Policy Makers Council 2010 Summer Meeting

Joy Ditto and

APPA Government Relations Staff

July 19, 2010

APPA Overview

• The American Public Power Association (APPA) is the service organization for the nation's more than 2,000 community-owned electric utilities that serve more than 45 million Americans.

• It was created in 1940 as a non-profit, non-partisan organization, and its purpose is to advance the public policy interests of its members and their consumers, and provide member services to ensure adequate, reliable electricity at a reasonable price with the proper protection of the environment.

• APPA is governed by a regionally representative Board.• Approximately 62 staff work in APPA’s office in D.C., with eight of

those in the government relations department.

Overview

• Climate change• Energy/electricity policy• Tax and financing issues• Rail customer legislation• Financial regulatory overhaul• Telecommunications• Cyber security• Power marketing administrations• Electricity Markets

Climate Change Timeline

October 2006 July 2010

January 2007 January 2008 January 2009 January 2010

October 2006APPA Climate Change

CEO Task Force is formed

April 2007U.S. Supreme Court rules in favor of EPA

to regulate carbon and other green house gases

May 2008Lieberman-Warner Climate Security Act

of 2008 (S.3036) is introduced

June 2009American Clean Energy &

Security Act (H.R. 2454) passes House

November 2009Clean Energy Jobs &

American Power Act (S. 1733) killed in committee

May 2010American Power Act

is introduced

July 2010Introduction of utility only

cap-and-trade bills

H.R. 2454 (Waxman-Markey) or American Clean Energy and Security Act of 2009

• H.R. 2454 passed the House of Representatives 219-212 on June 26, 2009.

• Main Provisions:

- National combined energy efficiency and renewable energy standard

- Smart Grid/Transmission planning & siting

- Cap and Trade:

- Incremental CO2 reductions by year

- Allocation/auction of allowances

And on to the Senate…S.1733

• S. 1733 was stalled in full committee due to a boycott by Committee Republicans who requested a more detailed EPA analysis of the bill.

• Major Provisions:

- Almost identical to H.R. 2454 particularly as it is related to the cap and trade provisions

American Power Act (Kerry-Lieberman Bill)

• The American Power Act establishes at cap and trade regime with similar targets and timelines as H.R. 2454 and S. 1733.

• Firm price collar: $25/ton ceiling, $10/ton floor plus escalation @ CPI + 5%.

• Significant additional allowances in first 8 years.

• Attempts to pre-empt (improvement over H.R. 2454) the Clean Air Act for GHGs and of state and regional programs

• Cap and trade for electric utilities only in 2013, with industry phase in six years later

 

Where Are We Now?Climate Change

• The President and Majority Leader Reid remain committed to passing legislation to address the Gulf oil spill, energy policy, and climate change.

• Majority Leader Harry Reid plans to bring his energy package to the Senate floor the week of July 26.

• No clear indication of what package will contain.

Obstacles to Enactment of Climate Legislation

• The obstacles to legislation are large:– Time (2010 mid-term elections)– Controversy – most major issues remain unresolved– Complexity – few understand the important details; so many

committees involved– Other priorities – Kagen Supreme Court confirmation,

appropriations, immigration– Energy and environmental issues tend to be more regional than

partisan

Major Policies on the Table

• The American Clean Energy Leadership Act (S. 1462), which passed by the Senate Energy and Natural Resources Committee in June of 2009. This is an energy policy only bill, no cap and trade.

• The Practical Energy and Climate Plan Act (S. 3464), introduced by Senators Dick Lugar (R-IN), Lisa Murkowski (R-AK), and Lindsey Graham (R-SC), which is an energy only and tax incentives bill.

Major Policies on the Table(continued)

• A Utility-Only Cap: Two bills have been released to date by Sen. Bingaman and Senators Kerry and Lieberman.

• The American Power Act introduced by Senators John

Kerry (D-MA) and Joseph Lieberman (I-CT) in May of 2010. Economy wide cap and trade bill which includes some energy provisions.

Major Policies on the Table(continued)

• The CLEAR Act (S. 2877), which was introduced by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME) in November of 2009. This is an economy-wide program only with no energy provisions.

APPA Point of Contact: James Williams (Lead) & all other lobbyists

Who will Win the Race to Regulate CO2 first?

14

And If Congress Doesn’t Act, We Still Have Utility Regulations

14

Energy Legislation

• The American Clean Energy Leadership Act (S. 1462) , includes the following Major Provisions:

– Clean Energy Technology Development

– Transmission Planning

– Transmission Siting

– Transmission Cost Allocation

– Transmission Rights to Support New Generation Development

– Renewable Energy Standard/Energy Efficiency

– Plug-in Hybrid Electric Vehicles

– Energy Efficiency

– Cyber Security

– Nuclear Waste

– Carbon Capture and Storage

– Energy Markets

APPA Point of Contact: Joy Ditto

Uncle Sam Wants Comparable Incentives for Public Power

Tax Issues

• APPA’s priorities in tax legislation include:

• CREBS-Lifting the cap on Clean Renewable Energy Bonds.  Additional flexibility (removing non-utilities from the program, extending maturity date, etc.).

• Treasury Grant Program-Extension of and public power eligibility for the 30% grant conversion of the production/investment tax credit authorized for private entities in the economic stimulus bill.  This program ends Jan. 1, 2011.

• Nuclear PTC-Allowing public power recipients of the nuclear production tax credit to trade their credit with their private investment partners.

• Tax-Exempt Bonds-Increased flexibility in the use of tax-exempt bonds by eliminating or easing “private use” restrictions.

APPA Point of Contact: Amy Hille

Rail Customer Legislation• Two “tracks” – pun intended:

– Bills to put railroads under major antitrust laws – H.R. 233 and S. 146, have been passed by House and Senate Judiciary Committees.

– Legislation to reform the Surface Transportation Board’s practices and ratemaking – S. 2889 passed the Senate Commerce, Science and Transportation Committee in December 2009.

– Politics of this issue continue to be extremely difficult, but the best progress has been made in 20 years to get legislation enacted.

APPA Point of Contact: Corry Marshall

Financial Regulatory Overhaul

• Major financial reform legislation, which includes additional regulation of the derivatives markets, will be signed into law this week.

• APPA supported the “end user” exemption from mandatory clearing for hedging included in bill.

• APPA also supported the clear delineation of FERC vs. CFTC jurisdiction for purposes of regulating financial transmission rights in RTO markets that was included in the final bill. 

• APPA supported the easing of a fiduciary duty requirement that would have been imposed on swap dealers swapping with municipal governments.  The language instead requires a “standard of care.”

APPA Point of Contact: Amy Hille

Telecommunications• FCC has released the National Broadband

Plan. Congress must now act on the recommendations included therein. Two major areas of interest:

- Pole attachments:

1. FCC has proposed doing away with muni, coop, railroad exemption.

2. The FCC issued a Further Notice of Proposed Rulemaking on pole attachments. Comments are due August 16, 2010.

- Community broadband. FCC has indicated support for expanding.

APPA Point of Contact: Corry Marshall

Cyber Security

Cyber Security

• Lots of interest in more regulation of electric industry related to cyber security.

• Industry is united in the view that any new authority should build on current NERC/FERC framework and be narrowly targeted to deal with cyber emergencies.

• The GRID Act (H.R. 5026) passed the House on June 9, 2010; industry unhappy with bill.

• Activity also in Senate Intelligence and DHS committees.

APPA Point of Contact: Joy Ditto

Power Marketing Administrations

• Budget process has been quiet over the last few years.

• Big issues overall, however, are related to hydro O&M, dam safety, and the new transmission infrastructure program (TIP) at WAPA.

• Hoover Power Allocation Act of 2010 (H.R. 4349) passed the House on June 8, 2010. Senate may consider H.R. 4349 or a companion bill.

APPA Point of Contact: Corry Marshall and Joy Ditto

Electricity: At What Cost?

Electricity Markets

• RTO market problems continue to rank high on APPA’s priority list, and Congress seems most interested in the transparency issue. Senator Schumer is contemplating legislation on this issue, for example.

• FERC’s oversight of and attitude toward these markets, however, continues to be problematic, as evidenced by a recent process related to RTO metrics.

APPA Point of Contact: Desmarie Waterhouse & Meghan McLaughlin

Other Issues

• Nuclear: Desmarie and Joy

• Coal-Ash: James

• Smart Grid/Data Privacy: Corry

• Clean Air Interstate Rule: James

APPA Resources:Your APPA Govt. Relations Staff

APPA Resources

• Website: www.appanet.org• Government Relations Staff:

Joe Nipper: 202.467.2931; jnipper@appanet.org

Joy Ditto: 202.467.2954; jditto@appanet.org

Amy Hille: 202.467.2929; ahille@appanet.org

Corry Marshall: 202.467.2975; cmarshall@appanet.org

Meghan McLaughlin: 202.467.2934; mmclaughlin@appanet.org

Theresa Pugh: 202.467.2943; tpugh@appanet.org

Monica Stowe: 202.467.2959; mstowe@appanet.org

Desmarie Waterhouse: 202.467.2930; dwaterhouse@appanet.org

James Williams: 202.467.2928; jawilliams@appanet.org