US MIDTERMS 2022: US energy focus could shift as federal, state seats up for grabs

The narrow divide in the US Senate and US House of Representatives could shift with the midterm elections, as several state level races and energy-related ballot measures will also be decided by voters, panelists said Oct. 13 during an S&P Global Market Intelligence webinar.

Since taking office in 2021, President Joe Biden has set some strong clean energy goals, which could be supported by the recently signed Inflation Reduction Act, and if Republicans take over the majority, they are likely to shift the focus to energy dominance and promoting fossil fuels, said Molly Christian, industry editor with S&P Global Commodity Insights, who moderated the panel.

"That's a pretty big shift away from trying to move away from fossil fuels and decarbonization," Christian said.

Congress outlook

Democrats currently have a very thin margin in both the House and Senate. However, all 435 House seats are up for grabs in the midterm election, as well as 35 Senate seats, Christian said.

If Republicans take the Senate, it will make it harder for Biden to nominate positions such as the Federal Energy Regulatory Commission chair and federal judges, Christian said, adding that if the Republican shift happens Biden will likely move onto agency executive action to achieve his goals.

If Democrats keep majority in the House and Senate, they will likely focus on the parts of the Build Back Better plan that were left out of the Inflation Reduction Act, such as transmission tax credit and incentives for existing hydro, Christian said.

No matter what party leads the next Congress, permitting reform will be an issue, with republicans wanting more aggressive action, panelists said.

"If Republicans do want to have some leverage, there's opportunity to potentially highly influence some regulation reform," said Tom Hassenboehler, a partner with Coefficient Group, about so much funding coming out of the federal government in the last two years.

FERC nominations

FERC Chairman Richard Glick's term ended June 30, but he is staying on until the end of the year. Glick will need to be reconfirmed by the Senate by year's end to avoid falling off the commission.

If Republicans take over control, it could be the end of Glick, said Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School Environmental & Energy Law Program.

In addition, two more FERC terms are up in 2022 and 2023, Peskoe said, adding a Congress flip could change who is nominated.

State level elections

The governor's seat is up for grabs in 36 states, with all but eight states including the incumbent on the ballot, said Monica Hlinka, a research analyst with Regulatory Research Associates, a group within S&P Global Commodity Insights.

"The outcome of this election could lead to policy change no matter who is elected," Hlinka said.

There are 15 seats in nine states up for grabs in utility commissioner races, with 30 commission terms expiring within the next year. The most controversial is in Georgia, where the district court postpone the commission election, Hlinka said.

In addition, voters in California, New York and New Mexico will decide on state-level energy related ballot measures.

Pennsylvania and RGGI

In Pennsylvania, the Democratic governor and Republican legislature have been butting heads over energy policy, specifically the state's participation in the Regional Greenhouse Gas Initiative, which is a cooperative effort of New England and Mid-Atlantic states to reduce CO2 emissions from the power sector. It became the first mandatory cap-and-trade program to limit carbon emissions in the US in 2009.

Pennsylvania officially joined RGGI July 1 but has yet to participate in a quarterly auction. In July, the Commonwealth Court of Pennsylvania issued a preliminary injunction preventing Pennsylvania from implementing and enforcing the state's carbon dioxide budget trading program, which is the basis for Pennsylvania's membership in RGGI.

In addition, there are three vacancies on the five-member public utility commission because the legislature has not confirmed the governor's appointees, Hlinka said.