WASHINGTON, May 17, 2012- Senators debated the merits of legislation that would create a national standard for clean sources in electric energy generation during a Senate Committee on Energy and Natural Resources hearing today. The legislation would award credits to clean electricity technologies to meet a standard that would become more stringent over time, said Chairman Jeff Bingaman, D-N.M., at a hearing over the Clean Energy Standard Act of 2012, S. 2146.
According to the pending legislation’s language, the purpose is to “create a market-oriented standard for electric energy generation that stimulates clean energy innovation and promotes a diverse set of low- and zero-carbon generation solutions in the United States at the lowest incremental cost to electric consumers.”
However, the legislation could cause electricity prices to rise for some utilities and consumers, according to Energy Information Administration (EIA) Deputy Administrator Howard Gruenspecht.
“By 2030, CES-induced compliance costs could result in electricity price levels that are about 3 to 30 percent higher for covered retailers than for exempt retailers in the same region,” he stated.
The EIA analysis also suggests that after 2021, the standard would increase national average electricity rates to just under four percent in 2025, but grow to as much as 18 percent on average by 2035.
Bingaman, who authored the legislation, referenced EIA information that states the CES would drive substantial amounts of clean energy production across a diverse set of sources, including wind, solar, nuclear, biomass and natural gas.
“It would also drive enhanced energy efficiency, in particular in the industrial sector,” he said. “EIA projects that it would reduce emissions from the power sector by 20 percent below their reference case in 2025 and by 44 percent in 2035. This mix of benefits has led to support for the legislation from a diverse group of stakeholders.”
Department of Energy Assistant Secretary for Policy and International Affairs David Sandalow said the legislation would support President Barack Obama’s energy goal of generating 80 percent of the nation's electricity from clean sources by 2035 by “creating a market here at home for the clean energy technologies of the future” and ensuring "that these technologies are developed and manufactured in America instead of being imported from abroad.”
He said the legislation will save household energy costs, citing EIA models that project the average household will pay $5 less per month for energy in 2035 than in 2011 under the CES.
Senator John Barrasso, R-Wyo., opposed the bill’s approval, stating that since the administration is not willing to repeal or amend the Clean Air Act, it would just provide “additional red tape with additional legislation.’
“So this would be piled on top on what job creators are facing today,” he said. “China is going to widen the gap of coal producing countries by the end of decade. If Congress adopts legislation that increases electricity cost as much as 30 percent, how would that help us keep up with China?”
Investing in energy efficiency, but also using the abundant energy resources the nation already has would be a better balanced solution, claimed Senator Bob Corker, R-Tenn.
“It seems to me that as a nation for us to be competitive is that we’d focus on resources we have and fully expand those,” Corker said. “It just seems that Washington is constantly trying to move away from the great strengths this nation has.”
Senator Joe Manchin, D-W.V., also promoted the idea of a balance between cleaner energy and currently available energy, such as coal.
“China will triple their demand for coal in the next three decades,” he said, asking the administration to find a balance between pursuing clean energy and using coal resources efficiently.
Sandalow claimed that the standard would invite all energy sources, including coal.
“The standard is technology neutral,” he said. “Wind and coal could all come in under this standard. Clean coal is a fundamental part of how we meet the Clean Energy Standard.”
Senator Al Franken, D-Minn., a supporter of the CES, argued that “one of strengths we sometimes ignore is our innovation,” and that CES would help bring “ideas from the laboratory to the marketplace.”
However, he suggested additional standards within the CES for renewable energy products, referencing his state’s “25 x 25” policy to achieve 25 percent renewable energy in utilities by 2025.
“I think it’s clear that renewable energy needs to be part of this mix,” he said. “I believe we should carve out a renewable energy standard within the Clean Energy Standard.”
Franken’s suggestion directly opposed the sentiments of Senator James Risch, R-Idaho, who said the reason the nation is falling behind technology innovation is due to “the heavy, heavy hand of the government and the shackles of government regulation that hold innovators back.”
Hearing witness and Jacksonville Electric Authority CEO James Dickenson claimed the CES could cost JEA customers an estimated additional $14 billion over the 20 years in combined energy replacement and alternative compliance payments, an increase over base case costs of about 64 percent.
“While applauding the inclusion of nuclear energy and the partial credits for natural gas technologies,” he said. “The move away from existing coal generation, including JEA’s, will strand not only large capital investments but the nation’s abundant supply of a secure domestic fuel that will be exported to other countries.”
He requested that Congress consider a longer time frame greater than 20 years for large-scale generation projects, because “twenty years is just a short timeframe in this industry.”
Duke Energy Group Executive Keith Trent said the market-based strategy reduces pricing overall and that giving the industry a long-term strategy provides the ability to keep prices lower, but “if you want to have 'clean' as a goal you’re going to have some costs associated with that.”
Trent maintained that the partial credit for natural gas included in the CES is unwise, because “it could lead to an overreliance on this single fuel.”
“Construction of new nuclear units and zero-emission wind and solar power plants will suffer if Congress gives natural gas another leg up,” he said. “Important work on technologies like carbon capture and sequestration will also grind to a halt barring government support for particular projects. This technology is vital to coal’s future.”
Economists say the legislation should be a welcome alternative to additional Environmental Protection Agency (EPA) mandates for the industry, according to Bingaman.
“A major impetus for the Clean Energy Standard is that economists thought we should try to have a market-based mechanism for improving environmental performance of generating capacity and should not be driven by Washington through EPA regulations,” he said.
Ranking Member Lisa Murkowski, R-Alaska, who did not sign the legislation, said “bringing energy prices down should be our objective, not driving them up today, or in the future, as some analyses have projected CES would do.”
“We need to break the habit of piling one policy on top of another,” she added, claiming that the CES plan lacked the consensus for her to support it.
Senators Ron Wyden, D-Oreg.; Bernard Sanders, D-Vt.; Mark Udall, D-Colo.; Al Franken, D-Minn.; and Christopher Coons, D-Del., are cosponsors of the bill. Senators John Kerry, D-Mass.; Sheldon Whitehouse, D-R.I.; Tom Udall, D-N.M.; Diane Feinstein, D-Calif.; and Jeff Merkley, D-Oreg., also support the legislation.
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