Energy News for February 3, 2015

  • by BPC Staff
  • on February 3, 2015


Politico Morning Energy: EPA watchdog says tensions over access are easing – Hedge fund calls FERC investigation a ‘pile of nonsense’ – NRC mulls what to do with remaining $4 million in Yucca bucks

By Alex Guillén

EPA WATCHDOG SAYS ACCESS TENSIONS ARE EASING: EPA leaders and the agency’s inspector general have worked out at least some of the issues over recent disputes about the IG’s access to “intelligence” issues, EPA’s watchdog will tell lawmakers today. EPA IG Arthur Elkins says he and EPA have reached ‘at least a theoretical agreement on a substantial portion of the issues,’ though he notes those agreements are only just beginning to be implemented. Elkins also disapproves of EPA’s Office of Homeland Security conducting its own investigations apparently without authority, a continuing point of contention. “What we have agreed upon is that there is no category of activity at the EPA to which OIG does not have unfettered access,” Elkins says in his prepared testimony:

It’s a compulsion: Elkins identifies what he calls a “big-picture” challenge: Compelling employees to cooperate with IG investigations. Under the law there is no punishment for federal employees who won’t talk to investigators. “I believe that this committee should look into the ‘gap’ between what the IG Act requires and OIGs’ ability to achieve those requirements in such circumstances,” Elkins says. “Subject to constitutional due process rights, there might be ways to strengthen an agency’s ability to discipline an employee for failure to comply with an OIG request. For example, Congress could provide for placing the employee on leave without pay status, rather than administrative leave with pay. Alternatively, Congress might consider restricting the availability of appropriated funds to pay the employee.”

Show me the money! Elkins also has some choice words for Congress when it comes to appropriations. “The budget levels made available to me are impeding our ability to do our work,” Elkins says, while conceding OGR is not an appropriations panel. “This is penny-wise and pound-foolish, as Ben Franklin used to say. We returned $7.33 for every dollar given to us in the past year. When the OIG is not able to carry out its responsibilities because of inadequate funding, it is a net loss to the federal government and American taxpayers.”

If you go: The Oversight and Government Reform Committee hearing starts at 10:15 a.m. in Rayburn 2154

SPEAKING OF EPA: The White House Office of Management and Budget on Friday finished its review of EPA’s final rule setting state implementation plan requirements for 2008 ozone standards, according to the agency’s website. This isn’t to be confused with EPA’s proposal to tighten those 2008 standards; EPA is still taking public comment on that proposed rule, and just yesterday held its third and final public hearing in California.

HAPPY TUESDAY and welcome to Morning Energy. Send your energy news to, and follow on Twitter @alexcguillen, @Morning_Energy and @POLITICOPro.

HEDGE FUND SAYS FERC INVESTIGATION IS ‘A PILE OF NONSENSE’: FERC staff’s investigation into alleged market manipulation by Powhatan Energy Fund is “a pile of nonsense,” the hedge fund told FERC’s commissioner in a 103-page filing on Monday. Powhatan warns FERC that should it continue the investigation, “it will be a train wreck.” The filing includes a detailed rebuttal of FERC’s allegations that a trader at Powhatan manipulated the PJM market via ‘Up To Congestion’ transactions, arguing that taking advantage of a “market inefficiency” or “loophole” is not a fraudulent act. But broad portions of the filing read more like a rant against FERC’s investigative practices than a formal filing in a commission proceeding. FERC in December proposed almost $30 million in fines. Norman Bay, who headed FERC’s Office of Enforcement until he became a commissioner last year, has recused himself from the case. Powhatan’s filing:

Powhatan defends itself: “The Staff characterizes such trading as inherently fraudulent because it was supposedly different from what PJM expected the traders to do – in other words, Dr. Chen was exploiting a ‘loophole.’ Maybe he was and maybe he wasn’t. Dr. Chen might say that he wasn’t exploiting a loophole because such trading was so obviously foreseeable from the tariff itself. Loopholes tend to be things that are not immediately obvious. But for the sake of argument, let’s go with the Staff’s view in the Report and assume that the trading exploited a loophole. That begs the question: so what? One can never be guilty of market manipulation simply by taking advantage of a flawed market design, or a ‘loophole.'”


Sage-grouse: The Interior Department’s proposed budget include an extra $45 million for sage-grouse conservation efforts. The December omnibus included language barring Interior from listing either species of grouse under the Endangered Species Act, though Secretary Sally Jewell has indicated that a court order to make a decision on whether to list the birds overrules that spending bill. The Bureau of Land Management is still working with states on sage-grouse conservation plans, with an eye toward meeting a compromise that could offer a way out of an ESA listing. Of the $45 million, $37 million would go to wildlife management activities, while $8 million would go to resource management planning.

MLPs: The proposed budget would take away a key tax benefit for master limited partnerships, which are currently taxed as pass-through organizations but are publicly traded like corporations. That means they are only subject to one level of taxation, when their income is passed through to their partners’ individual tax returns. The administration wants to begin taxing those working in fossil fuel industries as corporations, so they would pay the 35 percent corporate tax and also taxes at the individual shareholder level. The plan, which would begin in 2021, would raise about $1.7 billion, according to the Treasury Department.

The nexus: The National Science Foundation has proposed $75 million for a new program studying the nexus of energy, water and food systems. Better understanding the interplay between energy and water has attracted attention from members of both parties on the Hill. NSF’s proposed Innovations at the Nexus of Food, Energy, and Water Systems program would be the first of its kind, according to NSF. The agency’s proposed budget also include $377 million for clean energy research and education.

Mining oversight: The Mine Safety and Health Administration wants $395 million, about $19 million more than in the previous year. That includes $3.1 million more for enforcing the agency’s respirable dust rule, $650,000 for more off-shift inspections, $1.5 million for an IT upgrade and $600,000 more ‘to support rulemaking activities.’

NRC MULLS WHAT TO DO WITH REMAINING $4 MILLION YUCCA BUCKS: Unsurprisingly, the NRC hasn’t asked for any more Yucca Mountain money, but the agency still has about $4 million to carry out Yucca-related review activities, and it isn’t yet clear how the NRC will spend that money. A prime candidate is a supplement environmental impact statement that the NRC must conduct because DOE declined, and an agency spokesman said the NRC believes the $4 million is “sufficient” to cover those costs. But the decision on what steps to take next are in the hands of the NRC’s four commissioners.

ALASKA, TRIBES ASK JUDGE TO FORCE INTERIOR TO CONSIDER IZEMBEK ROAD: The state of Alaska and several Native groups have asked a federal judge to force Interior to vacate the administration’s decision to reject a proposed emergency access road through Izembek National Wildlife Refuge. They argue the decision violated NEPA because Interior didn’t properly consider the need for such a road, saying that the decision “displays an unconscionable disregard for human life.” They also argue that Interior didn’t really consider the value of the 56,000 acres the refuge would gain in exchange for the 206 acres needed for the road, which they say violates NEPA and a 2009 public lands law. The groups filed the lawsuit last June and in December a judge tossed out most of the claims made in the lawsuit while allowing these claims to move forward. Motion:

ANADARKO STILL RESPONSIBLE FOR DEEPWATER HORIZON FINES, JUDGE SAYS: The Times-Picayune writes from the ongoing BP Clean Water Act trial in federal court in New Orleans. “Anadarko Petroleum Corp., a minority investor in BP’s failed Macondo well, is on the hook for federal pollution fines for the 2010 Gulf of Mexico oil spill, regardless of whether the company was responsible for the disaster, a federal judge said Monday … The law applies whether that owner is a majority or minority owner, or if they are involved in day-to-day operational decisions or not, [District Judge Carl Barbier] said. ‘You seem to be making more of a policy argument as to why a non-operator should be subject to penalties under the Clean Water Act,’ Barbier said. ‘If that’s the case, I think you’re in the wrong venue. You need to go to Congress.'” TP:

TIMMONS TO TOUT SHALE GAS BENEFITS: National Association of Manufacturers President and CEO Jay Timmons will give his annual State of Manufacturing address today, and will highlight how cheap shale gas is ‘driving manufacturing’s resurgence,’ according to excerpts previewed for ME. Manufacturers use a third of the energy produced in the U.S., according to Timmons. Shale gas, managed right, could help ‘create a million new American jobs over the next 10 to 15 years,’ he will say, adding that building Keystone Xl wouldn’t hurt, either. ‘Manufacturers are doing our part… But we can’t do it alone. Americans need an energy policy manufacturers can plan around – one that incentivizes, not inhibits, innovation.’ Timmons is also setting out on a weeks-long tour to visit manufacturers and other groups across the U.S.


– Jeff Gohringer, the League of Conservation Voters’ national press secretary, will leave the green campaign group on Feb. 10 to become communications director for Better Markets, a nonprofit focused on financial reform. Before joining LCV in 2012, Gohringer was with then-Sen. Tim Johnson for five years.

– Today is the last day at the Pew Charitable Trusts for Tracy Schario, the group’s clean energy communications lead. She starts Feb. 9 as chief of external relations at the Optical Society, a scientific group focused on the study of light, like optics and photonics.

‘HAS ANYONE SEEN THE LOST ARK LATELY?’ – SALLY JEWELL, PROBABLY: The Interior Department is looking for a better way to collect and maintain information about more than 19 million federally owned objects. Interior owns more than 185 million such objects – including archaeological artifacts, piece of art, historic objects and geological specimens. It’s a collection rivaling the Smithsonian’s, but around 10 percent reside at museums and universities instead of federal repositories. In a notice in today’s Federal Register, Interior asks for comments about whether it really needs to collect all of the data in question from those museums and schools. FR notice:


– Americans using less power could mean not enough revenue for utilities to maintain generating properties and grid infrastructure. Wall Street Journal:

– Indian officials say the U.S.-India nuclear deal reached last month could be finalized this year. Reuters:

– Most of China’s biggest cities failed on air quality standards in 2014. AP:

– A Michigan mining company places the first fleet order for aluminum F-150s. Detroit News:
Go to POLITICO Morning Energy Now >>




By Davis Burroughs (@DAVISBURROUGHS)



Today’s Budget Brief:

  • The White House released its $4 trillion budget proposal Monday, the start of a months-long budget fight with the Republican Congress. President Obama called for modest increases at EPA, DOE andDOI:

Here are a few key takeaways:

  • The Obama budget builds on the landmark Clean Power Plan, despite Republican opposition. The administration proposed a $4 billion fund to reward states that go beyond their emissions targets. The fund would be open to any state “that develops plans that meet goals earlier or goes farther than the final deadlines require,” EPA’s Janet McCabe said on a conference call with reporters.
  • Obama’s budget proposes redirecting $3 billion in offshore oil and gas revenue payments marked for the Gulf States to the federal government instead. Sen. Bill Cassidy (R-La.) said it was a “raid on oil and gas revenues,” and promised to oppose the move from his position on the Senate Energy Committee.
  • The White House also makes the case that it’s not cost effective to ignore climate change. Proposals to combat climate change include half a billion dollars to help developing countries reduce carbon emissions, $31.5 billion over 10 years to modify and make permanent the renewable electricity production tax credit and investment tax credit, and nearly $128 billion over 10 years to enhance and fund clean energy research incentives.

Today’s Washington and Business Brief:

  • A union-led refinery strike enters its third day after talks for a new national contract broke down,Reuters reports. The strike is partially responsible for the rally in oil prices. More from CNBC.
  • The DOI’s new rules on fracking will be released within the next few weeks, Interior Secretary Sally Jewell said Monday. The Washington Examiner reports.
  • The average price of gasoline rose for the first time in 17 weeks, ending the longest weekly fall since 1995. Read the report from the U.S. Energy Information Administration. AAA said that while they expect prices to continue to rise, consumers won’t suffer too much, The Hill reports.

Today’s Chart Review:

Budget Requests and Budget Reality

from Morning Consult by Meghan McCarthy

Mark Your Calendars (All Times Eastern): 


Tuesday: Earnings Reports: Vanguard Energy, National Oilwell Varco

Tuesday: House Transportation Committee Hearing on energy markets @ 10 am

Tuesday: USEA discussion on economics of solar @ 2 pm

Wednesday: Earnings Reports: Marathon Petroleum Corp, Spectra Energy Corp, Southern Co.

Wednesday: The Hill forum w/Sen. Risch & Rep. Whitfield on grid security @ 8 am

Wednesday: BNEF Sustainable Energy in America Factbook release @ 10 am

Wednesday: Wilson Center discussion on falling oil prices @ 1:30 pm

Thursday: Earnings Reports: Capstone Turbine Corp, Entergy Corp, Teco Energy Inc, Suburban Propane Partners LP, Valero Energy Pa

Thursday: Global CCS Institute’s Fourth Annual Americas Forum @ 8 am

Thursday: House E&C hearing on Drinking Water Protection Act @ 10 am

Thursday: ELI discussion on Models for Financing TSCA @ 11:30 am

Friday: Earnings Reports: Delta Natural Ga, Dominion Res/Va, Wisconsin Energy

Friday: NASEO Energy Policy Outlook conference @ 8:00 am




1-12: General
13-16: Oil
17-18: Natural Gas
19-21: Utilities and Infrastructure
22: Nuclear

23: Morning Consult
24: Forbes
25: Wall Street Journal
26: New York Times


27: U.S. Energy Information Administration
28: Brookings Institution







1) Five Takeaways From Obama’s Climate and Energy Budget

from National Journal by Ben Geman and Clare Foran


President Obama’s 2016 budget proposal lays bare the deep divisions between the White House and ascendant Capitol Hill Republicans over climate change, oil-and-gas policy, and much more.


2) Obama budget digs in on climate, energy priorities

from E&E by Robin Bravender


President Obama’s new spending wish list underscores his plans to plow ahead with ambitious and costly climate, energy and infrastructure policies — and sets the stage for another year of fierce budget battles with congressional Republicans.


3) Energy winners and losers in Obama’s budget

from the Washington Examiner by Zack Colman


President Obama took on the Republican-controlled Congress when he laid out a budget request Monday that called for increased spending on climate change and clean energy, while also taking whacks at the fossil fuel industry.


4) U.S. refinery strike nears third day as Shell, union meet

from Reuters by Erwin Seba


Royal Dutch Shell Plc negotiators met on Monday with the union representing workers at U.S. refineries as a strike stretches into a third day after talks on a new national contract broke down.


5) In long KXL debate, something for everyone — to interpret and learn from

from E&E by Nick Juliano


In what states does the lesser prairie chicken live? How many police officers work for U.S. EPA, and how often do they need to use their guns? These were the questions Democratic senators and aides were trying to answer late one Thursday evening when the new Republican majority leader pulled a power play that ultimately threatened to sink the first bill under consideration in the Senate’s 114th session.


6) Reid ‘sorry’ Senate spent one month on Keystone

from The Hill by Laura Barron-Lopez


In his first appearance on the Senate floor since the start of the 114th Congress, Senate Minority Leader Harry Reid (D-Nev.) apologized for the time the upper chamber spent last month debating the Keystone XL pipeline.


7) New research suggests climate ‘skeptics’ and believers really, really don’t like each other

from the Washington Post by Chris Mooney


For a long time, people have been using words like “polarizing” and “partisan” to describe the debate over climate change. Last week, I added “brutal and dysfunctional” to the descriptive pile. But according to new research just out in Nature Climate Changeit may be even worse than that.


8) Stung by price crash, service provider finds ways to stay in the game

from E&E by Nathanial Gronewold


For years, the giant fabrication yard in this coastal community across the bay from Corpus Christi has attracted attention from miles around as towering offshore platforms went up and out to exploit the riches locked under the Gulf of Mexico.


9) McConnell touts new post on EPA appropriations panel

from The Hill by Laura Barron-Lopez


Senate Majority Leader Mitch McConnell (R-Ky.) announced on Monday that he will be joining a Senate subcommittee that oversees funding for what is arguably one of his least favorite agencies.


10) AAA: Gas prices on the rise, but don’t panic

from the Hill by Laura Barron-Lopez


The average price of gasoline has increased seven days in a row and is expected to continue on its upward trend, according to AAA.


11) With Oil Prices So Low, What’s That Fuel Surcharge For, Exactly?

from NPR by Susanna Capelouto


When oil prices shot up a few years ago, many transportation and delivery businesses started adding fuel surcharges to their prices.


12) U.S. Index Futures Advance; Office Depot Soars on Staples Talks

from Bloomberg by Roxana Zega


U.S. stock-index futures rose, indicating the Standard & Poor’s 500 Index will rise a second day after rebounding from its biggest monthly decline in a year.




13) Oil prices jump, BP cuts capital

from CNBC by  Reuters


Oil futures rose on Tuesday, adding to gains of more than 11 percent in the prior two sessions as BP announced a cut in capital expenditure for 2015. Brent crude oil futures were up $1.90 cents at $56.65 a barrel as of 0934 GMT. U.S. WTI futures were at $51.08 a barrel, up $1.51 cents.


14) KO in AK: The fight over oil development in Alaska [Podcast]

from Platts by Herman Wang and Brian Scheid


Platts senior editors Herman Wang and Brian Scheid go ringside for the big fight over the oil industry between the Obama administration and the Alaska congressional delegation, led by Senator Lisa Murkowski. The administration recently angered Alaska lawmakers by designating portions of the state off limits to oil and gas development. With Alaska depending on oil revenues for much of its budget and the Trans-Alaska Pipeline seeing its flows significantly reduced in recent years, state lawmakers say the administration’s move infringes on their sovereignty and their citizens’ livelihoods.


15) BP Posts Loss Amid Oil Rout

from the Wall Street Journal by Justin Scheck and Ian Walker


BP became the first of the world’s giant oil companies to record a quarterly loss in the recent oil-price swoon, largely the result of accounting losses because of the diminished value of some of its reserves.


16) Cash-Starved Oil Producers Trade Treasured Pipelines for Money

from Bloomberg by Rebecca Penty


Oil and natural gas producers confronting a cash drain are auctioning off the family silver: pipelines and processing plants.


Natural Gas


17) Fracking rule coming soon, Interior head says

from the Washington Examiner by Zack Colman


A long-awaited rule governing hydraulic fracturing, or fracking, on federal lands is coming in “weeks,” Interior Secretary Sally Jewell said Monday.


18) Natural Gas Boom Brings Major Growth for U.S. Chemical Plants

from Yale’s Environment 360 by Rachel Cernansky


The surge in U.S. production of shale gas is leading to the rapid expansion of chemical and manufacturing plants that use the gas as feedstock. But environmentalists worry these new facilities will bring further harm to industrialized regions already bearing a heavy pollution burden.



Utilities and Infrastructure


19) Energy-Pinching Americans Pose Threat to Power Grid

from the Wall Street Journal by Rebecca Smith


The long-term future of the nation’s electric grid is under threat from an unlikely source—energy-conserving Americans. That is the fear of some utility experts who say that as Americans use less power, electric companies won’t have the revenue needed to maintain sprawling networks of high-voltage lines and generating plants.


20) ISO-New England real-time prices rise above $100/MWh on cold weather

from Platts by Eric Wieser


Real-time prices in ISO-New England were over $100/MWh Monday morning, with cold weather causing demand to shoot above expected levels.


21) How utilities are transforming their fuel mixes

from Utility Dive by Herman Trabish


More than 80% of utility executives foresee distributed energy resources changing their company’s fuel mix in coming decades, according to Utility Dive’s new report, the State of the Electric Utility 2015.




22) White House seeks $100 million for FRIB

from the Lansing State Journal by Maureen Groppe


The Obama administration is seeking $100 million in next year’s budget to continue construction of a nuclear research facility at Michigan State University. That figure, included in the president’s budget request revealed Monday, is an increase from the $90 million being spent this year and is the full amount that was expected to be needed in 2016 for the Facility for Rare Isotope Beams.



23) APGA Opposes FERC Policy on Pipeline Trackers
from Morning Consult by American Public Gas Association


On November 20, the Federal Energy Regulatory Commission (FERC) released a policy statement that allows interstate pipelines—by means of a tracker mechanism—the ability to recover certain capital expenditures made to modernize pipeline system infrastructure to enhance reliability, safety and regulatory compliance. A tracker mechanism automatically allows a pipeline operator to recover capital costs annually rather than having to file a rate increase with FERC under Section Four of the Natural Gas Act (NGA) to recover specific costs.  The policy statement is intended to address anticipated regulations that will be placed on interstate pipelines through actions taken by the Pipeline and Hazardous Materials Safety Administration and Environmental Protection Agency.


24) Will Obama Negotiate On Keystone XL?

from Forbes by Brigham McCown


After six years of kicking the can down the road, the President will finally have the out he needs to approve the Keystone pipeline. The question is, will he?


25) Obama Unchained

from the Wall Street Journal by the Editorial Board


President Obama ’s allies are cheering the fiscal 2016 budget he released on Monday as an expression of his liberated liberal self. We’re trying to recall when he wasn’t so liberated. But the exercise is still useful as a warning about the tax-and-spending trajectory of liberal governance absent reform or Congressional restraint.


26) President Obama’s New Budget

from the New York Times by the Editorial Board


President Obama’s fiscal 2016 budget, released on Monday, pulls together the themes and policies set forth in his State of the Union address and other recent speeches and gives them a force and coherence — an ambitiousness — that a more piecemeal delivery does not convey.





27) Increase in average gasoline prices ends 17-week streak of declining prices ›

from the U.S. Energy Information Administration by Hannah Breul, T. Mason Hamilton


EIA conducts a survey of gasoline prices each Monday, and yesterday’s survey showed the U.S. average regular retail gasoline price increasing for the first time in 18 weeks. The steady decline in prices over the previous 17 weeks was the longest consecutive decrease in EIA’s weekly survey since prices fell 14 cents per gallon over a 24-week period in 1995.


28) America’s Advanced Industries: What they are, where they are, and why they matter

from the Brookings Institution by Mark Muro et al.


The need for economic renewal in the United States remains urgent. Years of disappointing job growth and stagnant incomes for the majority of workers have left the nation shaken and frustrated. At the same time, astonishing new technologies—ranging from advanced robotics and “3-D printing” to the “digitization of everything”—are provoking genuine excitement even as they make it hard to see where things are going.






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