Springing Forward on Fuel Diversity

With spring come spending bills, and this year Congress has the chance to support energy diversity across the board. In the FY18 omnibus, and a series (hope springs eternal) of appropriation bills for FY 2019. There are also talks of a fix-it tax package. In short, there are many opportunities for lawmakers to support a robust, diverse fuel mix now and in the future.

Rep. Larry Bucshon, M.D. (R-IN) has introduced legislation, the “Electricity Reliability and Fuel Security Act” that seeks to establish a 30 percent tax credit, for only a five-year period, for the fixed operation and maintenance expenses of some coal plants.

In various remarks this week, Rep. Bucshon notes that since 2010, 599 coal plants in 43 states, totaling almost 108,000 MW have either been named to retire or have already been shuttered. That’s over one-third of the U.S. coal fleet.

Tax policy certainly isn’t the only reason these plants are going, going, gone; slowed demand plays a part, as does the rise of natural gas and renewable alternatives. However, in energy, as in any other form of business, tax policy can make or break a plant’s viability. The renewables industry knows this well, having received tax benefits for 40 years, which it relentlessly fights to keep.

Rep. Bucshon’s bill highlights what many consumers and government leaders perceive about the electricity markets. If too many coal plants disappear, the U.S. could be in for a series of unwelcome surprises caused by extreme weather events, natural gas price increases, or delays in technologies needed to renewables contribute more, and more reliably, to the generation mix.

While the Buchson effort will likely draw some stiff opposition from the determined, permanent coal opposition, it shouldn’t. The bill, with its five-year term for tax supports, is aimed at keeping some plants around and useful for a short time horizon while electricity and environmental stakeholders continue to work toward a future with more renewable and clean energy.

We’ll all get there together faster with less arguing about fuel sources and more purposeful conversations about developing a full range of resources and technologies. In that spirit, PACE also took note of a letter to appropriators this week, from a group of renewable trade associations asking to maintain critical programs, especially at the well-renowned DOE labs, that are helping explore and perfect innovative electricity technologies. PACE agrees with these advocates; it is “… a particularly poor time to reduce research and development in energy.”

As spring draws closer and memories of the Bomb Cyclone fade, PACE will continue to update you on how Congress can leap forward on strengthening fuel diversity.


Show-Me State Legislators Show Value of Hedging

Later this week, PACE will offer testimony to the Missouri House of Representatives Utilities Committee highlighting why natural gas hedging helps assure consumer electricity prices are stable and predictable.

In February, PACE testified to a key committee of the Missouri Senate. Our goal was and is supporting a pair of resolutions (Senate Concurrent Resolution 43 and House Concurrent Resolution 87) introduced earlier in the session by Sen. Brian Munzlinger and Rep. Rusty Black.

Each resolution urges the Missouri Public Service Commission to continue allowing the state’s electric utilities to prudently hedge natural gas contracts, through financial means or by taking an ownership stake in fuel reserves.

The Senate version of the resolution passed the chamber’s Rules, Joint Rules, Resolutions & Ethics Committee unanimously on March 6th.

While regulators and legislators should feel empowered to ask questions about natural gas prices and how utilities use hedging to mitigate price risk, PACE wants to clarify for these and other stakeholders that low prices now do not justify abandoning hedging programs.

Many lawmakers, especially in states with term limits, may not have been in office during the early- to mid- 2000s when natural gas commodity prices rose sharply and proved to be extremely volatile.

While sustained low commodity prices for natural gas are a blessing, utilities and consumers should be allowed to prepare for the day when market forces (what comes down must eventually go up) take effect.

Prices could rise and become more volatile due to increased environmental regulations across the energy sector, or as U.S. natural gas exports rise. As more sectors (transportation, manufacturing) electrify, domestic natural gas usage may rise.

In speaking with lawmakers, PACE also has provided some basic definitions of hedging, recognizing it’s a familiar practice to those engaged in agriculture, but can seem mysterious at first blush. Hedging is essentially a contract that locks in a certain amount of a needed resource at a later date for a set price. The cost of hedging comes with the payment for that extra assurance. The goal isn’t the absolute lowest price over time, but rather the intersection of a predictable and low price for as many time periods as possible.

PACE efforts in Missouri continue our advocacy on hedging issues, first captured in our March 2017 briefing paper. You can learn more at


Expand Domestic Offshore Energy Access

PACE submitted public comments this week to the Bureau of Ocean Energy Management, supporting the proposed expansion of leasing regions. Energy leadership is needed now more than ever, for consumers at home – and to shore up America’s leadership in the world. 

Laura Marshall Schepis
Executive DirectorPartnership for Affordable Clean Energy
8409 Lee Highway, #2547
Merrifield VA 22116

March 8, 2018

Ms. Kelly Hammerle, National OCS Oil & Gas Leasing Program Manager
Dr. Jill Lewandowski, Chief, Division of Environmental Assessment
Bureau of Ocean Energy Management
45600 Woodland Road
Sterling VA 20166

RE:   Draft Proposed 2019-2024 OCS Oil & Gas Leasing Program & Notice of Intent to Prepare a PEIS

Dear Ms. Hammerle and Dr. Lewandowski:

On behalf of the Partnership for Affordable Clean Energy, I write in support of the decision to include offshore areas currently closed to access and to ask the Bureau of Ocean Energy Management (BOEM) to maintain all of the proposed leasing regions as it further develops the 2019-2024 offshore leasing program.
With nearly all U.S. offshore areas currently under lock and key, the federal government has taken a significant step forward by considering expanded opportunities to develop American energy. It’s critically important to assess, and where feasible, access the nation’s offshore energy resources.

Lifting long-time artificial constraints on access to American energy can help consumers spend less on energy and more on other priorities. Energy independence improves our economy and provides much-needed revenues to federal, state, and local governments. Studies have found that unleashing the full power of our offshore resources could create more than 893,000 jobs, nearly $450 billion in spending, over $546 billion in Gross Domestic Product, and over $395 billion in increased government revenue.

In an uncertain world, strengthening and expanding the offshore leasing program will help protect our long-term national security. Promoting development of U.S. energy supplies can reduce our reliance on energy from other countries and improve our ability to provide allies with energy resources. Energy leadership is an integral part of global leadership.

Thank you for the opportunity to comment.


Laura M. Schepis