This posting is from the 40 page report, Energy Update, and deals with the transportation and government funding bills that address federal energy policy, while the fate of omnibus energy legislation Is unclear
Donna J. Bobbish and Monica Lamb, Shearman & Sterling LLP
President Obama signed into law H.R. 22, the Fixing America’s Surface Transportation Act (FAST Act), authorizing budgetary resources for surface transportation programs for fiscal years 2016 to 2020, and the Consolidated Appropriations Act, 2016 (Appropriations Act), an omnibus spending bill to fund the federal government through September 30, 2016.
The FAST Act also contains provisions intended to improve the federal permit review process for major infrastructure projects, including energy projects, and the Appropriations Act lifts the 40-year-old ban on exports of US produced crude oil and extends wind and solar tax credits for three years. While the FAST Act evidences bipartisan support for accelerating review of energy projects, and the Appropriations Act evidences congressional willingness to horse trade on energy issues important to each side, it remained unclear at the end of 2015 whether omnibus energy legislation pending before the 114th Congress will be passed and signed into law by the President in 2016.
Appropriations act extends tax credits for renewable energy and repeals crude oil export ban
The Appropriations Act grants significant extensions to the investment tax credit (ITC) for solar energy investments and to the production tax credit (PTC) for wind energy investments. Investments in other eligible renewable energy technologies were granted a one-year extension of the PTC. (The PTC, which expired at the end of 2014, will be extended (retroactively from January 1, 2015) for wind, closed-loop biomass, open-loop biomass, geothermal, landfill gas, municipal solid waste, qualified hydroelectric and marine hydrokinetic energy projects beginning construction through the end of 2016. After that, the PTC for all technologies except wind will expire, and the wind PTC will be decreased by 20%, 40% and 60% for wind projects beginning construction in each of the subsequent three years, finally expiring for wind projects that commence construction after the end of 2019.
The ITC for solar, which was set to drop to 10% for utility-scale projects and expire completely for residential installations at the end of 2016, will be extended at the current 30% rate for projects that start construction by the end of 2019, 26% for projects that begin construction in 2020 and 22% for projects that begin construction in 2021, provided in each case that the projects complete construction by 2024.
Solar projects that begin construction in 2022 and in later years will receive a 10% tax credit. In return for extending the renewable tax credits favored by Democrats, the Appropriations Act repeals Section 103 of the Energy Policy and Conservation Act, which since 1975 prohibited the export of crude oil subject to certain exceptions granted by the Department of Commerce.
The Appropriations Act further provides that no official of the federal government may impose or enforce any restriction on the export of crude oil, except for the President under the Constitution, pursuant to specified federal laws, or if the President declares a national emergency. Pending Omnibus Energy Legislation In early December, the House of Representatives passed, by a 249-117, largely party-line vote, H.R. 8, the North American Energy Security and Infrastructure Act of 2015, sponsored by House Energy and Commerce Chair, Fred Upton (R-MI). In late July, the Senate Energy and Natural Resources Committee voted out S. 2012, the Energy Policy Modernization Act of 2015, a broad, bipartisan energy bill championed by Committee Chair Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA). S. 2012 was approved by a vote of 18-4, including 10 Republicans and eight Democrats in support. Both Senate and House energy bills contain, among other things, substantive changes to regulation of the natural gas, public utility and hydroelectric sectors by FERC and the US Department of Energy (DOE).
FAST Act’s project permitting reforms
The FAST Act creates a Federal Permitting Improvement Steering Council which includes, among others, the Secretary of Energy and the Chairmen of the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission. The new Permitting Council is responsible for coordinating timetables among agencies that review projects and setting deadlines to accelerate required reviews for project approvals, including environmental review. The projects covered by the new permitting process include infrastructure for renewable or conventional energy production, electricity transmission and pipelines that are valued at $200 million or more and subject to the National Environmental Policy Act of 1969 (NEPA).
The Permitting Council is required to create an inventory of major projects and establish model timelines for each infrastructure category. The lead agency for a given project would then establish a specific timeline for the project, consistent with the model schedule. Agency progress on granting approvals would be tracked by means of an online, public “dashboard.”
The FAST Act also reduces the time allowed for legal challenges to certain project permits, including environmental review under NEPA, from six to two years following the issuance of a project permit.
Electricity sector reforms
Among other things, H.R. 8 would require each Regional Transmission Organization (RTO) and Independent System Operator (ISO) that operates a capacity market or comparable market subject to FERC jurisdiction to provide to FERC an analysis of how the structure of that market utilizes competitive market forces in procuring capacity resources. It also includes resource-neutral performance criteria that ensure the procurement of sufficient capacity from physical generation facilities that have the following reliability attributes:
- Possession of adequate fuel onsite to enable operation for an extended period of time;
- Operational ability to generate electric energy from more than one fuel source or fuel certainty, through firm contractual obligations;
- Operational characteristics that enable the generation of electric energy for the duration of an emergency or severe weather conditions; and
- Unless procured through other markets or procurement mechanisms, essential reliability services, including frequency support and regulation services.
HR 8 would further would require FERC to submit to the House and Senate energy committees a report containing an evaluation of whether the structure of each market addressed in an analysis meets the criteria and if it does not, recommendations with respect to the procurement of sufficient capacity.
For the rest of the report: http://goo.gl/vxJ8tm
Filed Under: Financing, News, Policy
