Roadblocks to improving the energy grid: Regulations and empty chairs

By:  John Sciliano
Source: Washington Examiner

President Trump will need to rethink his energy budget priorities if he wants to get an infrastructure bill through Congress this year, while making sure he fills empty seats in regulatory agencies.

His steep $54 billion budget cuts released in a proposal this month could create a conundrum for some lawmakers who want to support infrastructure development, but can't because of the cuts.

Some lawmakers support moving ahead on Trump's defense priorities, but not at the expense of energy and environmental programs meant to support basic infrastructure development that ensure access to drinking water, electricity and heat, said a top Republican lawmaker.

Some, such as Sen. Lisa Murkowski, R-Alaska, feel Congress has already made significant strides in reining in departments such as the Environmental Protection Agency without throwing the baby out with the bath water.

"Over the past several years, we have already made significant progress streamlining agencies like the EPA while retaining funding for its core mission and functions, particularly basic infrastructure," said Murkowski, responding to Trump's March 16 budget blueprint outlining drastic cuts to programs that support basic infrastructure needs.

In addition to being chairwoman of the Energy and Natural Resources Committee, which is expected to play a pivotal role in Trump's infrastructure plan, Murkowski also chairs the Senate Appropriations Committee's interior and environment panel and serves on the energy and water panel, which will be key to balancing Trump's energy and environment budgets with what she and others believe need to be maintained priorities.

She supports the president's focus on defense, as Alaska will be at the forefront of the nation's missile defense, but "I cannot support many of the proposed cuts in this 'skinny' budget," she said.

In addition to the EPA's water infrastructure grant programs receiving cuts, Murkowski is also alarmed at Trump's termination of weatherization and home heating programs that are managed by the Energy Department. The programs "are critical to the health, welfare and safety of Alaskans, especially those in our remote, rural communities," she said.

"We need to remember that these programs are not the primary drivers of our debt, and to look at the full budget to find the best ways to reduce federal spending," she explained.

Filling seats

Trump will also need Murkowski's support to approve a number of key energy nominees required to permit natural gas pipelines, electric transmission infrastructure, and energy export terminals at the Federal Energy Regulatory Commission, the nation's energy watchdog.

The commission is an independent regulatory agency that serves as the gateway for getting natural gas pipelines and liquefied natural gas terminals permitted and built to support Trump's stated goal of supporting the nation's fracking boom, and exporting more American energy abroad.

But since February, the commission has lost most of its members needed to have a quorum to approve major projects. The commission is effectively shut down until Trump names new appointees. He has discussed the matter publicly, although sources privy to the matter said the White House is vetting candidates to fill the three seats.

Murkowski has vowed to help Trump shuttle the nominees through the confirmation process, since her committee holds jurisdiction over FERC.

The Democratic ranking member on the committee, Sen. Maria Cantwell of Washington, also wants to see new nominees as soon as possible, and wants the administration to work with both sides of the aisle on choosing the nominees.

Cantwell said she won't stand up for Trump's infrastructure plan when his budget proposed to harm infrastructure programs managed under the Interior Department.

"It is ironic that we are gathered to discuss infrastructure funding after having just received a budget that essentially abandons that entire concept," Cantwell said last week at an Energy Committee hearing on federal lands infrastructure. She said the budget cuts would further exacerbate the National Park Service's nearly $12 billion maintenance backlog, while depriving rural communities from much-needed infrastructure upgrades. The Environment and Public Works Committee is also expected to update the nation's dam system that produces the bulk of its hydropower electricity.

The environment committee also oversees the EPA and the Nuclear Regulatory Commission, which oversees and licenses the nation's nuclear power reactors. Industry officials said the nuclear commission will face a chairman change in June that the administration needs to start addressing soon.

The chairman of the Senate environment panel, Sen. John Barrasso, R-Wyo., joined a bipartisan group of senators to introduce a bill earlier in the month that would allow for more innovative power plant designs to be licensed and approved by the NRC.

"Our bipartisan legislation will enable the development of innovative reactors with bold, new technologies," Barrasso said. "We need to create an environment where entrepreneurs can flourish and create jobs here at home that will revitalize our nuclear energy sector."

"It is difficult to imagine an energy infrastructure project that produces more jobs and economic benefits than construction of a new nuclear power plant," said John Keeley, spokesman for the Nuclear Energy Institute, the industry's lead trade group. "Like other major elements of our national infrastructure, nuclear plants have provided tremendous and far-reaching benefits for nearly a century."

Since nuclear power involves the development of electricity power lines, new substations and improvement in mining and processing uranium, the prospects of revitalizing the grid with new reactors could dovetail with any infrastructure push, especially if energy is to be a major focus.

"Time is running out for America to reclaim international leadership in nuclear energy and to create hundreds of thousands more jobs, all while reinforcing our nation's electricity and manufacturing infrastructures," said Maria Korsnick, president and CEO of the Nuclear Energy Institute. She said the administration can't address the energy infrastructure issues piecemeal.

"Capitalizing on this opportunity requires broad action from the executive branch on a number of fronts," she said, including "unquestioned support" for the Energy Department's "Innovative Technology Loan Guarantee Program," which the budget blueprint targets for cuts. The loan guarantees help industry secure capital to build new power plants.

Trump must also appoint "a full complement of commissioners" at both the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission, "while moving decisively to address flawed electricity markets around the nation that fail to fairly value America's fleet of nuclear reactors and the benefits they deliver," Korsnick said.

Former FERC chairman James Hoecker told the Washington Examiner that he thinks the budget blueprint seems to be "some kind of opening bid" in gauging support for his forthcoming infrastructure plan. "Trump will have problems with members on both sides of the aisle," he said.

Rules changes needed

Hoecker helped spawn a new industry coalition on transmission line development to ensure electricity policy concerns are adequately covered in the infrastructure debate. "When it comes to making the grid great again, the administration has a more difficult task than for highways and bridges, which simply need federal appropriations," he said.

The coalition includes major electric utilities and independent transmission companies, along with the wind and solar industries and big electricity transmission and power plant component manufacturers represented by their respective trade associations.

The groups included the American Wind Energy Association, the National Electrical Manufacturers Association, the Solar Energy Industries Association and Hoecker's group WIRES, which represents utilities and other companies that build transmission lines.

The coalition was formed in March to drive home the need for transmission line regulatory reforms to be included in any infrastructure bill. There are nearly 200,000 miles of transmission lines in the U.S., and the utility industry is expected to invest $85 billion in new lines and upgrades between now and the middle of 2018.

But the process of developing interstate lines can easily become bogged down from one state to another, and even one county to another, forcing some projects to linger for a decade or more before approval. Hoecker said it's much more complicated than building a natural gas pipeline, which allows FERC to be the principal permitting agency. And it is definitely more complicated than roads and bridges that just require funding.

"President Trump has made clear that legislation to strengthen America's foundational facilities and public assets will be an early priority of his administration," said a letter sent by the coalition to Republican and Democratic leaders in the House and Senate. "Electric transmission grid infrastructure is one sector that can accelerate economic advancement, create jobs and save consumers money, if given due attention."

The letter explained that unlike other forms of infrastructure, such as roads and bridges, "the obstacles to expanding and modernizing our grid are mainly related to policies and regulatory practices, not a shortage of taxpayer dollars."

"We believe that there can be a new consensus on how to make progress in bringing our nation's energy grid up to its potential without harming key stakeholders' interests," the letter added. "We look forward to working with you on infrastructure legislation."

Manufacturing giants GE, Siemens, ABB Inc. and the Eaton Corporation signed on to the letter, along with utility giant Pacific Gas and Electric Company and a number of renewable energy firms, state coalitions, electric transmission companies and grid operators.

Hoecker said he will be pushing for FERC to be given renewed backstop authority to approve transmission projects if the permitting and siting process lingers too long. The commission had backstop authority under the 2005 energy law. But the policy was inferior and easily susceptible to legal challenges.

"I can't speak for all entities in our coalition, but improving the federal siting backstop seems like a no-brainer," he said. "The original approach in the '05 Act was rendered toothless by DOE's ineffective — and now totally outdated — corridor designation process and a couple very unfortunate court decisions. If that law could be made to work, that would be a major step in the right direction."

Both a nuclear and transmission component to an infrastructure bill could be used to generate bipartisan support for an energy title that supports low-carbon resources. Both areas can be used to benefit clean energy resources that Democrats would support, while bringing on pro-nuclear Republicans.

"Investment in new transmission lines will modernize the U.S. grid and deliver more clean energy to population centers," said Tom Kiernan, CEO of the American Wind Energy Association, who is a member of the coalition. At the same time, investment in new transmission lines will also keep "costs low for American homeowners and businesses," he explained.

"Recognizing transmission as essential infrastructure is another way Congress and the administration can keep promises of advancing all forms of energy while growing U.S. energy independence," he said.

Barrasso said the nuclear bill he supports would help implement an "all of the above" energy supply chain as a "clean, safe, reliable and affordable" source of electricity.

"It is also a major boost for the economy [and] American nuclear plants provide thousands of jobs and millions of dollars in benefits to local communities," the senator said.