House Resources chairman asks Chu to defend power marketing plan

Source: Hannah Northey, E&E reporter • Posted: Friday, April 6, 2012

House Natural Resources Chairman Doc Hastings (R-Wash.) says the Obama administration’s plan to use power marketing administrations to upgrade the electric grid is flawed and should be halted until Energy Secretary Steven Chu testifies before his committee.

Hastings asked Chu in a letter today to testify before the House committee April 26 to discuss a memo he issued last month (E&ENews PM, March 16).

Chu’s memo outlines a strategy for how the nation’s four power marketing administrations (PMAs) can leverage partnerships, rate-making power and financing to upgrade transmission and install new technologies to improve the transmission system and make it more accessible for renewable power generators. Such entities, the memo also notes, are uniquely positioned to serve as “test beds for innovative cyber-security technologies.”

The PMAs — the Bonneville, Western Area, Southeastern and Southwestern power administrations — are independent companies within the Energy Department that market wholesale electricity, mainly from federal hydropower projects.

Hastings said the DOE memo reflects a “command-and-control philosophy” that would force rates within the PMAs to be changed to provide incentive for the deployment of electric vehicles, an issue usually handled at the state or retail level.

“Why would a family farmer in Prosser, Washington, or Troy, Montana, be forced to pay higher power rates for a millionaire to plug in his or her electric vehicle in downtown Seattle?,” Hastings wrote. “It appears that the answer is: because the Secretary of Energy says so.”

Hastings said DOE’s strategy would dramatically change the power marketing administrations’ core mission from providing low-cost hydropower to imposing “experimental schemes” to pick winners and losers in the energy market and potentially raise electricity prices.

While some goals may be laudable, Hastings said, such a “Washington, D.C., knows best” approach is concerning because it fails to assess effects on consumers and it’s questionable whether the administrations have legal authority to implement the directive.

Hastings also said utilities could be forced to join regional transmission organizations, which would result in the socialization of costs and bring little benefit to existing PMA customers. The Federal Energy Regulatory Commission oversees the markets and those types of decisions, not DOE, he added.

Chu is ultimately responsible for ensuring the administrations meet their statutory obligations and fulfill their unique regional roles, Hastings said.

Jen Stutsman, a spokeswoman for DOE, said the agency is committed to working with the PMAs to upgrade the grid in a way that improves existing services to consumers and supports growing and changing energy needs in coming decades.

“The memo from Secretary Chu is the beginning of this process, which will involve extensive consultation with each of the PMAs, local communities and members of Congress as we move forward together to help strengthen American competitiveness, win the race for the clean energy jobs of the future, deploy clean renewable energy resources, and save consumers money by saving energy,” Stutsman said in an email.

The memo, which was spearheaded by DOE senior adviser Lauren Azar, has also been criticized by the conservative Heritage Foundation and the American Public Power Association.

Mark Crisson, the association’s president and CEO, said in a statement last month that Chu’s call to implement rate designs to incentivize renewables, demand response and energy efficiency is “in reality a euphemism for shifting costs from one market participant to another.”

But officials from the power administrations that testified before the House Natural Resources Subcommittee on Water and Power last month said they didn’t expect costs to increase (E&E Daily, March 21).

Stephen Wright, administrator of the Bonneville Power Administration, told the subpanel that much of what Chu called for in the memo plays into ongoing PMA activities.