conventional wisdom that major legislation doesn’t get done in the run-up to a presidential election. The bill sponsors, Sen. Lisa Murkowski (R-AK) and Sen. Maria Cantwell (D-WA), deserve credit for navigating a highly political bill into port on an 85-12 vote. Late last week, senators removed holds on the bill that had previously brought movement to a halt since January. Sen. Bill Nelson (D-FL) lifted his hold after an agreement was struck not to attach votes on amendments regarding offshore drilling for Gulf Coast states to the energy bill. Sens. Debbie Stabenow (D-MI) and Gary Peters (D-MI) also agreed to pull amendments to fund water infrastructure for Flint, Mich., from the energy bill. With these holds dropping off the bill, the Senate was able to move forward.

What about advanced energy in the energy bill? Unfortunately, the legislation fails to offer broad market signals for this growing industry. In order to maintain bipartisan support, major policy initiatives that could have helped or hurt the advanced energy industry were not included. But there were several provisions added that could help AEE member companies. For instance, Western senators successfully pushed for improved permitting for utility-scale geothermal, wind, and solar energy development on public lands. 

Federal agencies will also be looking to energy efficiency providers to comply with updated building efficiency standards. Bloomberg Politics noted that General Electric, Siemens, and Johnson Controls Inc. – all AEE members – could benefit from this provision. In a big step for a bill that has been offered in previous sessions, the Senate added an amendment to include expected energy savings when determining the value of homes in the mortgage underwriting process used by federal mortgage agencies.

Not in the headlines but still important is a provision that requires all regional transmission organizations (RTOs) to report on deployment and potential market barriers for distributed energy resources (DERs) and micro-grids in their service territories. This issue has recently gained steam elsewhere, as CAISO requested that the Federal Energy Regulatory Commission (FERC) facilitate the participation of DERs in its market. AEE submitted comments in support of this tariff filing. 

Sen. Murkowski has stated that she wants to send a bill to the president before Congress leaves on July 15 for the presidential nominating conventions and August recess. Murkowski has spoken with House Energy and Commerce Chairman Fred Upton (R-MI), who also wants to move quickly to get a bill to the president. In order to become law, the Senate bill would need to conference with the House energy bill, HR 8, which passed last year. Just before the Senate passed its bill, Upton expressed optimism about reaching agreement: “I’m convinced that if they pass something, we can get a bill to the president that he’s gonna sign.” 

We’re not so sure. There is a wide gap between the Senate and House bills, in content and in political appeal. The Senate version carried with bipartisan support, while the House version passed on a strictly party line vote. Additionally, both chambers will soon start voting on appropriations bills, which will take the vast majority of floor time. Murkowski recognizes this tough timeline, and will push aggressively to get a compromise piece of legislation complete by the July deadline. 

There was advanced energy action in other branches of the federal government recently as well. In its second major decision on energy markets this year, the Supreme Court voted 8-0 in favor of FERC in the controversial case Hughes v. Talen Energy Marketing. The Court decided that the state of Maryland had improperly intruded into FERC’s jurisdiction over wholesale energy markets. The Maryland program provided an incentive to a natural gas generator to ensure it cleared the wholesale market clearing price. While the state argued it needed to provide an incentive to maintain capacity requirements, the Court ruled against the state as it improperly suppressed federal wholesale market prices.

Writing the Court’s opinion, Justice Ruth Bader Ginsburg defined the case narrowly, however, to allow for future state incentives for generation. “Maryland’s program is rejected only because it disregards an inter-state wholesale rate required by FERC. Neither Maryland nor other States are foreclosed from encouraging production of new or clean generation through measures that do not condition payment of funds on capacity clearing the auction.” 

Meanwhile, FERC's Office of Energy Policy & Innovation requested information from each RTO/ISO on how their market rules impact the participation of storage. The request letters specifically asked “whether barriers exist to the participation of electric storage resources in the capacity, energy and ancillary service markets in the RTOs and ISOs, potentially leading to unjust and unreasonable wholesale rates.” The full letters can be read at FERC’s e-library (docket AD16-20).

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Topics: Federal Policy