Dems’ clean power plan could skip large utility companies

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The country’s largest public electricity company could be exempted from a US $ 150 billion clean electricity plan under consideration in Congress, raising concerns that the sweeping energy proposal contains significant loopholes and would hit the sector unevenly.

The Clean Electricity Performance Program (CEPP), passed this week by the House Energy and Commerce Committee, would not require the Tennessee Valley Authority and several other large utility companies to ramp up clean power generation because they do not directly provide electricity to homes and businesses , Experts say.

This could prevent smaller, downstream electricity suppliers from meeting the landmark policy goal of increasing clean electricity resources by 4 percent annually.

Critics say the blanket approach threatens to prevent electricity providers who do not generate their own electricity from being able to achieve this goal and to burden them with hefty fees in the process.

“Local energy companies are completely dependent on TVA to increase clean energy by 4 percent,” said Maggie Shober, director of utility reform for the Southern Alliance for Clean Energy, who noted that leaving out utilities like TVA “is not so seems “in line with the CEPP program.”

The CEPP has been opposed by several electricity companies and industry groups, including the American Public Power Association and the National Rural Electric Cooperative Association. By and large, they fear that smaller nonprofit utilities could bear the proposed $ 40 per megawatt hour fee because they missed the plan’s 4 percent clean energy target. The CEPP would also give grants managed by the Department of Energy to electricity suppliers who achieve the goal.

TVA did not speak to the CEPP, but sent a statement touting their efforts to reduce carbon dioxide. The federal agency is aiming for a 70 percent reduction in CO2 emissions compared to the 2005 level by 2030 and an 80 percent reduction by 2035.

“TVA is focused on supporting the advancement of clean energy through the mutual success of our customers, stakeholders and communities,” the utility said in the statement it emailed. “While we do not participate in the legislative process, we look forward to continuing to work with others to support a clean energy future for our Tennessee Valley region and the nation.”

The fate of the proposal is far from certain, as it is going uphill in the US Senate, where the chairman for energy and natural resources, Joe Manchin (DW.Va.), has spoken out against it. Still, the Senate Democrats ‘proposal to include a clean energy standard in the $ 3.5 trillion Reconciliation Act appears to mirror the House of Representatives’ $ 150 billion plan, said a presentation given to democratic lawmakers here on Tuesday quoting CEPP (E&E daily, 16th September).

Proponents of a CEPP say it would go a long way towards reducing emissions.

“I am thrilled with the historic investments we have made to tackle the climate crisis and create millions of new, well-paying jobs for clean energy and manufacturing right here at home,” said Frank Pallone (DN.J.), Chairman of House Energy and Commerce in a statement on Wednesday. “The groundbreaking new Clean Electricity Performance Program is providing a groundbreaking $ 150 billion to help us meet our clean energy goals.”

Who is Eligible?

The term “authorized” electricity provider is controversial in legislation. As written, the House Democrats’ CEPP proposal regards electricity companies that deliver electricity directly to households and businesses as suitable suppliers, not the utility companies that actually generate the electrons.

For traditional energy suppliers owned by investors who generate and distribute their own electricity, the policy is straightforward. The subject is more complicated for public utilities.

Some, like TVA, generate and sell electricity. Others ensure that these kilowatts get into people’s homes and are not allowed to own or operate power plants.

“As we understand it, house proposition is measured at the retail level,” said Oglethorpe Power Corp. in a statement. OPC generates and transmits electricity to electricity companies across Georgia.

Under the CEPP, these cooperatives and other end users would depend on their wholesale electricity suppliers to bring more clean energy into the grid. In the case of TVA, any power company or municipality in the Seven State Territory would rely on the federal agency to adhere to clean energy policies.

TVA sells electricity to more than 150 local utilities in the southeast, most of which have signed 20-year sales contracts. The supplier allows these local electricity companies to obtain up to 5 percent of their load from renewable energies or decentralized energy technologies.

Shober of the Southern Alliance for Clean Energy said that number relates to capacity. In order to achieve the goals of CEPP, this corresponds to about 3 percent clean generation.

“So that’s not even the value of clean energy for a year,” she said in an interview with E&E News.

Shober noted that TVA was just an example and said they didn’t think the discrepancy in CEPP was intentional. TVA also sells electricity directly to around 60 large industrial customers.

‘Difficult situation’

Rural electricity cooperatives and municipal utilities are skeptical of the uniform approach of the CEPP and warn not to take the special situation into account according to industry officials, these types of electricity suppliers are facing.

Power cooperatives, which serve 13 percent of US customers, are not-for-profit, customer-owned utilities that typically operate in areas with high numbers of low-income residents. Some, unlike Oglethorpe Power in Georgia, have little to no generating resources and instead distribute electricity primarily to households and businesses.

However, many cooperatives have long-term contracts with independent electricity suppliers that would not be subject to the rules of the plan.

“So you could punish a sales cooperative that has a contractual relationship to buy power for 20 years from someone who couldn’t change their generation mix fast enough,” said Louis Finkel, senior vice president of government relations at the National Electricity Association.

“It’s a construct that really puts our sales cooperatives in a really difficult position.”

The American Public Power Association, which represents municipal utilities, has behaved the subject of energy and trade.

“Most of our members don’t own the generation and then they have a contract, many of them are long-term and you can’t just break the contract,” said Desmarie Waterhouse, vice president of government relations at APPA.

“These issues are really complicated, and with public power we want to make sure that things are worded in a way that gets it right, that it encompasses all of our members,” Waterhouse later said in an interview with E&E News. “There isn’t one universal public energy supply company with exactly the same structure. ”

It remains to be seen how different parts of the electricity sector will play out in locations where competition plays a major role.

Todd Snitchler, president and CEO of the Electric Power Supply Association, which represents competitive power producers, said his organization is still reviewing the latest details of the proposal.

“The CEPP must provide an opportunity for independent power producers to develop clean energy resources and offer more affordable or efficient options, and should coexist with existing competitive wholesale electricity markets,” Snitchler said in a statement. “All new resources should prove to be the most cost-effective option.”

He said this would “ultimately create a lot more room for new efficiencies and innovation while lowering the cost of developing clean energy and getting better results for consumers.” He said oversight is vital as significant expenses are at stake.

Houston-based NRG Energy Inc., an EPSA member that has competitive power generation and retail stores, said in a statement that it “supports a well-designed standard for clean power” and believes “CEPP could meet that bill.” .

“However, it is important to ensure that CEPP is easily adaptable to the electricity markets in those parts of the US where customers have the right to choose their provider – and where those providers in turn get energy from competitive auctions rather than from designated resources.” said NRG.

Reporter Miranda Willson helped.


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