December 23, 2010

Must Read:WSJ Outs Rent-Seeking, Wall Street Fat Cats Looking to Make Enron-Like Profits.Wall Street Journal(12/23) reports, “Strange things happen atthe nexus of progressive ideology and private profits. Like Peter Orszagdecamping the White House budget office for Citigroup, a bank that wouldn’texist without taxpayer crutches. Then there are the utility CEOs cheering onthe Obama Administration’s plans to wipe out large portions of U.S. electricpower capacity. The Environmental Protection Agency is preparing anunprecedented torrent of air and other regulations that will force as much as athird of U.S. coal-fired power to retire in the coming years. This gambit ismeant as an anticarbon backstop now that cap and trade is in the politicalmorgue and it will cause huge reliability problems, but some electricexecutives claim all this merely follows the law and is nothing to worry about.Eight leading utility CEOs responded recently to one of our editorials with aletter defending the EPA, claiming that the coal retirements are "longoverdue" and that the regulations will "yield important economicbenefits." What they didn’t mention is that those benefits will mostlyaccrue to the businesses they happen to head. But don’t take our word for it.Here’s John Rowe, one of the letter’s signatories and the chairman and chiefexecutive of Exelon: "Put simply, we expect some drop in 2012 earnings.But we believe by that time that the trough in our revenues will be nearing itsend. This morning, I am going to cover three reasons why we believe that.First, EPA regulations will affect both capacity and energy markets, and willdo so sooner than many think," Mr. Rowe said on Exelon’s second-quarterearnings call in July.”

Mandates,Handouts, Regulations, Tax Hikes, Permitoriums and Moratoriums; That’s theObama Admin. Energy Policy… Where’s the “Olive Branch?” E&ENews (12/23) reports, “At ayear-end press conference yesterday that capped a string of legislativevictories for the White House, President Obama singled out energy reform as amajor piece of unfinished business. "We’re still going to have to figureout how we work on energy," Obama said in response to a question about hisability to make good on promises to the Hispanic community about makingprogress on immigration. "And that’s an area that I want to immediatelyengage with the Republicans to figure out.” Obama did not elaborate on anypossible avenues for bipartisan accord on energy, but several Republicans havelaid down markers for collaboration with the administration in the aftermath oftheir party’s midterm election victories. Sens. Susan Collins (R-Maine), ChuckGrassley (R-Iowa) and John Ensign (R-Nev.) this year signed onto aDemocratic-backed renewable electricity standard (RES) plan that would requireutilities to derive 15 percent of their power from sources such as wind andsolar by 2021. Meanwhile, Sen. Lindsey Graham (R-S.C.) has proposed a competingclean energy standard (CES) that would allow utilities to meet a similarmandate by expanding nuclear power and "clean coal" — a prospect EnergySecretary Steven Chu recently asked lawmakers to "think aboutseriously"

Who Coinedthis “Clean Energy Standard” BS? It’s a Mandate that will Cost Jobs and JackRates, Period. The Hill (12/22) reports, “Sen. Lindsey Graham (R-S.C.) walked awayfrom climate change and energy talks with Democrats months ago, but he’splotting a return to the thick of Senate energy debates. Graham said Thursdaythat he’s reviving his proposal to create a “clean energy” standard forutilities in the next Congress. The idea would require power companies tosupply escalating amounts of energy from various low-carbon sources. Powergenerated from new nuclear plants would be eligible. Graham told reportersthat he wants to link the idea with proposals that would prevent theEnvironmental Protection Agency from “overly” regulating several air pollutants— including carbon. “I am going to try and get with some Democrats andRepublicans and see if we can come up with a clean energy standard that has aregional flexibility, that focuses on clean energy, and keep the EPA fromoverly regulating all these pollutants. That would be the tradeoff,” Graham saidin the Capitol. Flashback: LindseyGraham advocated for increase in federal gasoline tax as part of KGLcap-and-trade proposal.

The LoneStar Showdown: Texas Gov. Taken Off the Gloves with L-Jack and EPA; Sides withJobs, Farmers, Energy Producers. New York Times (12/23) reports, “The feud between Texasand the Environmental Protection Agency reached a new level this week, withfederal officials saying that they will take over the granting of permits fornew power plants and refineries in the state because Texas refuses to regulateits emissions of greenhouse gases. The showdown centers on Texas’ opposition tothe Obama administration’s program to rein in heat-trapping emissions, whichhas become a symbol of a broader struggle by industry and some Republicanpoliticians to thwart such regulatory efforts. Texas and several other statesare fighting the mandates in court, and Republican leaders who will take overthe House of Representatives next year have made no secret of their opposition,arguing that mandating cuts in industrial emissions will harm the economy. OnMonday, Gina McCarthy, the E.P.A. assistant administrator for air issues, toldstate environmental officials in a letter that if Texas would not regulatecarbon emissions from smokestacks, the federal government would seize controlof the state’s permitting program on Thursday. “The unwillingness of Texasstate officials to implement this portion of the federal program leaves E.P.A.no choice but to resume its role as the permitting authority,” Ms. McCarthywrote. State officials see it differently. “This is an arrogant act by anoverreaching E.P.A. that is trying to implement new, unnecessary controls onAmerican industry,” said Andrea Morrow, a spokeswoman for the Texas Commissionon Environmental Quality.”

RememberProf. Gabriel Calzada? He told you Two Years Ago that Spain’s Renewable EnergyIndustry Was a House of Cards – Which is Now Coming Down. Bloomberg (12/23) reports, “Spain will cut revenue that photovoltaicplants can earn by 30 percent for three years, part of a policy shift forecastto trim the costs consumers pay for electric power by 4.6 billion euros ($6billion) through 2013. Electricity producers that use solar panels will earnthe standard rate for some of the hours each day that they are currentlyearning a premium, subsidized rate, according to an Industry Ministry statementtoday. The package, approved by Spain’s cabinet of ministers, seeks to close thetariff deficit while freezing electricity prices for the nation’s 5 millionpoorest families. The deficit, or the shortfall between what power companiesare allowed to charge consumers and the revenue guaranteed to them by thegovernment, has spiraled in recent years. The cabinet raised the legal limitfor the tariff deficit for 2010, 2011 and 2012 by a total of 4 billion euros.Madrid-based utility Endesa SA, which is owed the most money from having tocover the tariff deficit, rose 1.1 percent to 19.54 euros in Spanish trading.”

PennsylvaniaRep. With most Marcellus Acreage Lands Spot on Resources Committee, Gavel onAg. Energy Subcommittee. E&ENews (subs req’d, 12/23)reports, “Rep. Glenn "GT" Thompson of Pennsylvania will head theretooled Conservation, Energy and Forestry Subcommittee, which overseesconservation, small watershed programs, energy and biobased energy, ruralelectrification and forestry. Rep. Tim Holden (D-Pa.) held the chairmanship ofa similar subpanel called Conservation, Credit, Energy and Research this pastCongress. Thompson, who also will serve on the House Natural ResourcesCommittee, touted his new gavel as a plus for his district and forPennsylvania. "I will have more input toward the issues affecting ourlives on a daily basis — from the commonwealth’s family farms to MarcellusShale, to the Allegheny National Forest and Chesapeake Bay Watershed," hesaid yesterday in a statement. The jurisdiction of several other subcommitteesalso has been tweaked. Rep. Jeff Fortenberry of Nebraska will head DepartmentOperations, Oversight and Credit, a subpanel that lacked credit oversight butincluded nutrition and forestry during the 111th Congress.”