Chu’s absence to loom large at House hearing on controversial transmission plan

Source: Hannah Northey, E&E reporter • Posted: Monday, September 10, 2012

Energy Secretary Steven Chu’s absence at a House Natural Resources hearing this week will loom large as lawmakers, industry groups and one clean energy advocate debate the Obama administration’s controversial plan to upgrade the electric grid using power marketing administrations.

The secretary declined a second request to answer questions in person about a memo he sent to the country’s four administrations in March, triggering sharp criticism from House Natural Resources Chairman Doc Hastings (R-Wash.). Chu also declined to testify at a hearing in April because he was traveling (E&E Daily, April 27).

“The chairman is disappointed for a second time that Secretary Chu won’t make himself available and explain a memo that he, himself, solely signed that could increase electricity prices,” said Spencer Pederson, Hastings’ spokesman.

In Chu’s absence, Lauren Azar, a Department of Energy senior adviser who spearheaded the initiative, will answer questions, alongside proponents and critics of the memo.

At issue is an initiative that calls on the nation’s four power marketing administrations — the Bonneville Power Administration, Western Area Power Administration, Southeastern Power Administration and Southwestern Power Administration — to leverage partnerships, rate-making power and financing to upgrade power lines and boost reliability and access for renewables (E&ENews PM, March 16).

Azar has defended the initiative as an avenue for upgrading the country’s aging electric grid and supporting a surge of new clean energy. The memo, she’s said, will “capture the economies of scale” in the electric sector and eventually decrease costs for customers through energy efficiency and demand response (E&E Daily, March 21).

But the initiative has triggered debate in the energy sector on a number of fronts.

Mark Crisson, the American Public Power Association’s president and CEO, who is slated to testify, has sharply criticized the plan and said it will likely raise electricity costs for customers who depend on cheap hydropower from the power marketing administrations. The DOE entities are independent companies within the department that market wholesale electricity, mainly from federal hydropower projects.

Crisson has said Chu’s call for the DOE entities to implement rate designs to provide incentives for renewables, demand response and energy efficiency is “in reality a euphemism for shifting costs from one market participant to another.”

Criticism has also gained traction on Capitol Hill.

In June, a bipartisan group of 166 lawmakers — including 40 senators and 126 House members — accused Chu of trying to change the role of the nation’s power marketing administrations without congressional approval. The lawmakers referred to the initiative as a “Washington, D.C.-based top-down approach” that utilities, rural electric cooperatives and local officials fear could alter the historical role of the power marketing administrations (E&ENews PM, June 11).

A coalition of clean energy and environmental groups say the issue is more complicated.

The grid is aging — some parts are more than 100 years old — and faces new and more complex demands as an increasing number of renewable generators seek to interconnect, and the system needs upgrades that will allow for the system to evolve, said Jim Baak, the director of policy for Utility-Scale Solar and the minority witness. Chu’s memo, he said, would lay the groundwork for smoothing out power flows as states, namely in the West, replace large, centrally located generators with more variable wind and solar sources.

Members of the Western Clean Energy Advocates, a coalition of renewable energy and wildlife advocates and energy trade associations, have also backed Chu’s memo at a series of meetings the DOE held throughout the country this summer.

But Baak acknowledged the DOE’s approach of issuing the memo hit a live wire in the West, where local control is a big issue. The groups, he said, have “made some good points about how the department went about getting these initiatives out, and maybe not working as closely or collaborating” with customers of the power marketing administrations.

“These local utilities … are locally owned, and anything that looks like centralized control or directives from anyone in Washington, D.C., is met with a lot of resistance,” he said. “They see that as potentially leading to higher rates, that’s a lot of the concern.”

Even so, Baak said he believes public power customers will benefit significantly from the steps outlined in Chu’s memo, especially in areas where states are imposing stricter requirements for larger amounts of renewable power. Congress has also changed the role of the power marketing administrations in the past, Baak noted, pointing to DOE’s decision to give the Western Area Power Administration billions of dollars in loan authority (Greenwire, Nov. 9, 2011).

“It’s logical that these agencies of the federal government … support the policies of the administration and of Congress,” he said.

Schedule: The hearing is Tuesday, Sept. 11, at 11:30 a.m. in 1324 Longworth.

Witnesses: Ed Anderson, manager of the South Dakota Rural Electric Association Inc.; Joel Bladow, senior vice president of transmission at Transmission, Tri-State Generation and Transmission Association Inc.; Scott Corwin, executive director of the Public Power Council; Mark Crisson, president and CEO of the American Public Power Association; W. Kent Palmerton, general manager of the Power and Water Resources Pooling Authority; and Jim Baak, the director of policy for Utility-Scale Solar.