Given the distance on energy issues articulated by their campaigns, one would think that the prospects for the utility industry under a President Romney would be radically different than those under a second-term President Obama. There are notable differences (e.g., on subsidies for wind and solar), but for the immediate future, those differences would not amount to much in practice.
That was the outlook provided by Paul Molitor, Assistant Vice President of Smart Grid and Special Projects at NEMA, the National Electrical Manufacturers Association. Speaking about election implications last week at ABB’s Western Utility Executive Conference, Molitor began by providing a quick rundown on the latest polling, including figures from InTrade where people are betting -- literally -- on an Obama win by nearly four to one. Polls by Rasmussen, Gallup and Real Clear Politics, however, all have the candidates in a statistical dead heat.
Molitor sees the Democrats picking up two seats in the House and the Republicans picking up one in the Senate -- not enough for a supermajority, and therein lies the nub of the issue. A mixed Congress is not likely to make any dramatic changes in legislation, regardless of who occupies the White House.
The one winner Molitor predicts in either scenario: the Keystone XL pipeline. Otherwise, he doesn’t see much change on the horizon.
“The lame-duck priorities will be the same [regardless of who wins the presidency],” he said. “Energy takes a back seat to fiscal policy and a mixed Congress is likely to take longer to deal with fiscal issues, so they are less likely to get around to other matters.”
Molitor said there is likely to be much more action at the regulatory level on issues like greenhouse gas emissions, automobile fuel efficiency standards and cross-state air pollution.
His view into the future did not extend to the 2014 midterm elections, but it’s reasonable to assume that by then circumstances will have changed at least with regard to the so-called “fiscal cliff.” At that point we might expect to see the candidates’ positions on energy come more into play.
“The key element of Romney’s plan,” said Molitor, “is to empower states to control onshore energy development and the federal government to control offshore areas.” That means state-level decisions on shale gas development and federal control over offshore drilling. Romney is also big on streamlining regulations to eliminate the “sue and settle” system that characterizes many of the points of contention in energy policy, and he envisions the U.S. becoming not only energy-independent but a net exporter of hydrocarbons by 2020.
That’s an ambitious target -- about as ambitious as Obama’s goal of obtaining 80 percent of the nation’s energy from clean sources by 2035. The president’s energy policy statement, issued in June of last year, places a strong emphasis on environmental issues but it also seeks to “align utility investments” by changing the industry’s business model to reduce its dependence on merely selling more power.
Bottom line: the ideological differences between Romney and Obama are not likely to have much of an impact on the utility industry for the immediate future.
Jimmy Glotfelty, Executive Vice President at Clean Line Energy Partners, spoke during a panel discussion on regulation just prior to Molitor’s presentation and noted that energy policy is made in Congress and agencies such as EPA and FERC. He doesn’t see a President Romney, for example, being able to stop EPA’s coal regulations given recent court rulings. Energy policy is also historically slow-moving.
“Major energy bills only pass about once every decade,” he said. “The president [either one] won’t be able to do much unless they decide to do the unspeakable and compromise.”
In the current political climate, that seems unlikely.
Bob Fesmire is the Strategic Communications Manager at ABB.