Sparring Grows Over Clean Electricity Program Amid Senate Pushback

Source: By Doug Obey, InsideEPA • Posted: Tuesday, September 21, 2021

Observers are questioning whether key elements of House Democrats’ proposed incentives and fees to spur clean electricity will comply with Senate budget procedures allowing passage on a party-line vote, while a key senator is reportedly pushing to weaken the plan.

The threats to the proposed Clean Electricity Performance Program (CEPP) come as supporters are touting analysis claiming it would boost the effectiveness of other climate policies, particularly measures aimed at boosting clean manufacturing in energy-reliant communities.

More broadly, signs are emerging that Democrats may trim the size of the broader budget “reconciliation” package that would include the CEPP — with moderates pushing back on a top-line spending figure of $3.5 trillion — a move that could put pressure on the size of the proposed $150 billion clean power program.

Lawmakers are also jockeying on the timeline for advancing the bill, with some House leaders raising the prospect of a delay in the reconciliation plan despite efforts to tie the plan to a bipartisan infrastructure package the House has committed to consider by Sept. 27.

“I personally don’t see it passing muster,” says one environmentalist, alluding to concerns that a provision in a version of the CEPP approved Sept. 14 by the House Energy and Commerce Committee might run afoul of the Senate’s reconciliation procedures, though the source adds it is not clear if the issue is resolved.

At issue are Senate procedures that limit reconciliation bills to policy measures that are deemed to be associated primarily with revenue effects on the federal budget.

Multiple sources suggest an included fee on power suppliers not attaining their annual CEPP goal — and perhaps most crucially a directive that the fee be imposed on shareholders rather than ratepayers — may be too prescriptive to win approval by the Senate parliamentarian.

Sources also indicate that Senate energy committee Chairman Joe Manchin (D-WV), whose panel has jurisdiction over the program in the Senate, is developing his own approach to the CEPP.

Along these lines, a New York Times report more specifically notes that he is eyeing changes to the House approach, including: limiting the rate of required annual increases in clean energy supply to no greater than 3 percent; allowing a larger role for natural gas power as a clean energy source; and scrapping the fee on power suppliers for failing to reach their targets.

The Energy & Commerce plan would require at least a 4 percent annual improvement, offering incentives for meeting that goal while imposing fees for falling short. It also would define “clean” power as not exceeding 0.1 metric tons of carbon dioxide per megawatt hour.

Supporters of the CEPP are also suggesting that Manchin’s approach could create a new political problem among environmental and other progressive groups by rendering it an incentive-only program, removing the stick in the House plan’s carrot-and-stick approach.

Crowded Agenda

The CEPP’s potential parliamentary issues are just one wildcard on affecting the broader reconciliation bill, which Democrats hope will include an array of climate and social programs.

That effort also comes amid a crowded and uncertain fall agenda for Congress, including a pledge by House Speaker Nancy Pelosi (D-CA) that the chamber will consider the bipartisan infrastructure legislation Sept. 27, a battle over raising the federal debt ceiling, and a looming lapse in government funding at the end of September.

“It’s four liquid forces pressing on each other, which basically just gives you a bowl of soup,” Bipartisan Policy Center President Jason Grumet tells Inside EPA.

Grumet adds that moderate lawmakers’ calls to trim the size of the reconciliation package tee up the question of whether the CEPP will compete with other clean energy provisions in the bill, such as proposed tax incentives for various low-carbon technologies.

With respect to the size of the reconciliation bill, House Majority Whip Jim Clyburn (D-SC) and House Budget Committee Chairman John Yarmuth (D-KY) suggested in separate Sunday talk show appearances Sept. 19 that the package could be trimmed below the $3.5 trillion bill House committees are developing. Clyburn, for example, suggested a smaller bill is possible but not certain, and Yarmuth predicted a package “somewhat less than $3.5 trillion,” according to a Reuters roundup of the comments.

Regarding timing, Pelosi has pledged to hold a House floor vote on the bipartisan package by Sept. 27, with progressive lawmakers threatening to oppose that plan without a clear path forward on reconciliation.

Meanwhile, Sen. Kyrsten Sinema (D-AZ) reportedly told the Biden administration she will not support a reconciliation plan if the House delays its infrastructure bill vote or if a vote fails.

Yet, Clyburn in his Sept. 19 remarks cited the possibility the House delays that vote.

CEPP Advocacy

The legislative churn comes as CEPP backers are circulating several analyses defending the approach, and in some cases appealing explicitly to Manchin to support a robust CEPP.

Among the analysis is a new report from Data for Progress touting the proposed federal investment of $8 billion in existing legislation on clean manufacturing tax incentives, sponsored by Manchin and Sen. Debbie Stabenow (D-MI), as creating nearly 140,000 jobs and $27 billion in higher economic output.

But “the two policies are greater than the sum of their parts,” the report adds with reference to the CEPP, citing modeling that Manchin’s “48C” legislation would “directly create 15 percent to 30 percent more jobs if paired with the CEPP.”

Critics of the CEPP plan, however, are also sharpening their critiques, including a Sept. 16 blog post from R Street Institute fellow Devin Hartman calling the plan a “staggering subsidy machine” and raising concerns that the House language “may obliterate voluntary renewable” energy markets, which “fairly allocate resources based on what customers are willing to pay for clean energy.” — Doug Obey (