GOP poised to tussle over Obama admin’s power agenda

Source: Hannah Northey • E&E • Posted: Monday, March 19, 2012

The Obama administration’s plan to use power marketing administrations to upgrade the transmission grid and bolster renewables and cybersecurity is likely to meet stiff opposition from Republicans on a House Natural Resources subcommittee this week.

Officials from four federal power administrations, the U.S. Geological Survey and the Bureau of Reclamation are scheduled to testify before the House Water and Power Subcommittee tomorrow about President Obama’s fiscal 2013 budget request.

Republicans will quickly turn to Energy Secretary Steven Chu’s memo Friday that outlined a strategy for upgrading an aging electric grid and bolstering renewables, smart grid and cybersecurity through power administrations.

The DOE entities — the Bonneville Power Administration, Western Area Power Administration, Southeastern Power Administration and Southwestern Power Administration — are independent companies within the department that market wholesale electricity, mainly from federal hydropower projects.

Chu called for the administrations to implement a mixture of rate structures, partnerships with neighboring grid operators and financing mechanisms to build and site more transmission lines, bolster the development of renewable energy, install “smart grid” technology and serve as “test beds” for new cybersecurity technologies.

DOE’s efforts could be far-reaching, considering that the entities’ electric systems overlie thousands of miles of transmission and distribution lines in 20 states and cover about 42 percent of the land area of the continental United States.

Republicans say the plan will boost electricity rates for customers across the nation and possibly violate the main goal of power marketing administrations — to provide customers with the cheapest electricity. House Natural Resources Chairman Doc Hastings (R-Wash.) said in a statement Friday that while some of the goals are laudable, the bulk of the proposals could raise power costs “at a time of economic malaise.”

But DOE is planning on working with the power administrations and hopes the changes can be made within their current cost structures, said Jen Stutsman, a spokeswoman for the agency. The overall goal, she said, is to bring down prices for customers and guide the country toward a clean energy economy.

Rep. Ed Markey (D-Mass.) on Friday praised the plan but said the changes should not distract the administrations from their current operations.

“The secretary’s initiative sets a laudable goal for the role of the PMAs into the future and in supporting renewable energy and efficiency,” Markey said. “However, the devil is in the details, and I look forward to seeing how the department implements these strategies while still meeting the PMA’s existing missions.”

Loan authority, infrastructure

Republicans are also likely to renew calls for the government to pull billions of dollars in loan authority for what they say are risky transmission projects being built to access remote wind and solar power.

Rep. Tom McClintock (R-Calif.), the subcommittee’s chairman, has introduced legislation to repeal WAPA’s $3.25 billion in loan authority. The House Natural Resources Committee passed the measure, and it’s now awaiting a vote on the House floor. McClintock said the program ensures ratepayers are on the hook for transmission projects that could fail and experience cost overruns.

McClintock and Hastings were calling on the administration to strip the administration’s loan authority last year when a scathing internal audit from Inspector General Gregory Friedman surfaced. The report found WAPA’s program lacked “necessary safeguards” to protect taxpayer money (Greenwire, Nov. 9, 2011).

The main source of contention was WAPA’s financial support for the Montana Alberta Tie Line. The agency entered a $161 million financing agreement with MATL LLP in October 2009 to develop a 215-mile-long electricity transmission line that would support proposed wind power generation farms in Montana.

The project ran into several roadblocks, including difficulties securing the necessary land after northwest Montana property owners filed a lawsuit against Montana over a state law that granted the utility eminent domain authority. The holdup created cost overruns of up to $70 million, Friedman said in his report.

But WAPA spokesman Randy Wilkerson said much has changed since Friedman’s report was written and that WAPA is now working to implement measures to better protect taxpayers. The MATL project is also moving forward again after a Montana judge last month upheld the state law in question (Land Letter, Jan. 19). Furthermore, Calgary, Alberta-based Enbridge Inc., bought Tonbridge Power and took over construction of the MATL transmission line, he noted.

GOPers on the subcommittee will also have the chance to air concerns over the Obama administration’s environmental regulations, which they blame for slowing down dam and reservoir construction and creating a “man-made” drought in the West (E&E Daily, Feb. 8).

Western water agency officials who testified before the House subpanel last month said some dam and reservoir projects were being stalled in the regulatory processes created to enforce laws such as the Clean Water Act, Endangered Species Act and National Environmental Policy Act.

Republicans at the time said the regulations seemed to present nearly insurmountable barriers to new dam construction, which drive up costs and scare off private investment.