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US power industry largely backing GOP incumbents in 2018 midterms


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US power industry largely backing GOP incumbents in 2018 midterms

Power producers and industry trade groups are largely backing incumbent GOP committee leaders in the upcoming 2018 midterm elections as Democrats push to reclaim the majority in at least one chamber of the U.S. Congress.

With help from President Donald Trump, Republicans in Congress have worked since early 2017 to support the easing of permitting requirements for energy projects and repeal Obama-era regulations for the sector. Although some power companies are wary of potential rollbacks in mercury and carbon emissions standards, industry trade groups have broadly welcomed the GOP's push for lighter federal regulation and lower taxes.

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The political action committee of the Edison Electric Institute, which represents investor-owned utilities on federal policy matters, has donated $401,000 to congressional candidates so far in the 2018 election cycle, 60% of it to Republicans, according to Federal Election Commission data of total election spending from January 2017 through Sept. 24, 2018. The data was aggregated by the Center for Responsive Politics.

In the House, which Democrats have a good chance of winning this November, two of the biggest recipients of the EEI PAC's campaign contributions were U.S. Reps. Fred Upton, R-Mich., and Kevin Brady, R-Texas, who each received $10,000.

Upton is chairman of the House Energy and Commerce Committee's energy subcommittee, which has advanced a raft of bills in the 115th Congress to lower permitting barriers for hydropower facilities and natural gas pipelines and bolster energy sector cybersecurity.

Brady helms the powerful tax-writing House Ways and Means Committee, which helped craft the GOP tax bill Trump signed into law in late 2017. The legislation included key priorities for the utility sector, including a lower corporate tax rate and the preservation of certain tax deductions and incentives.

The EEI PAC also donated $10,000 each to two top House Democrats: Rep. James Clyburn of South Carolina, who is the House assistant Democratic leader, and Democratic Whip Steny Hoyer of Maryland.

Most of EEI's biggest donations have been to Republican leaders for the entire House and individual committees of interest. House Majority Leader Kevin McCarthy, R-Calif., has received $7,500 from EEI this election cycle, while key GOP lawmakers on the House Energy and Commerce Committee and House Committee on Appropriations have received $5,000 each, including House Energy Committee Chairman Greg Walden, R-Ore.

In the Senate, EEI has spent more on Democratic candidates than Republicans so far this election cycle, even though Republicans are defending more seats in the midterms. But the institute's single biggest Senate campaign contribution went to U.S. Sen. John Barrasso, R-Wyo., who chairs the Senate Environment and Public Works Committee. EEI has spent $10,000 on Barrasso's re-election, firmly exceeding what it spent on its next biggest Senate recipient, Democrat Heidi Heitkamp of North Dakota, to whom EEI gave $7,000.

Barrasso has been a staunch coal advocate and worked to lower regulatory hurdles for energy developers, including through proposed updates to the Endangered Species Act and a bill to limit state reviews of Clean Water Act permits for new gas pipelines and proposed coal terminals.

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The American Public Power Association has also directed the bulk of its spending to GOP incumbents. Contributions from APPA's PAC to federal candidates this election cycle totaled $76,000, according to Federal Election Commission data. Of that, 69% went to Republicans, and the remaining 31% went to Democrats.

APPA's PAC only contributes to people already in office, said the group's vice president of government relations, Desmarie Waterhouse. Regardless of the party in charge, "we'll work with both of them," she said.

In the House, Walden was the biggest recipient of APPA's campaign support at $6,500, followed by $4,000 for Rep. Peter Roskam, R-Ill., who is a House Ways and Means Committee member.

The National Rural Electric Cooperative Association has also centered its support on incumbent GOP committee leaders. The data show that the NRECA PAC has spent about $1.4 million on federal candidates, about 63% of which went to Republicans. The top recipient was Rep. Martha Roby, R-Ala., who sits on several House appropriations subcommittees. Another top recipient of NRECA PAC funds this cycle was Rep. Mike Simpson, R-Idaho, who chairs the energy and water subcommittee of the House Committee on Appropriations.

Trend is similar for utility companies

Major U.S. electric utilities have also thrown their support to incumbent lawmakers, particularly Republicans. The PAC for NextEra Energy Inc., the largest U.S. utility by market capitalization, based on data compiled by S&P Global Market Intelligence, has directed 72% of its election spending this cycle to GOP candidates. In the House, the NextEra PAC's top donations went to Upton and McCarthy. Sen. Angus King, I-Maine, and Barrasso were the biggest recipients of NextEra PAC money in the Senate.

At a recent industry conference, NextEra President and CEO Jim Robo said expiring incentives for renewable energy and political risk were the company's two biggest concerns in the coming years, but NextEra was positioned well regardless of which party controls the White House and Congress.

Duke Energy Corp.'s PAC has given 81% of its federal campaign contributions to Republican candidates, including House Energy and Commerce Committee member Rep. Bob Latta, R-Ohio, who has received the most Duke PAC spending at $9,000.

Latta co-sponsored recent legislation to improve grid-sector cybersecurity, including through a voluntary program with the U.S. Department of Energy to identify and test cyber secure products and technologies. He also introduced legislation to require the U.S. Nuclear Regulatory Commission to create a framework for reviewing advanced nuclear reactor applications.

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Watch: Power Forecast Briefing: Fleet Transformation, Under-Powered Markets, and Green Energy in 2018

Steve Piper shares Power Forecast insights and a recap of recent events in the US power markets in Q4 of 2017. Watch our video for power generation trends and forecasts for utilities in 2018.

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Coal Forecast Surging Export Volumes Aid Coal Production As Gas Competition Tightens


Higher export volumes aid coal production as gas competition tightens domestically

Jul. 20 2017 — Coal production made gains through June as modest electricity demand to open the summer was offset by stronger exports. Weekly shipments for June came in 24% higher than the same period last year, continuing the improved production results for 2017. However, easing natural gas prices during June provided little headroom for thermal coal prices. The NYMEX CAPP eased by $0.25/ton (0.5%) for the month, while the NYMEX PRB gained $0.24/ton (2.2%).

Natural gas prices traded lower during June than in May, with low electricity demand doing little to clear surplus storage. After opening the month at $3.05/mmBtu, Henry Hub spot prices varied during mid-month from $2.85-3.12/mmBtu, before closing at $3.07/mmBtu. Natural gas remains in a moderate surplus, with June injections trailing modestly below historical averages. Storage levels as of June 23 stood at 2,816 Bcf, 182 Bcf above five-year averages. The surplus restrained natural gas markets during the month, with warmer weather the last week of June kicking off the cooling season and providing a boost to prices.

Coal inventories remain in surplus as well, with April stockpiles growing to just over 166 million tons, 9.3% above normal. The growth in inventory corresponds to estimated displacement of coal from natural gas generation resulting from Henry Hub prices declining by 20 cents per mmBtu. Looking ahead to the summer season, robust cooling demand could add 1.5 million tons per week to production, which would drive coal production to levels not seen since the summer of 2015. For the four weeks ending June 24, coal shipments averaged 15.5 million tons, as demand into the summer season picks up. Production levels continue to improve overall, about 24% higher than the same period last year. Inventories remain above normal, and low electricity demand shoulder season may do little to clear them, tending to keep a lid on prices.

Higher natural gas prices have boosted coal demand for the first half of 2017, especially compared to the dramatic loss of demand that occurred during the first half of 2016. However, surpluses linger in both the coal and natural gas markets going in to summer. If electricity demand remains low, growth in coal production could taper during the peak season.

On the improved demand picture for the year, the CAPP and NAPP coal regions are projected to beat 2016 production levels. A firmer natural gas strip, easing coal retirements during the year, and stronger seaborne metallurgical markets all contribute to the improved outlook. The markets for Illinois Basin and Southern PRB are also projected to rebound by 44 million tons this year on improved price competitiveness.

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