In a letter to key House members, American Public Power Association (APPA) President and CEO Joy Ditto outlined strong concerns related to the Clean Electricity Performance Program (CEPP), which is included in the Build Back Better Act that the House Energy and Commerce Committee started to mark up on Sept. 13.
At the same time, Ditto said that APPA is committed to working with members of the House Energy and Commerce Committee on “developing policies for reducing greenhouse gas emissions from the electric sector that are workable for public power utilities” and noted that public power utilities “recognize the threat climate change poses and have undertaken significant efforts reduce their greenhouse gas (GHG) emissions -- and they will continue to do so.”
Under the proposed CEPP, the Department of Energy (DOE) would be directed to establish a program to provide grants to eligible electricity suppliers and collect payments from them between 2023 and 2030. To qualify for a grant, an eligible electricity supplier must increase its percentage of clean electricity from the previous year by four percent. Eligible electricity suppliers would have to make payments to the Secretary of Energy if they do not show at least a four percent increase in their percentage of clean electricity from the preceding year.
Specifically, APPA does not believe that the CEPP, as currently designed, offers sufficient time for public power utilities to transition to cleaner resources while keeping their rates affordable and ensuring reliability for their customers, she said.
The letter was sent to Rep. Frank Pallone, D-N.J., Chairman of the House Energy and Commerce Committee, Rep. Paul Tonko, D-N.Y., Chairman of the House Subcommittee on Environment and Climate Change, and Rep. Bobby Rush, D-Ill., Chairman of the House Subcommittee on Energy.
“While we greatly appreciate that the CEPP would provide grants to electric utilities to expedite the clean energy transition, our members do not believe a requirement for load-serving entities to increase their percentage of clean electricity by four percent annually is achievable in the very short timeframe that the CEPP program would exist,” she wrote.
Given the length of time it takes to site, permit, and construct new generation and transmission, “we do not see how clean energy infrastructure could be built fast enough to enable our members to meet this new compliance obligation. Further, given the incredible amount of infrastructure that would need to be built to meet the needs of the entire electric sector, we are concerned about the ability of supply chain manufacturers to build needed equipment to meet this timetable and the ability of our already tight labor force to construct it.”
Ditto noted that the clean energy transition will require significant new transmission to be planned, sited, permitted, and built in the coming years.
“Developing new transmission is a costly and lengthy process filled with regulatory and political hurdles. We appreciate the emphasis on transmission infrastructure in both the Build Back Better Act and the Infrastructure Investment and Jobs Act and our concerns about the challenges and costs associated with building significant new transmission should not be seen as opposition to appropriate transmission investment,” the APPA President and CEO told the lawmakers.
“We are concerned, however, that as more and more utilities move toward cleaner energy resources, the challenges and high costs associated with building new transmission will persist, if not become worse, delaying the availability of resources that public power utilities will need to comply with the CEPP or to achieve their own emissions reductions goals beyond it.”
To address this, Congress should take action to streamline the federal permitting and siting process, eliminate excessive regulatory barriers, work with federal agencies to ensure more timely decisions, “and make keeping transmission costs affordable for consumers -- a benchmark by which all transmission policies should be judged,” Ditto said.
She went on to note that as not-for-profit utilities, all the costs incurred by APPA members are passed along to their customers. “Preliminary analyses conducted by our members of the CEPP show that compliance with the CEPP, whether through meeting the clean electricity percentage increase of four percent annually (assuming it could even be done) or payment for failing to do so would result in substantially increased costs for customers. And if they cannot meet the compliance obligation, they would have to pay a substantial penalty while not being eligible for the grant program to help them contain costs for their customers.”
It would make more sense to provide grant money to help public power utilities make further investments in clean resources, “especially given that they have not benefitted from the production tax credit for wind or investment tax credit for solar that for-profit entities have had access to and that have reduced the costs of these renewable resources,” Ditto said.
While the House Ways and Means Committee “plans to address this inequity in its portion of the Build Back Better Act, which we greatly appreciate, it will take time to build these resources going forward, more time than the CEPP will allow.”
Also, as designed, the short timeframe for the eligibility of grants under the CEPP appears to benefit wind and solar resources to the detriment of other non-emitting resources, Ditto pointed out.
She highlighted the fact that public power utilities are seeking to develop new nuclear (i.e., small modular reactors), green hydrogen, hydropower, and carbon capture and storage projects that will not come online fast enough to meet their CEPP compliance obligations or receive grants. “These technologies will be needed to provide public power utilities with dispatchable, non-emitting resources needed to further reduce GHG emissions while ensuring reliability.”
There are other issues APPA would ask the committee to address in the CEPP, Ditto said, including the need to allow public power utilities to assign their compliance obligations to their joint action agencies, changing the definition of “eligible electricity supplier” to ensure it includes all load serving entities, and other changes needed to address the diversity of structures of public power utilities.
“Public power utilities are committed to further reducing their emissions to address climate change. Unfortunately, we do not believe that the CEPP, as currently designed, provides sufficient time for public power utilities to transition to cleaner resources while keeping their rates affordable and ensuring reliability for their customers -- two key tenets that must be protected as we reduce emissions -- and is therefore unworkable as drafted,” Ditto went on to say in the letter.
Additionally, public power utilities “would have to meet this unrealistic timeframe while helping electrify the transportation sector and home space and water heating, which will increase electric demand, making meeting a four percent target even more difficult.”