When Energy Secretary Ernest Moniz takes his pitch for upgrading the nation’s energy infrastructure to Capitol Hill on Tuesday, he will find a pair of Senate lawmakers who are ready to swing.
Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski, R-Alaska, and top Democrat Sen. Maria Cantwell, of Washington, are working on broad energy legislation that they hope to move this spring. The bill could touch many of the elements raised in the Quadrennial Energy Review, the sweeping assessment of U.S. energy infrastructure the White House released last week.
Moniz has focused on the first Quadrennial Energy Review since joining the Obama administration in May 2013. Modeled after a Pentagon effort, the Energy Department version will be updated annually. The first, 348-page iteration is meant to provide unbiased information on energy infrastructure in hopes of informing investment opportunities and policy changes.
On Tuesday, Moniz will present the report to Murkowski’s panel. The meeting comes just two days before the committee begins marking up a suite of energy-efficiency bills that could make it into the broader energy legislation. Below are some of the recommendations and issues raised in the Quadrennial Energy Review that could garner attention from Murkowski and Cantwell.
Electric reliability
Cantwell and Murkowski, with their respective caucuses, likely will question Moniz on how to keep the electric grid from suffering blackouts and attacks.
Murkowski wants to focus on how certain environmental regulations will affect the nation’s power supply, such as an Environmental Protection Agency measure that aims to reduce emissions of mercury and other air toxics and a proposed rule to limit greenhouse gas emissions from power plants. Industry groups and lawmakers from areas largely dependent on coal-fired power believe the rules will shutter too many power plants and leave people in a lurch if demand suddenly spikes.
Republicans are also worried that wind and solar power, which would be used to partly replace coal, aren’t reliable. They say solar only works if the sun is shining and wind only works with the breeze, and that wholly relying on either would be foolish.
But Cantwell wants to ensure that the electric grid has the tools needed to integrate wind and solar. In competitive wholesale electricity markets with a modern electric grid, utilities would bid for the cheapest sources of power, which could be wind or solar.
Modernizing the grid with new bells and whistles — such as voltage sensors, monitors that alert crews to power line failures and two-way communication between customers and utilities — also could reduce cyber attacks and blackouts.
The Quadrennial Energy Review suggested spending $3.5 billion over 10 years on that “smart grid” technology. It also recommended developing a new pricing mechanism to more accurately value services that grid technology can provide, such as demand response, which allows utilities to curtail power use by willing customers during times of grid stress.
Pipelines
U.S. energy has undergone significant change recently thanks to hydraulic fracturing, which has turned the nation into the world’s top oil and natural gas producer. But pipeline infrastructure has failed to keep pace, the Quadrennial Energy Review notes.
“For the vast majority of projects, the environmental review and permitting requirements are accomplished effectively and efficiently. For particularly large and complex infrastructure projects, however, the diverse and often divergent sets of agency permit and decision-making responsibilities can lead to friction and create inefficiencies, as well as extend the time frame for the federal permitting and review process,” the report said.
Pipeline decisions inside their borders rest with state and local governments. Environmental regulations impede that process, Republicans contend. The GOP-led House has passed legislation with some Democratic support to shorten review periods for infrastructure siting.
Inadequate pipeline infrastructure also contributes to climate change. Natural gas producers often have to “vent” or “flare” excess fuel they can’t get to the market, which pumps methane — a short-lived but potent greenhouse gas — into the air.
Safety and transportation
The dearth of pipelines is contributing to a glut of agricultural products stacking up, waiting for transportation, because crude oil is increasingly traveling to refineries via railroad and through ports. Transportation costs have risen alongside the increase in waiting time for energy products traveling through inland ports, which account for 56 percent of all inland waterway commerce.
“The surge in waterborne and rail shipments of crude may be a factor in delays at some inland and coastal ports,” said the Quadrennial Energy Review, which suggested more public-private partnerships. Grain and other agricultural products have to compete with crude for space at the ports and on the rails.
The review recommended spending up to $2.5 billion over 10 years on a new grant program targeted at expanding port and railroad infrastructure for energy, which it estimated would bring up to $5 billion in non-federal funding.
Increasing crude transport also worries communities along shipping lines, especially those in the Pacific Northwest and wherever railroads pass through town centers, who are concerned about the rising number of crude-by-rail accidents occurring across the country. Pipelines also present a safety issue — thousands of miles of old, leaky pipelines need replacing. Failure to do so could result in deadly explosions, such as a March 2014 blast in Harlem, N.Y., that killed eight people.
The Quadrennial Energy Review proposed offering $3 billion of incentives over 10 years to states to more quickly replace their pipelines, but that amount would only scratch the surface.
Strategic Petroleum Reserve
Updates to how the nation taps its safety net of 691 million barrels of oil known as the Strategic Petroleum Reserve also will get a look from the committee. The review proposed a fundamental change to how the reservoir is used.
Implemented in the 1970s as a response to oil shortages resulting from the Arab oil embargo, the policy was created to ensure U.S. refineries kept running. But now the Obama administration thinks the reserve should be used to respond to significant swings in global oil markets.
The review also recommended spending $2 billion to update the reserve. The suggestion builds on a $257 million request included in President Obama’s fiscal 2016 budget that would go toward smoothing bottlenecks in getting Strategic Petroleum Reserve oil to market. A stress test found that oil pipelines previously used to channel the fuel out from the reserve were already being used by domestic producers, a result of rising U.S. production.
Oil exports
Ending the 40-year-old ban on crude oil exports is a top agenda item for Murkowski, who last week introduced legislation to end the restrictions. Murkowski told the Washington Examiner that she doesn’t know whether it will make it into the big energy bill she’s working on with Cantwell (doing so might cost support from the Washington Democrat), but she plans to address the matter Tuesday.
Moniz, for his part, doubled down on previous comments when he remarked last week at a big energy conference in Houston that the oil industry hasn’t made a convincing argument to end the ban.
“In a situation where we still import seven million barrels of crude oil per day, I don’t think an overly compelling argument has been made on the basis of pragmatic economics,” Moniz said at the IHS Energy CERAWeek conference, according to the Houston Chronicle.
Boosters of ending the ban say doing so would allow drillers to fetch better prices on the open market. They contend there’s a backlog of domestically produced light sweet crude at U.S. refineries because those facilities were built to process heavy sour imports.
Opponents, chiefly refiners and Democrats, are worried loosening restrictions would raise gasoline prices. That contrasts with some early studies — including a December 2014 Congressional Budget Office paper — indicating gas prices would fall. Refiners also argue that they can handle light sweet crude, or at least make investments to do so.
