Photograph: Wikimedia Commons

Senate boiling over heavy water

April 28, 2016 Laura Curtis

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

For a brief time this week, the Senate appeared to be ready to shake off its reputation for stalemate  by restarting the process of passing regular U.S. government spending bills. But a dispute over a Republican amendment that would target a portion of the Iran nuclear deal threatened to scuttle the effort to pass a $37.5 billion bill that would fund the Energy Department and other agencies.

Democrats balked after Sen. Tom Cotton of Arkansas introduced an amendment that would block the administration from buying heavy water, which is used in some nuclear reactors, from Iran. Under President Obama’s nuclear accord Iran must shed some of its heavy water, and the U.S. agreed last week to purchase some in a bid to help the nation find buyers.

Senators voted 50-46 on Wednesday, falling short of the 60 votes needed to advance the spending bill, H.R. 2028. Democrats said the amendment violated an agreement to avoid politically charged amendments on the spending bills, and that the White House threatened to veto the entire measure if the provision were added.

Until this last-minute glitch, the bill had been speeding toward passage. The bill would provide $37.5 billion for the Energy Department, Army Corps of Engineers, parts of the Interior Department and other agencies in fiscal 2017. That’s $355 million more than was allocated in fiscal year 2016 and $261 million more than Obama requested. It also includes a roughly $1.2 billion increase for the defense-related programs housed within the Energy Department compared to the previous year. The Senate was able to come together to pass a resolution honoring Prince.

EPA’s Janet McCabe told the Bloomberg Government event  that the NSPS rule for methane emissions is “very close,” but wouldn’t say if it’s coming this week — or in May. She was pressed by the Sierra Club’s Michael Brune on whether the administration would really leave office without proposing regulations for methane from existing sources. McCabe said, “nothing is off the table,” but quickly added that the focus now is on doing the data collection from industry. It sure sounded to us like there won’t be a rule for existing sources before Obama moves out.

Ted Cruz and Carly Fiorina might now be on the same presidential ticket, but  their views on climate change are as different as Texas and California. Cruz has derided “global warming alarmists,” and called belief in it a religion. However, the former head of Hewlett-Packard Co. has acknowledged human activity contributes to climate change but said technological innovation—and not federal regulations—should fuel solutions, Anthony Adragna reports. “Why would we destroy all these jobs with regulations when the answer to climate change is innovation, not regulation? We’re just kind of shooting ourselves in the head and in the foot right now,” she told Seth Meyers in May 2015.

There were more mixed signals in the oil industry  yesterday: Exxon said it boosted its quarterly dividend to 75 cents a share a day after having its AAA rating yanked by S&P. It is set to announce its quarterly earnings Friday morning. Baker Hughes Inc. saw its shares gain after reporting a larger-than-expected first-quarter loss. Oh, and oil closed above $45 a barrel in New York for the first time since November after U.S. crude output dropped and Federal Reserve policy makers signaled they’re open to raising interest rates in June.

When it comes to using aircraft to survey areas for pipelines,  as Rep. Mike Pompeo proposes, greens balk. But tapping drones to save diseased Douglas firs in Oregon is something to rally around. Also today, Pete Olson says he doesn’t want to be chairman of E&C, a second pipeline bill is ready for the House floor and FERC says it will review the Ohio payout plan for FirstEnergy and AEP’s coal plants.

Drajem’s Don’t Miss

They are longtime foes when it comes to the environment but allies on getting roads, water pipes and bridges built. Sens. James Inhofe and Barbara Boxer are set to mark up their joint Water Resources Development Act bill this morning. The measure got some added political juice as Inhofe agreed to include aid for Flint, Michigan in the package. The legislation is concerned primarily with authorization of projects for transportation and flood control—improvement and maintenance of harbors, coastal and inland navigation channels, dams, locks and levees, according to Bloomberg BNA’s Alan Kovski.

Quotable

“I’m confident he couldn’t differentiate heavy water from sparkling water,” White House spokesman Josh Earnest said of Sen. Tom Cotton’s amendment aimed at stopping the U.S. from buying heavy water from Iran.”No .@PressSec my focus is on stopping US dollars from going to a terror-sponsoring regime that’s murdered US troops in Iraq and Afghanistan,” Cotton replied in a Tweet.

“His own Secretary of Energy has said there will be no more purchases. But the vehemence with which the White House is opposing my amendment raises the question of whether President Obama is being straight with the American people,” Cotton said in a statement.

The Predictor

Sure, one broadly bipartisan water bill crashed and burned yesterday, but we predict WRDA is getting fast tracked through the Senate, as it could be the swan song for that infrastructure duo of Boxer and Inhofe.

Contact Us

Send us your comments, tips and the name of the person you’d choose as your running mate. (I’m claiming Jerome Bettis.) Shoot us an e-mail: Mark Drajem is the editor (mdrajem@bloomberg.net or @drajem), Catherine Traywick (ctraywick@bloomberg.net or @ctraywick) and Laura Curtis (lcurtis7@bloomberg.net or @LouKCurtis) cover Congress and regulation.Bloomberg Government subscribers can get this and any of our eight other newsletters in their inbox every morning. Click here to modify your subscriptions. Contact Peter Hsu at 202-416-3035 or yhsu24@bloomberg.net for more information or if you have colleagues that would also value access.

Chart of the Day

Making Sense of EPA’s Methane Changes  

In its latest greenhouse-gas inventory, EPA reworked how it quantifies methane emissions from oil and natural gas, a change that led to a 30% increase in its estimates of the releases from that sector. But, as this chart from the Environmental Defense Fund shows, that figure was not distributed evenly. EPA found that production emissions were more than double what it had previously thought, with most of that coming from petroleum systems. However, transmission, storage and distribution were less than it had thought.

Inside the Beltway

No Hazard Seen for the Pipeline Bill  Pipeline safety legislation cleared yesterday by the House Energy and Commerce Committee should be headed to the floor in “a couple weeks, at least,” Energy and Power chairman Ed Whitfield tells us. Committee Chairman Fred Upton adds that there are still a few things he has to work out with his counterpart on the Transportation & Infrastructure Committee, Bill Shuster, “But I don’t anticipate any problems. I really don’t.”

The committee yesterday adopted a manager’s amendment that incorporates some of the language in the T&I-approved measure. In particular it clarifies the conditions under which PHMSA can issue an emergency order, and more narrowly defines “imminent hazard.” But Republicans on the committee are still insisting on adding language that would force PHMSA to consult with pipeline operators before issuing an order. Upton said that issue will be resolved before the bill goes to the floor.

Olson Not Interested in Top Spot on E&C  Texas Republican Pete Olson tells us he’s vying to replace Ed Whitfield as chairman of the Energy and Power Subcommittee — squelchingrumors that he might be interested in the committee gavel. Asked what his legislative priorities as chairman would be, he told Catherine Traywick to “remember three words: market, market, market! Trust the free market.”

“Let’s tap some federal lands, go offshore, promote that,” he said. “Let’s have NAPEC — North American Petroleum Exporting Countries — that’d be great, huh?” Olson says he could work well with any of the three leading candidates to lead the committee: Joe Barton,John Shimkus or Greg Walden.

Declaring War on Obama’s Sage-Grouse Plan  A rider included in the defense authorization bill, which was approved by the House Armed Services Committee in the very early hours this morning, would both block the Fish and Wildlife Service from listing the sage grouse as endangered — something it already decided not to do — and also give governors the ability to stop the federal land management plans put in place to preclude a listing. Governors could block those plans retroactively, according to Bobby McEnaney of the Natural Resources Defense Council: “It’s actually a very sweeping policy rider to change how land is managed in the West,” he said. The measure is opposed by the Interior Department, spokeswoman Jessica Kershaw told us. “It’s ill-advised for purposes of public land management, providing governors unfettered power over public lands,” she said.

EPA Sends Clean Energy Incentive Program to White House   EPA sent its Clean Energy Incentive Program, a voluntary component of the agency’s Clean Power Plan (RIN 2060-AR33), to the White House Office of Management and Budget for regulatory review, the agency told Bloomberg BNA’s Anthony Adragna. The program would give incentives to states to make early investment in wind and solar power generation and demand-side energy efficiency measures in low-income communities. According to the agency, “Sending this proposal to OMB for review is a routine step and it is consistent with the Supreme Court stay of the Clean Power Plan.”

Outside the Beltway

Pennsylvania Officials Investigating Quake Near Fracking Site: Post-Gazette   Pennsylvania officials are investigating the cause of a small earthquake in Lawrence County on Monday not far from the site of a natural gas well where fracking operations were ongoing, the Pittsburgh Post-Gazette reported. Department of Environmental Protection spokeswoman Melanie Williams said Hilcorp Energy Co., doing business as North Beaver NC Development, was hydraulically fracturing two wells on a four-well pad in Mahoning Township when seismic monitors detected a magnitude 1.9 earthquake, at 12:05 a.m. on Monday, according to United States Geological Survey records.

LePage Vetoes Maine Solar Bill as Backers Push for Override: AP   Republican Gov. Paul LePage has vetoed a bill that sought to modernize Maine’s policies on solar power. The bill would change how solar customers are paid for their surplus power. Utilities would pay rates set by regulators instead of paying retail price. LePage has been skeptical of the bill but said earlier this week that he was working with Democrats on a potential bid to save it.

Fracking Leaves Legacy of Soil, Water Pollution in North Dakota, Study Finds: Bismarck Tribune   A published and peer-reviewed Duke University study finds that thousands of saltwater and frack flowback spills throughout the oil patch have left a legacy of toxic contamination, including radioactive soils and polluted streams unsafe for human consumption and aquatic health. The Duke team of researchers, which advocated that more study is needed, published the findings Wednesday in the Environmental Science & Technology journal.

Industrial Fenceline Monitoring Bill Approved by La. House Environment Committee: Advocate   A bill that would make industrial plants with multiple violations pay for additional air pollution monitoring made it out of a Louisiana House committee Wednesday with overwhelming support from committee members. House Bill 486 would require industrial facilities to install air monitors around fencelines after racking up three permit violations within two years. Sponsored by Rep. Patrick Connick, R- Marrero, the legislation would cover facilities considered “major sources” of air pollution.

Prosecutors Oppose Blankenship Bid to Remain Free Pending Appeal: Charleston Gazette-Mail   Prosecutors are urging a federal appeals court not to allow former Massey Energy CEO Don Blankenship to remain free while that court considers Blankenship’s challenge of his conviction for conspiring to violate mine safety and health standards at the Upper Big Branch Mine, where 29 workers died in an April 2010 explosion. Government lawyers argue that allowing Blankenship to continue his $1 million bail would be contrary to the general mandate of federal law, which is that delaying the start of a jail sentence during appeal is only allowed in “exceptional circumstances.”

AEP Must Prove ’Smart Meters’ Save Customers Money Before Charging to ’Opt Out’: Columbus Dispatch   American Electric Power must demonstrate the financial benefits of so-called “smart meters” before it can begin charging a fee of $24 per month to customers who opt out of using them, Ohio utility regulators ruled today. The unanimous decision is on an application filed in June 2014, one that had been opposed by consumer advocates. Rather than accept the proposal as written, the Public Utilities Commission of Ohio added some significant conditions. “We find that customers should not have to pay for advanced meter opt-out service if they are not actually receiving a reduction in costs resulting from the operational efficiencies created by AEP Ohio’s gridSMART Program,” the panel said in the decision.

Electricity and Renewables

AEP, FirstEnergy Face FERC Review of Ohio Power Plant Contracts   American Electric Power Co. and FirstEnergy Corp. face a federal review of controversial contracts they secured from state regulators for power from money-losing plants they run in Ohio. AEP and FirstEnergy won guaranteed rates for uneconomic coal-fired and nuclear plants last month, over the objections of competing generators who argued they amounted to a consumer-funded bailout. The contracts warrant a U.S. review as the utilities’ customers will be “captive in that they have no choice as to payment” of the charges, the Federal Energy Regulatory Commission said Wednesday, ordering the companies to submit their so-called power purchase agreements for approval. The federal review throws into question yet again the fate of the companies’ Ohio power plants, totaling about six gigawatts of capacity, Jonathan Crawford reports. The generators, like other U.S. power suppliers, are seeking other sources of revenue as they face low power prices in wholesale markets and weakening demand growth that’s threatening to force plants into early retirement. FERC said it “has an independent role to ensure that wholesale sales of electric energy and capacity are just and reasonable and to protect against affiliate abuse.”

Oil, Gas and Coal

Market Wrap:  Oil traded near the highest close in more than five months after U.S. government data showed crude output declined. West Texas Intermediate for June delivery lost as much as 39 cents to $44.94 a barrel on the New York Mercantile Exchange and was at $45.14 at 7:50 a.m. London time. The contract gained $1.29 to $45.33 on Wednesday, the highest close since Nov. 4. Natural gas futures for June delivery fell as much as 1.3% to $2.125/mmBtu on the Nymex, and were trading at $2.129 at 7:43am London time.

Venezuela Declares a 2-day Workweek Because of Dire Energy Shortages   In a desperate attempt to save electricity, drought-stricken Venezuela has introduced a new concept to the workplace calendar: the five-day weekend, the Washington Post reported. President Nicolás Maduro has decided to furlough the country’s public employees — who account for a third of the labor force — for the bulk of the week, so they can sit through rolling blackouts at home rather than in the office.

East Libya to Ship More Oil While UN Slams Sales as Illegal   Authorities in eastern Libya pledged to export more crude oil soon, two days after shipping their first cargo in defiance of a national unity government based in Tripoli.A representative of the National Oil Corp. based in eastern Libya said he expected payment within a month for the shipment. A separate branch of the company based in Tripoli, in the west of the divided country, said it hoped international forces would seize the “illicit” cargo. A United Nations official condemned the sale.

Exxon Increases Quarterly Dividend After Losing Top Rating    Exxon Mobil Corp. increased its quarterly dividend by 2 cents to 75 cents a share, a day after losing its AAA credit rating.Exxon was expected to raise its dividend to 76 cents, the average of forecasts compiled by Bloomberg. The company has regularly announced an increase in dividend each April. This is the smallest increase since 2011. The largest U.S. energy company is expected to report quarterly earnings on Friday.

Baker Hughes Gains After Larger-Than-Expected Quarterly Loss   Baker Hughes Inc. gained even after reporting a larger-than-expected first-quarter loss as a financial crisis in the oil industry forces explorers to slash spending.The world’s third-biggest oil services provider reported a net loss that widened to $981 million, or $2.22 a share, from a loss of $589 million, or $1.35 a share, a year earlier, Baker Hughes said Wednesday in a statement. Excluding certain items, the loss of $1.58 a share was worse than the 33 cent average loss that 32 analysts predicted.