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Clinton adviser to talk power with utility executives

April 7, 2016 Mark Drajem

The First Word Energy team draws on Bloomberg’s worldwide resources to cover all aspects of energy policy. Learn how Bloomberg Government can help your energy lobbying or policy analysis—contact Peter Hsu at yhsu24@bloomberg.net or 202-416-3035.

Today’s Agenda

Hillary Clinton’s outside energy adviser, Trevor Houser,  is set to meet with utility executives and union leaders today, as the Democratic campaign frontrunner confronts questions about her energy and climate policies. “This discussion sets the stage for a robust dialogue with the Clinton campaign about the priorities of our mutual stakeholders,” according to an invite to the event at the Edison Electric Institute obtained by Jennifer Dlouhy.

Utilities are the rare energy companies that split their campaign  donations between Democrats and Republicans; in fact, Clinton is the presidential candidate with the most donations from the industry, $151,280, according to OpenSecrets.org. Their attitude was best summed up by Southern Co. CEO Tom Fanning, when we asked him who he’s supporting in this year’s election: “The incumbent.”Industry lobbyists tell us they’re anxious to find out if there will be any difference between a Clinton administration and the Obama administration on energy and environment issues, and what those differences may be. Brian Wolff, who was a top aide to former Speaker Nancy Pelosi, said the meeting is crucial to show what the industry is doing “to deliver an energy future that is smarter, cleaner, and stronger.” He added in an e-mail: “We want to ensure that we are communicating with and educating the presidential campaigns as part of our outreach. We plan to hold similar briefings with other campaigns in the future.”

The fuels utilities use have been a big part of the campaign between Clinton and Bernie Sanders. Clinton’s been pressed into declaring her opposition to fossil-fuel production on public lands, for the elimination of the use of coal for electricity generation and for rules that would curtail fracking in most of the country. Each of those would be radical departures from current norms. But none likely represent the true policy priorities of what a Clinton administration would do; Bill Clinton told a Wyoming audience that coal will be around for a long time.

Utilities are increasingly reliant on cheap gas,  so fracking may be more important than coal for them. The New York Times reported that upstate New York self-styled fracktivists are pushing Clinton further to the left against fracking, and giving support to Bernie Sanders. “The absolutism of Mr. Sanders’s position on this and other climate issues — as well as the fact that Mrs. Clinton arrived at her views under pressure from the left — has made many activists mistrustful of her and supportive of Mr. Sanders,” the newspaper declared.Sanders is also absolutely against the Indian Point nuclear plant near New York City; Clinton’s views are more nuanced — which should appeal to the utility executives and their union workers, as well.

“There’s a current Nuclear Regulatory Commission study being undertaken. But we also have to be realistic and say, you get 25 percent of the electricity in the greater New York City area from Indian Point,” Clinton told WAMC news. “I don’t want middle-class taxpayers to see a huge rate increase, so this has to be done in a careful, thoughtful way.”

Utilities, of course, have many other issues specific to what they do: the Clean Power Plan, siting policy and, even, ozone rules, BI analyst Cheryl Wilson says. As for Clinton herself, she’s scheduled to go to my hometown of Buffalo tomorrow. I’ve got to recommend a visit to Allen Street, first for the wings at Gabriel’s Gate and then for a Labatt’s and steak sandwich at the Old Pink. The Ramones will be playing on the jukebox.

In today’s edition, we also have details on mergers and more.  Sagging stock prices and looming debts led many analysts to predict an era of merger mania among energy companies. Yesterday showed that’s going to be no easy task. Pipeline company Williams accused Kelcy Warren, the chief executive officer of its would-be owner Energy Transfer Equity, of “maliciously orchestrating” a unit offering that breached the terms of the takeover. And the Department of Justice filed a lawsuit to block the merger of Halliburton with Baker Hughes, the second and third largest oil services companies. Bill Baer, the head of the Justice Department’s antitrust division, said the deal is “unfixable” and assailed the companies for proposing “the most complicated array of piecemeal divestitures and entanglements” that he has ever seen. Also today, the latest on the FAA bill and ITC expansion, EPA tries to figure out biomass, cheap natural gas may mean trouble for producers, but chemical manufacturers couldn’t be happier; and T. Boone Pickens on talking frogs and Texas oilmen.

Quotable

“People view the Arctic as this snow globe that sits up a on a shelf and looks pretty — but don’t touch it! Hands off!,” Sen. Lisa Murkowski said at an Arctic Forum yesterday. Congressional debates on the Arctic are “so focused, so targeted specifically on the issues of climate change, of environmental protections.”“In our state, we will not allow the prioritization of production and profits over the safety of our workers,” W.V. Sen. Joe Manchin said in response to the sentencing of Don Blankenship. “No sentence is severe enough, and no amount of time in jail time will heal the hearts of the families who have been forever devastated, and I pray that this sentence brings them some closure.”

The Predictor

Chances that oil producers will agree to freeze output fell to 50% from 90% after Saudi Deputy Crown Prince Mohammed bin Salman said the world’s largest producer will only join the effort if Iran signs on, too, DNB Markets analyst Torbjoern Kjus said in a report.

Contact Us

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Chart of the Day

Europe is Not the Only Thing the U.K. May Exit   The world’s first coal superpower, the U.K., now produces less power from coal than it has since at least 1850, BNEF’s Michael Liebreich said in his presentation.

In Depth

Why Utilities Were So Antsy at the BNEF Summit  Kit Konolige, a BI analyst, gets at why utilities sounded so anxious at the BNEF summit this week. He gives the case study of Texas: “Wind power can produce 10 percent of demand on the Texas grid, crushing off-peak pricing. Ercot fossil-fuel generators are now concerned that 2,000 megawatts of solar expected online by 2017 may wipe out their 30 highest-priced hours. Wind is strongest overnight and almost disappears during midday’s high demand, keeping August prices from 4-5 p.m. above $100 a megawatt in 2015. Solar is strongest in summer afternoons, which could cut peak pricing. While their coal and nuclear plants are hardest-hit by low power prices, natural gas spark spreads have also narrowed.”

Inside the Beltway

Senate Nears Deal on Adding Tax Extenders to FAA Bill  While Minority Leader Harry Reid continues to insist that he had a handshake deal with Majority Leader Mitch McConnell on attaching renewable energy tax credits to the FAA reauthorization bill, the chamber’s resident tax experts haven’t yet come to agreement on the actual numbers behind such a deal, according to Republican and Democratic leadership aides.Democrats are asking for a straight five-year extension of the investment tax credit for all eligible energy sources under Section 48, which means fuel cells and small-wind projects would get a 30 percent tax break while geothermal, micro-turbine and combined heat and power projects would get a 10 percent cut. An initial proposal floated by Wyden would cost $1.4 billion over 10 years, according to his office. Republicans, of course, aren’t exactly wedded to those figures but at close of business yesterday, Wyden told reporters outside of Reid’s office that they were getting close to working it out.

Also at issue is how such a deal would be introduced: Democrats want a finance title added to a manager’s amendment but some Republicans would prefer a stand-alone amendment, which would raise the hurdle for getting it included. (FWIW, energy lobbyists say they have no doubt a stand-alone would get the requisite 60 votes — after all, CHP tax breaks benefit the natural gas industry, too.)

Making Coal Out of Farm Waste at the EPA Today  Enginuity Worldwide CEO Nancy Heimann came by the office with product samples that looked a heck of a lot like coal. The Missouri-based company, which is 75% farmer owned, uses friction and pressure to turn waste plant material into “biocoal,” which can be burned in a regular coal plant. The benefit is “you can change the fuel, not the plant,” she says, while cutting emissions. Enginuity is working on a pilot program with Ameren that the utility projects would add 180 jobs and generate $40 million for the rural economy. The process isn’t unlike what nature does using heat and compression, but Heimann points out, “we do it in two minutes and 40 seconds.”

Heimann is speaking at today’s EPA workshop on using biomass to address carbon pollution, which starts at 9 a.m. and can be livestreamed here.

Jay Faison Has Company   Julian Robertson, a top Republican donor and legendary hedge-fund manager, is backing a campaign to push the party’s candidates to support clean-energy policies. Robertson recently gave $500,000 to a new super-PAC known as ClearPath Action, which advocates for nuclear and hydroelectric power and cleaner coal and natural gas technology. “The time has come for Republicans to embrace a conservative clean energy platform,” the billionaire investor said in an e-mail to Bloomberg. ClearPath is the brainchild of Jay Faison, a North Carolina entrepreneur and Republican. In addition to the super-PAC, which plans to support Republicans in congressional races this year, he’s also funded a related $165 million nonprofit foundation dedicated to clean energy.

T. Boone Pickens and Talking Frogs  Energy tycoon T. Boone Pickens opened yesterday’s event on shale gas at the Hudson Institute with a pretty good one, and in the process compared himself to a talking frog: “The oil business is pretty sad right now,” he said, “and this woman was walking down Travis Street in Houston and there was a frog in the gutter and he said, ‘Stop stop!’ And she looked at him and said, ‘Did you say that?’ He said, ‘Yes, I am a talking frog, pick me up.’ She picked him up and she went, ‘You really are a talking frog.’ ‘Yes, I had this horrible spell cast over me and it made me a frog and if you’ll kiss me I’ll turn into a Texas oil man.’ And she looked at him, zipped her purse and he said, ‘Wait a minute, if you kiss me I’ll turn into a Texas oil man!’ She said, ‘Let me tell you something. A talking frog today is worth a hell of a lot more than a Texas oil man.'”

Automakers Join Chorus Against EPA Race Car Provision   An obscure provision in proposed truck emissions standards would mark a significant departure by the Environmental Protection Agency from its treatment of non-road vehicles under the Clean Air Act and deprive consumers of property rights by barring legitimate activities, automobile manufacturers said in comments to the agency, Bloomberg BNA’s Anthony Adragna reports. The Alliance of Automobile Manufacturers, whose members include Ford Motor Co. and General Motors Co., and the Association of Global Automakers, whose members include Honda Motor Co. and Toyota, proposed clarifying language to the EPA’s greenhouse gas emissions standards for medium- and heavy-duty trucks to ensure that modifying a vehicle to be used solely in competition did not constitute tampering with emissions controls under the Clean Air Act.

Interior Approves California Solar Project   A 287-megawatt solar project proposed to be constructed on federal lands in Southern California by privately held Bechtel has been granted final approval by the Interior Department, Bloomberg BNA’s Ari Natter reports. Approval of the Soda Mountain Solar Project on 1,767 acres of property owned by the Bureau of Land Management comes despite objections from environmental groups such as the Sierra Club, which has said the project less than one mile from the Mojave National Preserve threatens wildlife habitat.

Outside the Beltway

Md. Senate OKs Increasing State’s Renewable Energy Standard: AP   A measure to increase Maryland’s renewable energy standard has passed the state Senate. The vote was 31-14 Wednesday. The bill increases requirements to use energy sources like wind and solar to 25 percent by 2020. That’s up from the current goal of 20 percent by 2022. The House passed a similar bill last month 92-43. The two chambers will need to pass the same version of the measure before Monday at midnight to send the bill to Gov. Larry Hogan.

Coahoma Electric Cuts Ribbon on Miss. Solar generation facility: Clarksdale Press Register   South Mississippi Electric (SME) last week celebrated the first solar power generation facilities in the Mississippi Delta with a joint ribbon-cutting event for sites at Delta Electric Power Association and Coahoma Electric Power Association. Coahoma is headquartered in Lyon, and Delta in Greenwood, where the event was held. Both facilities are operational and generating electricity. The smaller-scale installations of 100 kW or less are among five such facilities that SME has announced it would construct and operate.

BP Engineer Gets 10 Months Probation on Pollution Charge: AP   A former BP engineer was sentenced Wednesday to 10 months’ probation for a misdemeanor pollution charge connected to the 2010 Gulf of Mexico oil spill. Donald Vidrine had served as a rig supervisor on the Deepwater Horizon offshore rig. Prosecutors had argued that he and one-time co-defendant Robert Kaluza botched a pressure test before the rig’s explosion, which sent millions of gallons of oil spewing into the Gulf. Both had once faced manslaughter charges connected to the deaths of 11 rig workers.

Utica Shale Drilling Downturn to Cost Ohioans: Beacon Journal   The downturn in shale drilling will likely be costly for Ohio landowners hoping to cash in on Utica Shale royalties, says an energy researcher. The drilling slowdown and low commodity prices are projected to cost Ohio landowners $6.5 billion in lost income over the next five years, said Maria Cortez of Houston-based Wood Mackenzie, an energy research company.

First of Two Calif. Central Basin Water District Reform Bills Passes First Test: Whittier Daily News   The first of two bills to reform the Central Basin Municipal Water District by adding additional directors to its board was approved Wednesday by the state Senate Governance and Finance Committee. Sen. Ricardo Lara’s bill, S.B. 953, would add two seats to the Central Basin board and give the Los Angeles County Board of Supervisors the responsibility of appointing the new members.

Pacts Signed to Remove Dams from Klamath River: AP   Endangered salmon blocked for nearly a century from hundreds of miles of the Klamath River in Oregon and California are expected to return en masse under unusual agreements signed Wednesday to tear down four hydroelectric dams. U.S. Interior Secretary Sally Jewell, who signed agreements with the governors of both states, said the plan would bring about one of the largest river restoration projects in the history of the U.S.

Buffalo News: Cuomo says SolarCity funds secured in state budget   The state budget should put an end to the cash squeeze that caused the state to fall behind on its payments to vendors working on the SolarCity solar panel factory in South Buffalo late last year and early this year. The budget includes $685 million in funding for “high technology” projects in Erie and Chautauqua counties, including $200 million for the Athenex pharmaceuticals plant in Dunkirk. The rest of the funding – $485 million – is targeted for the SolarCity plant on South Park Avenue, which is being built with $750 million in promised state funding.

Chinese Emissions to Peak Early: E&E   China could peak its carbon emissions a decade earlier than it promised as part of last year’s global climate deal, according to a new analysis by an influential Chinese think tank. The Chinese Academy of Social Sciences’ (CASS) “World Energy China Outlook 2016” found that under one scenario, the world’s largest emitter would likely peak its CO2 emissions in or around 2020 if the country takes recommended steps to decarbonize.

Oil, Gas and Coal

Market Wrap:  Oil extended gains following the biggest advance in three weeks after crude stockpiles unexpectedly declined from the highest level in more than eight decades. West Texas Intermediate for May delivery rose as much as 55 cents to $38.30 a barrel on the New York Mercantile Exchange and was at $38.12 at 7:47 a.m. London time. Natural gas futures for May delivery on the Nymex fell as much as 1% to $1.892/mmBtu and were trading at $1.906 at 7:22am London time.

Halliburton Sued by U.S. Seeking to Block Baker Hughes Deal   Halliburton Co. was sued by U.S. antitrust officials who say its planned takeover of rival oil-services firm Baker Hughes Inc. threatens competition and should be blocked, a blow to Halliburton’s bid to bulk up to better compete against rival Schlumberger Ltd. The deal, which would unite the No. 2 and No. 3 firms in the industry, threatens to eliminate head-to-head competition in 23 products and services used in oil exploration and create a duopoly with market leader Schlumberger, the Justice Department said.

Williams Accuses Would-Be Owner of ‘Maliciously’ Breaching Deal   Williams Cos. is accusing pipeline magnate Kelcy Warren, the chief executive officer of its would-be owner Energy Transfer Equity LP, of “maliciously orchestrating” a unit offering that breached the terms of its takeover. Warren interfered with the terms of the companies’ merger pact by arranging the offering of units in Energy Transfer last month that it may use to finance the merger, Williams said in a lawsuit filed in a Texas court. Warren led the offering to “enrich himself” at the expense of other shareholders, according to Williams. The legal challenge is just the latest bump on what’s proven to be a rocky road toward closing the transaction between Energy Transfer and Williams, a deal valued at $32.9 billion at the time of its announcement in September. Oil’s collapse is already weighing on the value of both of the companies’ stocks, casting doubt on whether Energy Transfer, the midstream giant founded by Warren, will actually follow through with the buy.

Blankenship Gets Year in Prison Over Mine-Safety Conspiracy   Six years after 29 miners were killed in a West Virginia coal dust explosion, the man who ran the mining company like a fiefdom — a coal baron and power broker who earned millions of dollars a year — learned Wednesday he’s prison-bound. Donald Blankenship, who presided over his coalfields from a mountaintop castle, was sentenced Wednesday to a year in prison and a $250,000 fine, the maximum punishment after his misdemeanor conviction for conspiring to flout mine-safety rules.

PennEast’s $1 Billion Pipeline Start Delayed to 2018 for Review   Developers of a $1 billion shale gas pipeline in the Northeast are pushing back the start date because a review by federal energy regulators is taking longer than anticipated. The 118-mile (190-kilometer) PennEast natural gas pipeline project is expected to begin operations in the second half of 2018, compared with an earlier planned date of late 2017, according to an announcement on the project’s website Monday.

Shale Gas and Chemical Investments   U.S. chemical industry investment linked to shale gas reached $164 billion. Forty percent of the investment for the 264 projects – new facilities, expansions and factory re-starts – is completed or underway, while 55 percent is in the planning phase, the American Chemistry Council said. The ACC analysis shows that the capital spending could lead to $105 billion per year in new chemical industry output, and 69,000 direct jobs.

Keystone Oil Pipeline Shuts and Oversupplied U.S. Market Shrugs   This week’s shutdown of the Keystone oil pipeline has stopped up the route for roughly a quarter of the crude flowing into the U.S. Midwest.To which the oil market has essentially said: Eh.TransCanada Corp. closed the pipeline that ships 590,000 barrels a day of Canadian crude to the U.S. on April 4, responding to signs of a leak in South Dakota, and doesn’t expect to restart it until at least early next week. While there’s no good time for a shutdown, the move comes with American oil stockpiles booming.