Senate energy leaders aiming for bipartisanship, whoever ends up on top

Source: Nick Juliano, E&E reporter • Posted: Monday, November 5, 2012

We won’t know until later this week who will hold the Senate energy gavel in the next Congress, but the two veteran lawmakers in line for the slot are pledging to preserve the panel’s bipartisan reputation, regardless of which party claims a majority in the upper chamber.

Sen. Lisa Murkowski (R-Alaska) and Ron Wyden (D-Ore.) expect to be the chair and ranking member of the Energy and Natural Resources Committee next year, although who claims what spot will be decided by voters in a handful of states likely to determine which party controls the Senate. Republicans need to flip three Democratic seats to gain the majority if former Massachusetts Gov. Mitt Romney (R) wins tomorrow, or four if President Obama is re-elected.

Whatever the outcome, the majority party is likely to have a margin of just a few seats, meaning bipartisanship will be key if any legislation is to make its way through the Senate’s thicket of procedural obstacles. If any committee can produce the types of cross-party deals modern legislating requires, the Energy Committee is a good candidate.

Issues expected to be on the committee’s plate include potential export of liquefied natural gas, regulation of hydraulic fracturing, reforming subsidies for clean energy development, and expansion of oil and gas exploration on public lands, including whether states should receive a share of royalties from that activity, the two senators said recently in separate interviews with E&E Daily.

“I think where the two of us are coming from on some of these bigger-picture issues, there are some areas we’ll find common ground on,” Murkowski said.

Murkowski’s and Wyden’s aides have been meeting throughout the fall, as Congress has mostly been on recess to give endangered members plenty of time to campaign. Neither Murkowski nor Wyden has to worry about her or his own re-election until 2016.

Most of the staff work has been looking ahead to next year. While Congress will reconvene after the election, most of its focus is expected to be on the basket of tax and spending issues surrounding efforts to avoid the so-called fiscal cliff at the end of this year. Lawmakers will spend most of their time determining how and whether to address questions such as whether to extend tax cuts implemented under former President George W. Bush and how to handle the across-the-board spending cuts known as the sequester that will hit at the end of the year.

Energy is not likely to be a key focus of the lame-duck session, aside from deciding the fate of several expired or expiring energy-related tax credits to promote wind power, energy efficiency and alternative fuels.

Whatever happens to the tax credits by the end of this year, Wyden has said he wants to take a broader look next year at how the government subsidizes renewable energy. The idea is to avoid debacles like the bankruptcy of solar panel manufacturer Solyndra, which received a $535 million loan guarantee from the Department of Energy, while still providing support to companies that can succeed with a modest boost from the government.

“The real objective should be to create technology-neutral policies that put the emphasis on innovation and homegrown energy rather than just having every energy source in its own silo,” Wyden said in a recent interview.

Details of the approach are still being sketched out, but Wyden said he would like to examine how to adjust both the loan guarantee program and the various tax credits available to energy companies. He said government support should go to companies that will be able to succeed in the market and be structured to provide long-term certainty for companies.

To contrast with Solyndra, Wyden pointed to the recently opened Shepherds Flat wind farm in his home state. The 845-megawatt wind farm received a $1.3 billion partial loan guarantee from DOE, which supplemented private investment and a long-term power purchase agreement the project developer had signed with a utility before construction began. The project, one of the largest in the United States, began operation earlier this fall.

“For purposes of a loan guarantee, if you’ve got a [power purchase agreement], if you’ve attracted some private-sector financing, and there is real evidence that this is innovative, that ought to count more in a new system based on risk and reward than Solyndra, which early on looked untested as a tech and the markets didn’t look particularly promising,” Wyden said.

“The loan guarantee program today dumps everything in the same bucket,” he added. “That doesn’t make sense, and that’s what I’d like to see changed.”

Wyden also has introduced with Sens. Dan Coats (R-Ind.) and Mark Begich (D-Alaska) a broader, bipartisan tax reform bill, and he’s hoping it becomes a key part of any discussion of comprehensive tax reform next year.

Regarding energy-specific tax incentives, Wyden said he would like to apply the same principles of technological neutrality in pursuit of low-carbon energy sources. He said he would like to re-examine some technologies that receive lower benefits through existing tax incentives, such as hydroelectric energy. Qualified hydro projects receive just 1.1 cent per kilowatt-hour through the existing production tax credit, compared to wind, which receives 2.2 cents per kWh.

The wind production tax credit expires in December unless Congress votes to extend it. Wyden supported a package that came out of the Finance Committee in August to extend the production tax credit for a year and modify its requirements.

Murkowski is not a member of the Finance Committee but says she does not want to see the credit disappear at the end of the year, either. She said she supports an idea that is gaining favor among Republicans and some in the wind industry to gradually reduce or eliminate the credit over a number of years.

“I’m in the camp that says we need to figure out how we phase down, how we transition out,” she said. “But I’m also not one that just wants to cut it off cold turkey.”

Murkowski takes a similar reform-don’t-remove tack on the broader question of loan guarantees and federal energy support. She said she looks forward to working within the Energy Committee on structural reforms to federal incentives.

“We clearly need some reform here,” Murkowski said of the loan guarantee program. “I’m not of the mind that we just throw it out, because I do believe there is value from it.”

Another issue expected to be high on the Energy Committee’s agenda next year is the continuing boom in natural gas supplies unlocked by hydraulic fracturing. Wyden noted that the boom had not even occurred the last time Congress enacted comprehensive energy legislation, in 2007.

Key questions include whether the United States should allow for the export of liquefied natural gas and what role the government should play in regulating hydraulic fracturing. On LNG exports, Murkowski has been bullish on the prospects for Alaskan gas producers to access Asian markets with exports, while Wyden has taken a more cautious view. Earlier this month, Wyden wrote to Energy Secretary Steven Chu seeking more information on how DOE will assess concerns around energy prices and other issues in evaluating LNG export applications.

Murkowski plans to roll out a more detailed version of her energy plan after the election. Whoever wins, she said, she expects the committee will be able to find common ground on some of the issues before it.

“Rather than get ourselves caught up in the 10 percent that the right can’t handle or the 10 percent that the left can’t handle,” she said, “let’s focus on areas of commonality and build something.”