Former Chair of the Federal Energy Regulatory Commission (FERC) Joseph Kelliher is now Executive Vice President for Federal Regulatory Affairs at renewable energy giant NextEra Energy Inc. and free to speak his mind. In a recent interview, he offered some insider insights on what to expect in energy policy between now and the 2012 election.1
. The reason Congress has only provided the wind industry’s Production Tax Credit (PTC) (and the solar industry’s Investment Tax Credit, ITC) for one-year durations and has allowed them to lapse over the years, creating uncertainty and retarding growth, Kelliher said, is that the credits require hard-to-find large budget offsets for scoring by the Congressional Budget Office. Longer-term credits require larger offsets.2
. The 2009 three-year extension of the PTC (and the six-year extension of the ITC) reflect, he believes, new recognition on the part of legislators of renewables’ maturity and increasing importance in the economy.3
. The PTC is unlikely to be allowed to lapse when it expires in 2012 because there is a growing awareness in Congress that it would put tens of thousands of wind industry jobs at risk.
“The deficit is now of great concern to a lot of people in Congress,” Kelliher said. “But jobs are an equal, if not a greater, concern.”4
. Legislators are aware that while the PTC would cost U.S. jobs, removing incentives from the oil and gas industry is unlikely to do so.
“[Cutting oil and gas incentives won’t result in] a loss of jobs in the industry because of the profit margins. I think it would be hard to argue that if the PTCs weren’t extended, there would be no job impacts. I think there would be. There would be a loss of green jobs.”
. The political base for renewables differs from that of the fossil fuel industries, but that is changing.
“Renewable energy has bipartisan support. The oil and gas industry has strong support in certain states. In Congress, it’s better to have a handful of really strongly motivated people than a lot of more tepid support,” Kelliher said, but “in North Dakota, Republican or Democrat, they know the wind industry is important to the state,” he added. “We’re starting to see some of that same kind of regional support that’s strongly motivated and that’s really important in Congress.”6
. When the Renewable Energy Standard (RES) got crowded off the legislative agenda by health insurance reform and the 2010 election, it may have lost its best chance for the foreseeable future.
“That was a missed opportunity,” Kelliher said. “We should have had a federal RES enacted in the last Congress. Now, it would be a lot harder.”7
. There will be no RES before the 2012 election without a broader energy bill.
“If there’s going to be an energy bill, I think there’s a good chance of an RES or a Clean Energy Standard,” Kelliher said. “But I don’t think an RES or a Clean Energy Standard is strong enough to pull a bill by itself. If there is going to be an energy bill, it will be bipartisan, and I don’t see how the votes could be assembled unless it had something like an RES or a Clean Energy Standard in it.”8
. A broad energy bill is possible but not likely.
“It’s common wisdom that Congress can’t enact important bills in an election year and Congress can’t pass an energy bill in an election year, but actually, if you look back, Congress does that a lot, because if something is bipartisan, it can be done in an election year,” Kelliher said. “There are more unknowns than knowns, but you can see it is in the world of the possible because it is the kind of thing that can be done by a divided government.”
Senate Energy Committee Chair Jeff Bingaman (D-NM) and Ranking Member Senator Lisa Murkowski (R-AK) “are very knowledgeable on energy issues” and “collaborated on a really important bill in the last Congress that would have been a good law and had a federal RES in it,” Kelliher said. But now, “their desire is to move single-issue bills, send them over to the House, hopefully the House will tend to approve them, and they’ll develop an energy law in chapters, rather than one big bill.”9
. The House, full of new members with Tea Party affiliations, is unpredictable.
The Bingaman-Murkowski “strategy might be successful and a series of stand-alone bills might go to the House -- and we will see how the House reacts,” Kelliher said. “Right now, the House is in Republican control and doesn’t seem to have a lot of interest in energy legislation.”10
. The wild card is the pump price of gas.
“If the gasoline price is seen politically as too high for too long, I think that might make Republicans in the House reconsider whether they are comfortable with not acting on energy legislation,” Kelliher said.
“The House position seems to be they don’t want to act on energy legislation. The Senate position is ‘we’re not going to do a big bill,’” Kelliher summed up. “And the variable is [the question]: are those two strategies tenable if gasoline prices remain too high for too long? Does that mean the House suddenly wants to move some kind of bill that is seen as addressing public concerns about gasoline prices? And then, maybe the Senate starts to think that if the House has more interest, maybe we should move a more comprehensive bill.”