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Power industry braces for change with new Congress, Trump

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Power industry braces for change with new Congress, Trump

Electric power industry leaders Dec. 14 offered their views on the new GOP-controlled Congress and incoming Trump administration, including discussing the need for lawmakers to stay focused on resolving power market jurisdictional issues.

GOP President-elect Donald Trump's plan to spur massive infrastructure investment through tax breaks is "an area of focus" for the Edison Electric Institute, EEI Executive Director Brian Wolff said at the start of S&P Global Market Intelligence's two-day utility regulation conference in Washington, D.C. Congress has yet to roll out an infrastructure package, but Trump listed the electric grid among the systems that could benefit from such a plan.

Republicans also hope to take up broad tax reform in 2017 that could affect the energy sector. Congress extended tax incentives for large-scale wind and solar power in late 2015 with bipartisan support, but those and other credits for energy producers could get a second look from lawmakers seeking to level the playing field between resources while finding ways to offset other tax cuts.

The reforms could have a substantial impact on electric power, because "tax policy has been energy policy since 2007," American Gas Association vice president of federal affairs George Lowe said. Lowe also repeated expectations for Trump to streamline or toss federal regulations for energy producers.

One priority that industry leaders hope will not change for Congress is the recent focus on where the line between FERC and state jurisdiction over wholesale power markets should be drawn.

The "clash" between federal and state policies is the Electric Power Supply Association's "number one" issue, EPSA President and CEO John Shelk said. EPSA sued FERC over the federal agency's demand response program, which seeks to compensate demand response providers at the same price paid to electric generators. The U.S. Supreme Court sided with FERC, finding that market operators' payments for demand response commitments directly "affect" wholesale rates and therefore those payments are subject to FERC's rate authority.

Other cases involving the federal-state power regulation divide are working their way through the courts, meaning Congress should "seize the moment" to figure out solutions to the jurisdictional issue rather than leave such matters to the courts, which "don't have a clue" about the electric system, Shelk said.

Congress failed to complete work on a ride-ranging energy bill in 2016, but measures to resolve the FERC-state divide issue should be part of a broad energy bill in the future, said Christopher Mele, legislative director for the National Association of Regulatory Utility Commissioners.

The U.S. House Energy and Commerce Committee has held oversight hearings this year on the Federal Power Act, but conference attendees said the future of that review will depend on committee leadership changes.

"They have their agendas, we have our agendas," Wolff said.

Starting in January, U.S. Rep. Greg Walden, R-Ore., will take charge of the committee from Rep. Fred Upton, R-Ore., who is chair term limited. Walden has historically focused on communications and technology issues rather than energy, placing more significance on who heads the committee's energy and power subcommittee. That role is currently held by Rep. Pete Olson, R-Texas, but a permanent successor has not been named.