Senate, House energy leaders setting priorities for 112th Congress

Utah Association of Energy Users (UAE) Report
Utah Association of Energy Users (UAE) Report—week of 1/02/2011

Senate, House energy leaders setting priorities for 112th Congress
By Kathleen Hart

With the 112th Congress set to convene Jan. 5, energy leaders in the Senate and House of Representatives are finalizing official committee rosters, setting policy priorities and agendas and preparing for oversight hearings.
Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, D-N.M., plans to meet with his Democratic colleagues on the committee, with the ranking Republican, and with his committee staff over the coming weeks to discuss his legislative agenda, Bill Wicker, Democratic communications director for the committee, said Jan. 4. Bingaman plans to announce his first hearing within a few days.
Under Bingaman’s leadership, the committee approved comprehensive energy legislation in the last Congress that never made it to the Senate floor for consideration. It is uncertain whether energy policy will rank high on the overall list of Senate priorities at the start of the 112th Congress or take a backseat to other issues.
“It’s always hard to divine the future for energy policy. In the 111th Congress, it did not come up on the Senate floor for the entire two years. It’s hard to see that happening two consecutive Congresses,” Wicker said.
Sen. Lisa Murkowski, who won a historic write-in campaign in Alaska in the November 2010 election to keep her Senate seat, is expected to retain her position as ranking Republican on the Energy and Natural Resources Committee.
“She is certified and she is the most senior member, so we are expecting no problems,” a staffer for the committee minority said in a Jan. 4 interview. Republican members on the committee are expected to vote for ranking member later this month. The staffer noted that there are no challengers to Murkowski in her bid to keep her position on the committee.
In terms of legislative priorities, Murkowski plans to continue working on many of the issues in 2011 that she worked on in the 111th Congress. Addressing the U.S. Environmental Protection Agency’s regulations on emissions of carbon dioxide from coal-fired power plants and other stationary sources “is still at the top of her priorities,” the staffer said. The issue of rare earth minerals is another of her top priorities.
Murkowski does not have specific plans right now to introduce legislation aimed at striking down the EPA emissions rule, which went into effect Jan. 2. “We’re thinking things will get started in the House and then move over here,” the staffer said.
Rep. Fred Upton, R-Mich., incoming chairman of the House Energy and Commerce Committee, said Jan. 2 that Republicans might use the Congressional Review Act to try to undo the EPA’s new carbon emissions rule.
“We are not going to let this administration regulate what they have been unable to legislate,” Upton said on Fox News. He noted that under the Clean Air Act, the administration is required to consider the impact of rules on jobs and the economy. “We’re going to have early, early hearings on this. We’re going to see exactly what their analysis is” on the impact of the EPA rule on jobs, Upton said.
However, even if a bill striking down the EPA carbon emissions rule were to pass the House and Senate, it would still be subject to a veto by President Barack Obama. Nonetheless, Upton suggested that it might garner enough bipartisan support to override a presidential veto. “Already, we’ve seen a number of powerful Democrats indicate that they have real, real qualms about what the EPA is intending to do,” he said.
Last year, Murkowski introduced a similar resolution, which the Senate rejected by a vote of 53-47. The resolution of disapproval, S.J. Res. 26, which would have prevented the EPA from regulating CO2 emissions from power plants, was defeated in June 2010. However, six Democrats joined with all Senate Republicans in supporting it.
In addition, Sen. Jay Rockefeller, D-W.Va., introduced legislation in the Senate in March 2010 to suspend the EPA’s potential regulation of CO2 emissions from coal-fired plants for two years. A companion bill also was introduced in the U.S. House of Representatives.
The House Republican conference has approved committee assignments and an official roster of subcommittee members and chairmen of Upton’s committee. “The conference voted [Jan. 3] to confirm the committee assignments,” a congressional staffer said Jan. 4, adding that “we won’t have a comprehensive list until after [Jan. 5].”
Wicker said unlike the House, the Senate does not organize its committees until after it convenes a new Congress. “That will be [Jan. 5], and it may take a couple of weeks before both parties have completed their committee assignments,” he added.
The Legislature Wants In on New Mexico’s Cap-and-Trade Battle
A legislative proposal moving ahead in Santa Fe may turn New Mexico’s Environmental Improvement Board from a climate change pioneer into a gubernatorial lapdog.
The EIB approved a cap-and-trade program, modeled on the Western Climate Initiative, for the state in November, and a cap on greenhouse gas emissions, proposed by environmental group New Energy Economy, in December.
But the Government Restructuring Task Force, an interim legislative committee that has been meeting since April, is preparing a proposal that would remove the board’s rulemaking powers and convert it into an advisory board to the Secretary of the Environment. Only the secretary, appointed by the governor, could approve and carry out new regulations.
State Rep. Paul Bandy (R-Aztec) and Sen. Lynda Lovejoy (D-Crownpoint) will sponsor the EIB legislation in the session that starts Jan. 18. This plan “will make the governor more responsible,” Bandy said in a YouTube interview. He called the proposal “a better way to do things” because “there can be games played and have been” with the current board, appointed by former Gov. Bill Richardson.
The 2011 New Mexico Legislature is more Republican, more conservative and more anti-cap-and-trade, with a net gain of eight seats for the GOP in the House. And the new Republican governor, Susana Martinez, is expected to take some kind of action to undo the emissions control rules put in place by the EIB. PNM and Tri-State Generation and Transmission, among others, have challenged the cap-and-trade program in court.
The Restructuring Task Force is likely to present the Legislature with two other energy-related proposals. One would eliminate the state’s Public Regulation Commission as a constitutional body and turn it into something over which the Legislature would have more control. The task force is also preparing to recommend that parts of the Environment and the Energy, Minerals and Natural Resources departments be consolidated.
While legislators in Santa Fe debate how to reinvent state government, Tres Amigas, the blockbuster transmission project in eastern New Mexico that would unite the country’s three power grids, has big plans for the first quarter of the year. On Dec.23, the project’s developers signed a 99-year lease with New Mexico’s state lands commissioner for the 14,400 acres of state trust land in Clovis where the project will be located. When it goes into operation in 2014, Tres Amigas will pay the state over $9 million a year under the terms of the lease.
Signing the lease “puts us one step closer to starting construction,” David Stidham, chief operating officer for Tres Amigas, told Energy Prospects West. “Up until now, we haven’t been able to go on the land to do studies, look at the nature of the soil or poke any holes,” he said.
In the first quarter of 2011, according to Stidham, Tres Amigas will select a general contractor that will oversee construction of the facility. The superstation would link the Southwest Power Pool, the Western Electricity Coordinating Council and the Electric Reliability Council of Texas and eventually could carry up to 30 GW of power transfers.
“We also plan to finish up interconnect agreements with WECC and SWPP, and once we have those agreements in hand, we can finalize our design for Phase 1 of the project,” he noted. ERCOT would be part of Phase 2. Tres Amigas is also seeking to be certified as a balancing authority.
Stidham said they are negotiating with utilities and merchant developers that could become anchor tenants for Tres Amigas now. “We are still scheduled to begin construction in November 2011,” he added.
This fall, American Superconductor Corp. announced the selection of LS Cable Ltd. of Korea, and Nexans, a French company, to manufacture the superconductor power cables for Tres Amigas, using AMSC’s proprietary high-temperature superconductor wire. Tres Amigas will benefit from the companies’ expertise in underground DC cables, Stidham told Prospects.
According to a press release from AMSC, Tres Amigas would be a “multi-mile, triangular pathway of superconductor electricity pipelines capable of transferring and balancing many gigawatts of renewable power,” and like highway rotaries used for traffic flow control, lines from each interconnection would feed power in and out of the superstation through AC/DC converters connected by DC superconductor cables.
Another big wind farm is going to be built just over the border from Tres Amigas. Xcel Energy announced Dec.28 it will buy the output from the Spinning Spur Wind Ranch, a 161-MW project to be built west of Amarillo in the Texas Panhandle. Cielo Wind Power, which has developed 1,234 MW of projects in New Mexico and Texas over the past 11 years and is the largest independently-owned wind company in the country, will build Spinning Spur.
Asked about the synergy between such a project and Tres Amigas, Stidham said “we can take the output of a wind farm like that, which will be an intermittent source of power, and through our valves, we can control it so it looks like conventional generation.”
Meanwhile in Arizona, the state’s largest proposed solar-thermal power plant has emerged from a lengthy financial purgatory and is moving forward.
The Department of Energy announced Dec.21 that a $1.45-billion loan guarantee for the 250-MW Solana project had been made final. Arizona Public Service will buy the power from the $2-billion facility to be built by Abengoa Solar of Spain. The project was first announced in early 2008.
Besides the loan guarantee, Abengoa will invest $550 million of equity into the project, Kate Maracas, vice president of operations, said in an article in the Arizona Republic. Work on the Solana site near Gila Bend has now begun, with completion of the parabolic trough facility set for 2013.
The 2011 Arizona Legislature is likely to be awash in proposals to encourage the building of new nuclear energy projects, and as the year turned, Arizona Corporation Commissioner Bob Stump took a stand for utilities in the nuclear business. He wrote a letter to Energy Secretary Steven Chu on Dec. 21 saying utilities and their ratepayers shouldn’t have to pay any more into the Nuclear Waste Fund, which was to finance the building of a nuclear waste repository for the country.
Since the early 1980s, nuclear power utilities have paid a tenth-of-a-cent per KWh into the fund, and Arizona Public Service and Salt River Project together have contributed $258 million, according to Stump. He noted that the administration has called the Yucca Mountain facility “not workable” even though over $10 billion has been spent researching the site.
“If the federal government will not fulfill its obligations to the nation by building a repository for the states’ nuclear waste, it should, at the very least, stop assessing a fee on electricity consumers in these tough economic times,” Stump said [Susan Whittington].
Solar Program to Expedite Southwest Solar Projects
The U.S. Bureau of Land Management and Department of Energy on Dec. 16 released a draft solar-energy development plan for six Southwestern states, which industry insiders hope will shift project permitting into overdrive.
“We see this as a push to get things really moving,” said Jim Baak, utility-scale solar policy director for the Vote Solar Initiative.
The solar-energy development draft environmental impact statement is a positive step, agreed Tom Fair, vice president of renewable energy at NV Energy.
Fair said the program could help the BLM deal with the flood of applications requesting approval to use federal land for solar projects.
“It’s almost a land rush,” Fair said.
The BLM counted 104 active applications as of Dec. 1, including 30 in California, 35 in Nevada, 36 in Arizona and three in New Mexico. The BLM has approved six fast-track projects with a total capacity of 3,572 MW in California. Also, two projects totaling 550 MW have received fast-track approval in Nevada. Colorado and Utah are the other states included in the study.
Under the proposal, the government prepared “a reasonably foreseeable development scenario” that indicated 214,000 acres of BLM lands in the study area would be used to build 24,000 MW of solar-energy capacity over 20 years.
“The process lays out the next phase of President Obama’s strategy for rapid and responsible development of renewable energy on America’s public lands,” Secretary of the Interior Ken Salazar said in a statement.
Sandy Bahr, state lobbyist for the Sierra Club in Arizona, said she was most interested in keeping solar development confined to areas already disturbed by agriculture, mining or other human activities.
She mentioned the BLM’s work in preparing an environmental study called the Arizona Restoration Design Project. The project is focused on using previously developed land for renewable energy generation, rather than wild remote areas.
“There are things of great value in the middle of nowhere,” she said. “We care about the middle of nowhere.”
Bahr said the draft document itself is “neither good nor bad.”
The draft outlines three approaches to developing solar power on federal land, one being the no-action, business-as-usual approach.
The government’s preferred approach, dubbed the Solar Energy Development Program Alternative, would exclude areas such as critical habitat for endangered species, visual-resource management lands such as Zion National Park and Bryce Canyon National Park in Utah, old-growth forests, and wild and scenic rivers.
It also would eliminate areas with slopes of 5 percent or greater and areas with low solar insolation.
The BLM also would identify 677,000 acres in 24 Solar Energy Zones, although proposed solar development would not be limited solely to these zones. The zones are near existing or designated transmission corridors, near existing roads, have slopes of 1 to 2 percent or less, and contain a minimum of 2,500 acres.
The favored alternative would establish solar-program administration processes, authorization procedures and design features for all utility-scale projects (with more than 20 MW of generation capacity) in the six states.
Individual solar-development applications for BLM land would continue to be evaluated on a project-by-project basis.
A third approach, the SEZ Program Alternative, would also include standard program administration, authorization and design features. However, all BLM land except the 677,000 acres in SEZs would be excluded from development. In other words, this approach would allow development only in solar zones. The BLM would give itself the future options of expanding, adding, removing or reducing SEZs.
By contrast, the government’s preferred approach would allow developers to propose solar-power facilities on 22.6 million acres, including 9.6 million in Nevada, 4.5 million in Arizona and 1.8 million in California.
While the program would not eliminate the requirement to prepare environmental impact statements for solar projects, Baak expects the government to do some “high-level screening” to identify key issues with endangered species and habitats in advance of receiving solar-project proposals.
He favors measures that would establish best environmental mitigation practices for specific wildlife and plant species.
“That’s something we’ve been advocating for a couple of years,” Baak said. By giving developers more certainty about environmental issues at project sites, the government could provide developers more certainty about potential environmental issues, reducing the risk and the cost of project financing, he said.
The government will listen to public comments on the program draft at meetings in the six states and Washington, D.C. in February and March [John Edwards].
Work begins on TransWest transmission line study in Wyoming
By JEFF GEARINO – Southwest Wyoming bureau | Posted: Wednesday, January 5, 2011 12:45 am
GREEN RIVER — Wyoming’s world-class wind has spawned numerous wind energy projects in southwest Wyoming over the past few years.
Those projects include the massive, 1,000-turbine Chokecherry and Sierra Madre wind projects proposed for Carbon County, and the 236-turbine White Mountain wind energy project near Rock Springs.
A new transmission line proposed for the region aims to help move some of that newly created wind-generated power to more densely populated markets in the Southwest.
The Bureau of Land Management and the Western Area Power Administration are beginning work on an environmental impact statement for the proposed $3 billion TransWest Express 600-kilovolt project, BLM spokeswoman Beverly Gorny said Tuesday.
The project — proposed by TransWest Express, LLC, a wholly owned subsidiary of the Anschultz Corp. — would cross portions of Wyoming, Colorado, Utah and Nevada.
The approximately 725-mile-long, high-voltage line would originate near Rawlins in Carbon County.
The line would move power through southeastern Sweetwater County into Colorado and down to substations located in southern Nevada near Las Vegas, according to plans.
Company officials said the transmission line, when completed in late 2015, would provide 3,000 megawatts of energy.
TransWest officials said that amount is roughly equivalent to three-fourths of the electricity used in Los Angeles alone.
The wind-generated electricity would be sold to emerging renewable energy markets in the Southwest, including Arizona, California, Utah and Nevada.
The Western Area Power Administration is a power-marketing agency within the U.S. Department of Energy and is proposing to jointly own the project with TransWest LLC.
More than half of the best-quality wind resources in the continental United States are in Wyoming, according to National Renewable Energy Laboratory data.
The state has been aggressively pursuing wind energy generation over the past few years.
Leaders in Wyoming’s growing energy industry want to export more electrical generation out of the state, but that means more power transmission lines must be built.
Developers hope to connect Wyoming’s wind-generated power to distant markets that pay higher prices for commodities such as the Southwest.
Energy Department officials estimate that even with ongoing energy conservation efforts, the demand for electricity in the desert Southwest is expected to increase about 2 percent a year over the next decade.
Other facilities
The TransWest Express transmission line would be constructed of 100- to 180-foot tall, steel-lattice pole towers, according to plans.
The project would also include two AC/DC converter stations, a fiber optic network communications system and two ground electrode facilities.
Officials said upwards of 1,000 total workers could be employed during the estimated two years of construction.
Gorny said the two agencies expect to host 23 open house meetings at various locations in the four affected states to kickoff work on the EIS. She said the agencies will accept public comments through April 4.
Company officials expect a draft EIS to be released in 2012 and a final record of decision in 2013, according to the TransWest Express website.
Contact southwest Wyoming bureau reporter Jeff Gearino at 307-875-5359 or gearino@tribcsp.com

US coal prices end 2010 on high note; predictions mixed for 2011
By Michael Niven
While 2010 will not go down as one of the strongest years for the U.S. coal market, coal prices did perk up significantly over the course of the year after an extremely lackluster 2009.
The majority of the gains were in the eastern U.S. coal market, which benefited from an improved export market and increased domestic demand that recovered from the low levels seen in 2009. Over-the-counter prices for NYMEX-spec barge coal closed 2010 at $80.15/ton for prompt-month delivery, marking a gain of more than 50% from the beginning of the year, when that product was trading at about $51.00/ton. Eastern U.S. rail coal prices saw similar gains in 2010, with the CSX, 12,500-Btu/lb, less-than-1%-sulfur product closing 2010 at $75.25/ton, up from $52.00/ton at the start of the year.

The uptick in prices during 2010 became particularly steep during the last few weeks as the market was affected by global coal supply concerns caused by severe flooding in Australia, as well as an increase in buying activity heading into the U.S. winter heating season, typically a heavy coal burn period for power generators. The prompt-month NYMEX-spec price jumped more than 10% in December alone, breaking the $80/ton barrier for the first time since November 2008.
The Powder River Basin coal market was generally less volatile in 2010 than the Eastern market, but PRB prices did quietly move significantly higher over the year. The 8,800-Btu/lb PRB coal closed 2010 at $13.00/ton for prompt-month delivery, marking a gain of 38% from the beginning of the year, when that product was selling at roughly $9.50 per ton.
Although 2010 represented a turnaround for U.S. coal prices, the market is still a long way from approaching the sky-high pricing levels seen during the 2008 spike. During the summer of 2008, supply shortages, in part due to hot export market demand, pushed the prompt-month NYMEX-spec price above $140/ton, or roughly $60 higher than current pricing.
Looking ahead to 2011, market participants said they are cautiously optimistic about the prospects for continued strength in the U.S. coal market. “There are certainly some bullish indicators out there right now that have me optimistic about where prices are going,” one U.S. coal seller said, “but there are also some hurdles that could ultimately limit coal use and put a dent in demand.”
On the bullish side of the equation, global coal supply is expected to become tighter, at least in the near term, in part due to the heavy flooding in Australia, which one analyst predicted could affect 13 million tons of production and push coal prices higher worldwide. Coal supply in the U.S., particularly in Appalachia, could also be hampered by mounting regulatory challenges that could limit mine permitting and ultimately reduce production. Bearish signals for coal include enhanced regulatory scrutiny of the electric power sector by the EPA, which could force generators to increasingly look to natural gas and mull the retirement of additional coal-fired units.
“If I had to predict right now where we will be in a year, I’d say prices will be higher than they are now, but not anywhere close to where the market was in 2008,” a market participant said. “Barring any unusual circumstances, such as an even worse situation in Australia, I think we’ll see a slow build in pricing levels over the course of the year as demand continues to come in line with supply. So I’m bullish but not overly bullish.”

NY governor confirms high-volume hydraulic fracturing ban, taps new DEC chief
By Bryan Schutt
In one of his first moves as governor of New York, Andrew Cuomo extended former Gov. David Paterson’s executive order banning high-volume, horizontal hydraulic fracturing until mid-2011.
Paterson’s Executive Order No. 41 requires further environmental review of fracking before its deployment in New York and mandates that the Department of Environmental Conservation publish a revised draft supplemental generic environmental impact statement, or draft SGEIS, around June 1. The order requires the DEC to accept public comment on the draft for at least 30 days and says the department cannot issue permits for drilling until the SGEIS is finalized.
Catskill Citizens for Safe Energy praised the move in a Jan. 4 e-mail. The group predicted another “huge outpouring” of comments on the revised SGEIS and said permitting could be delayed for months. “It’s hard to see how the DEC will be able to fulfill its legal obligation to consider all these comments before sometime in 2012,” the group wrote.
The DEC will be working toward the executive order’s mandate under new leadership.
On Jan. 4, Cuomo nominated Joseph Martens to serve as commissioner of the DEC. Martens has served as the president of the Open Space Institute since 1998 and is versed in Albany politics.
“Joe knows how to strike the critical balance between defending our natural resources from pollution and destruction while at the same time fostering a climate of economic renewal and growth,” Cuomo said in a statement.
Ashok Gupta of the Natural Resources Defense Council also chimed in on the nomination, saying Martens has the experience to effectively balance the state’s environmental needs with its economic goals.