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S&P Global Market Intelligence explores the potential impacts of the 2018 midterm U.S. elections on the economy, industries and individual companies across the globe. Climate change a political and policy opportunity, former Md. governor says If US House flips, top Democrat ready to probe Interior energy, science policies Tight PSC races imperil Georgia Power's reliable regulatory support Carbon capture braces for potential loss of Senate advocates in midterms Dems to probe EPA rollbacks, play legislative 'small ball' if they take US House US power industry largely backing GOP incumbents in 2018 midterms Defeated in legislature, carbon tax advocates eye Washington ballot initiative Colo. coal decline expected to continue no matter who wins governor's race |
This article is part of a package of stories that explore how the 2018 midterm elections may impact the U.S. energy business. The package also includes articles about how the oil, coal and natural gas sectors may or may not be disrupted by election results.
The Nov. 6 midterm elections could have significant consequences for the U.S. electric power sector.
States are weighing potential higher renewable energy targets and fees on carbon dioxide emissions, while a possible change in party leadership of the U.S. House of Representatives could shift that chamber's energy focus.
One state ballot measure attracting a lot of attention is Washington's Initiative 1631, which would create a fee on carbon dioxide emissions from fossil fuel-fired power plants, refineries and other large emitters. The fee would start at $15 per metric ton in 2020 and rise on an annual basis, up to a maximum of $55 per ton.
The initiative has backing from some big names, including former New York City mayor Michael Bloomberg and Microsoft Corp. co-founder Bill Gates. But refiners and oil producers, including Andeavor and Phillips 66, have fought to sink Initiative 1631, arguing that the proposal would exempt some of the state's largest carbon emitters from the fee while raising energy costs.
The power industry also is watching measures on the ballot in both Arizona and Nevada that would require those states to get 50% of their electricity from renewable resources by 2030. But even if Nevada voters approve a higher renewable standard next month, the state's constitution requires the measure to be passed again in 2020 for the requirement to become law.
Nevada voters further will have the chance to open up the state's retail electricity market to outside companies, which would break the effective monopoly that Berkshire Hathaway Energy subsidiary NV Energy Inc. has over most of Nevada's electricity customers. Nearly three-quarters of the state's voters already approved the initiative, known as Question 3, in 2016. As a proposed constitutional amendment, however, it must be approved again this November.
NV Energy and several environmental groups have urged voters to oppose Question 3, saying such a policy could disrupt clean energy investment by throwing into question NV Energy's decision to contract for over 1,000 MW of new solar energy in Nevada.
Key state governor races
In Colorado, voters will be choosing a new governor, and Democrat candidate Jared Polis, who currently is serving in the U.S. House, has made reaching a goal of 100% renewable energy by 2040 a key part of his campaign. Moving away from fossil fuels, Polis has argued, will save consumers money, create jobs and limit climate change.
But his opponent, Republican State Treasurer Walker Stapleton, claims Polis' "extreme" idea could burden consumers with nearly $45 billion in additional costs. Colorado's existing renewable energy standard calls for investor-owned utilities to obtain 30% of their electricity from renewable resources by 2020, and 10% or 20% for municipalities and electric cooperatives, depending on their size.
In Vermont, former Vermont Electric Cooperative Inc. CEO and Democratic gubernatorial candidate Christine Hallquist is challenging sitting-Republican Gov. Phil Scott. Both candidates endorse achieving Vermont’s goal of procuring 90% of its electricity from renewables by 2050, with an emphasis on solar and Canadian hydropower imports. However, both candidates oppose wide-spread wind development, especially on ridgelines in order to preserve scenic views and because out-of-state wind is cheaper. Scott is adamantly opposed to a carbon tax while Hallquist will not take a position until studying its impact on poorer Vermonters.
In Maine, Democratic state Attorney General Janet Mills and Republican businessman Shawn Moody are the main contenders to succeed outgoing Republican Gov. Paul LePage. Since both leading candidates are pro-renewable, the election marks the end of the LePage administration’s anti-renewable policies and could unleash between $3 billion and $5 billion of grid-scale renewable projects that have been waiting for a more favorable regulatory climate for eight years.
Another energy issue in the race has been Central Maine Power’s proposed 1,200-MW New England Clean Energy Connect transmission line, which seeks to deliver hydropower imports from Hydro-Quebec in Canada to Massachusetts utilities. Mills has expressed both concerns about the potential environmental impact of the project and skepticism of its promised benefits. Moody said he would support the line if it brings benefits to Maine, especially lower energy costs, and avoids long-term damage to whitewater rafting and tourism.
Democratic control of the House could boost oversight
On the federal level, a potential Democratic takeover of the House could have big implications for energy. With control of the House, Democrats could push for heavy oversight of the Trump administration's efforts to replace air and water quality regulations for the power sector with less stringent rules. Democrats also could pursue bipartisan legislation to support infrastructure development, including possible transmission upgrades and expansions, according to sources with utilities and environmental groups.
If Republicans keep control of the House, an Energy and Commerce Committee source said they will focus more attention on cybersecurity issues and grid infrastructure development. House Republicans also may revive their push to free up federal funds to build the Yucca Mountain nuclear waste repository in Nevada after the Obama administration suspended the project.
The GOP appears more likely to hold onto a majority in the U.S. Senate, which would help the Trump administration advance nominees for key positions, including the next member of the Federal Energy Regulatory Commission. FERC currently is divided between two Republican and two Democratic commissioners. To avoid partisan deadlocks on major proceedings, the GOP-controlled Senate is trying to move quickly to confirm U.S. Department of Energy official Bernard McNamee to fill the empty fifth seat at FERC.
The Senate Energy and Natural Resources Committee had scheduled an Oct. 16 hearing on McNamee's nomination but pushed back the hearing to Nov. 15 after Senate leaders decided to adjourn early ahead of the midterm elections.