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USA: Western States Lawmakers Call for Quicker Approval of LNG Export Applications

The Center for LNG praised a bipartisan group of 16 House Members who called for an expedited review process for applications to export liquefied natural gas (LNG).

The legislators – all representing districts in the western region of the United States – sent the letter to Steven Chu, Secretary of the U.S. Department of Energy (DOE), where all LNG export applications must be reviewed.

Led by Reps. Cory Gardner (R-Colo.) and Jim Matheson (D-Utah), the lawmakers noted that “Creating more opportunities to sell natural gas into global markets and access overseas customers could help the goals of increasing natural gas use and smooth out historical boom-bust cycles. Realizing sustainable natural gas prices will continue to stimulate the resurgence of U.S. manufacturing, power generation, chemical and agriculture sectors, as well as continue to keep costs low to heat our homes and fuel our nation’s transportation needs.”

The Center for LNG, a trade group representing the LNG industry, agreed with the lawmakers.

“Restarting the permitting process for LNG facilities would give the United States a unique opportunity to generate more public revenues, increase investment in the U.S. economy, create new jobs, and reduce our trade deficit,” said Center for LNG president Bill Cooper. “Promoting exports is a longstanding policy in the United States, including the President’s National Export Initiative, which is designed to create jobs by doubling U.S. exports by 2015.”

Yesterday’s letter follows a similar effort from earlier this summer, when a bipartisan group of 44 House lawmakers from Texas and Louisiana also wrote to DOE to encourage an expedited review of LNG facilities, bringing the total number of House Members supporting expedited approval to 82.

“This is yet another indication that Americans are ready to get back to work. Approving LNG export facilities would be a significant source of new jobs and will help re-grow our struggling economy,” Cooper added.

Three Democrats and 13 Republicans representing the states of Arizona, California, Colorado, Kansas, Nebraska, Nevada, New Mexico, Utah, and Wyoming all signed the letter.

Western States Lawmakers Call for Quicker Approval of LNG Export Applications, USA LNG World News.

Pro-LNG Export Group Urges Chu to “Think A Little Differently”

Rigzone Staff
Wednesday, August 08, 2012

A group of 10 Democrat and 34 Republican members of Congress from Arkansas, Louisiana, Oklahoma and Texas on Tuesday sent a letter to Secretary of Energy Steven Chu urging him to expedite the approval process for liquefied natural gas (LNG) export facilities.

“It is time to bring a renewed sense of urgency to the approval process for LNG facilities, which are part of a successful all-of-the-above energy strategy,” said U.S. Rep. James Lankford (R-Okla.) in a statement issued jointly with U.S. Rep. Gene Green (D-Texas).

The signatories represent states that have long produced oil and natural gas as well as products refined or manufactured from these fossil fuels for markets elsewhere in the United States. However, with the growth of production from major shale plays from Appalachia to the Rockies, abundant sources of oil and gas are now more widely dispersed domestically.

“[I]ncreased shale production in certain parts of the country require us all to think a little differently about this opportunity and about the need to allow producing areas the ability to seek international customers for a portion of their production,” the letter stated.

“The federal permitting process currently stands in the way of energy companies distributing their products in a timely manner,” Lankford said in the press release. “Without the ability to market to international customers, this could have a severe impact on production in our region.”

“The promise and challenge of this surplus of natural gas is that it has resulted in extremely low prices for natural gas in our country,” added Green.

“While this is great for our manufacturing sector, the price has dropped so low that many producers no longer find it economically viable to produce the resource, which could eventually raise the price of natural gas for our manufacturing sector. The approval of strategically located LNG facilities would provide the market opportunities to reincentivize this production while ensuring a stable price and supply for feedstock.”

Although the 44-member group expressed gratitude that the Department of Energy has “started to review and issue licenses” for LNG exports, they remarked that DOE’s process apparently lacks “a set timeline for decisions or a sense of urgency.” “In our collective view, it is time to bring a renewed sense of urgency to the approval process,” the letter stated.

On July 16, the DOE issued an updated list of the status of applications for LNG export projects from the Lower 48 States.

The entire Arkansas, Louisiana and Oklahoma House delegations signed the letter. The names of all but four members of the Texas delegation — Republicans Louie Gohmert and Michael T. McCaul and Democrats Lloyd Doggett and Eddie Bernice Johnson — appear on the correspondence.

A spokesman for Gohmert said the congressman supports the contents of the letter but was out of the country and unable to sign it.

Rigzone has reached out to the other three officials to obtain their positions on the matter and will post them as they become available

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The Obama Oil Embargo

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David Kreutzer, Ph.D.
April 18, 2012 at 6:46 am

From canceling oil leases in his second week in office to denying the XL Pipeline this year President Obama and his administration have offered up a non-stop assault on affordable energy.  Now that high gasoline prices have come home to roost, the president is flailing around for an energy policy.

His recent attempts at energy policy include:

  • Nobody can do anything about high gasoline prices.
  • Maybe I should release crude from the Strategic Petroleum Reserve.
  • There is a lot of drilling that I haven’t been able to stop.  Don’t I get credit for that?

The latest attempt is to blame everything on speculators.  And why not?  Previous polling shows that 80 percent of Americans believe petroleum price spikes are caused by speculation, which means no more than 20 percent believe it is caused by the fundamentals of supply and demand.

There are several flaws in “the speculators did it” theory.  The first is why do they only do it occasionally?  That is, why don’t speculators want to make unconscionable profits all the time?

Second, why do the index funds and all the other bad guys only speculate in oil?  Where are the profiteering speculators in natural gas, whose current price is about half of what it averaged over the last decade?

Third, there are sophisticated traders on both sides of the petroleum markets.  For every speculator who makes money on a trade, somebody else will lose money.  Blaming speculators on continued price increases requires an endless string of chumps to take the other side of the speculators’ deals.  If anybody should be the chumps, it should be the newbies from the insurance industry and hedge funds, but they are at the top of the most-wanted list.

Finally, for speculation to drive up prices, the speculators must either cause oil production to slow down (which they haven’t) or to pull oil off the market.  If the flow of petroleum and its products remains unchanged, the price at the pump will not change.  If petroleum is pulled off the market, which can happen even though there are limits to what can be stored, it will eventually come back on the market.  And the question becomes, “When the oil comes back on the market, is the price higher or lower than when it was pulled off the market?”  The price will only be higher if the amount supplied at that time is lower or the demand is higher.  In either of those cases, speculators have helped moderate price fluctuations and will be rewarded with profits.  If the price is lower, then the speculators did a bad thing and will be punished by losing money.

The real problem is that combating high gasoline prices requires a greater supply, and this administration’s policies have pushed the other way.  It seems the administration does not really want lower gasoline prices.  Steven Chu, Obama’s non-car-owning Secretary of Energy, famously said we need to get our gasoline prices up to the $8-$10/gallon level they are in Europe.

imageUnfortunately for the president, the voters want more gasoline and lower prices.  So, in the time-honored Washington tradition, he creates a boogeyman and blames his energy failures on speculators.

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World’s Largest Solar Plant, With Second Largest Ever Department of Energy Loan Guarantee, Files For Bankruptcy

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Submitted by Tyler Durden
04/02/2012 20:14

Solyndra was just the appetizer. Earlier today, in what will come as a surprise only to members of the administration, the company which proudly held the rights to the world’s largest solar power project, the hilariously named Solar Trust of America (“STA”), filed for bankruptcy. And while one could say that the company’s epic collapse is more a function of alternative energy politics in Germany, where its 70% parent Solar Millennium AG filed for bankruptcy last December, what is relevant is that last April STA was the proud recipient of a $2.1 billion conditional loan from the Department of Energy, incidentally the second largest loan ever handed out by the DOE’s Stephen Chu. That amount was supposed to fund the expansion of the company’s 1000 MW Blythe Solar Power Project in Riverside, California. From the funding press release, “This project construction is expected to create over 1,000 direct jobs in Southern California, 7,500 indirect jobs in related industries throughout the United States, and more than 200 long-term operational jobs at the facility itself. It will play a key role in stimulating the American economy,” said Uwe T. Schmidt, Chairman and CEO of Solar Trust of America and Executive Chairman of project development subsidiary Solar Millennium, LLC.” Instead, what Solar Trust will do is create lots of billable hours for bankruptcy attorneys (at $1,000/hour), and a good old equity extraction for the $22 million DIP lender, which just happens to be NextEra Energy Resources, LLC, another “alternative energy” company which last year received a $935 million loan courtesy of the very same (and now $2.1 billion poorer) Department of Energy, which is also a subsidiary of public NextEra Energy (NEE), in the process ultimately resulting in yet another transfer of taxpayer cash to NEE’s private shareholders.

As Bloomberg notes: “The company joins Energy Conversion Devices Inc., a U.S. solar manufacturer that suspended production last year; LSP Energy LP, the owner of a natural-gas-fired power plant in Mississippi; Ener1 Inc., maker of lithium-ion batteries for plug-in electric cars; solar-panel maker Solyndra LLC; and energy storage company Beacon Power Corp. (BCONQ) in bankruptcy.”

And so central planning fails again, and again, and again, and again. But it sure will be better with the centrally planned monetary (and in the absence of a working Congress – also fiscal) policy. Because this time it really will be different.

From Reuters:

Solar Trust of America and several affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. It estimated to have as much as $10 million of assets, and between $50 million and $100 million of liabilities.

Blythe is about 220 miles (354 km) southeast of Los Angeles.

“We have been working with Solar Trust of America for a couple of years in getting this project going,” David Lane, Blythe’s city manager, said in an interview. “Although the project is not in the city limits, we are the only city within 100 miles. My sense is that with the large investment in what was to have been the world’s largest solar power plant, someone somewhere will buy it and build it.”

At least someone’s reputation will be tarnished as a result of this latest epic failure of the Obama administration to misallocate capital :

Solar Millennium said it has been sued by former Chief Executive Utz Claassen over public statements by company representatives that he claims have damaged his reputation and left him unable to find a job. Solar Millennium said the lawsuit would not directly affect its insolvency proceedings.

Two people, however, who won’t be humiliated at all are California Governor Jerry Brown, and Secretary of the Interior Ken Salazar, who reprise the role of Joe Biden, last seen praising not only MF Global’s Jon Corzine, but that other epic administration failure: Solyndra. Watch them praise the groundbreaking for the Blythe facility.

Epic embarrassment. And not even a full year ago.

But before that, of course, we had the funding of the plant with a $2.1 billion loan guarantee from the US Department of Energy, the second largest ever, smaller only than Georgia Power’s $8.33 billion loan guarantee.

From the DOE:

U.S. Energy Secretary Steven Chu today announced the offer of a conditional commitment for a $2.1 billion loan guarantee to support Units 1 and 2 of the Blythe Solar Power Project, sponsored by Solar Trust of America, LLC. The concentrating solar thermal power plant includes two units comprising a combined 484 megawatt (MW) generating capacity, an eight-mile transmission line and associated infrastructure. The project will be built adjacent to the City of Blythe in Riverside County, California and is expected to create over 1,000 construction jobs and approximately 80 operations jobs. The plant is estimated to avoid over 710,000 tons of carbon dioxide emissions annually, equivalent to the annual greenhouse gas emissions from over 123,000 vehicles.

Loan guarantees play an important role in facilitating the development and deployment of innovative technologies at massive scope and scale,” said Secretary Chu. “Continued investments like this project make solar power more efficient and cost competitive while creating thousands of jobs and strengthening the economy.”

“California is the national leader in clean energy, and our great state is poised to become the world leader in renewable energy generation,” said Governor Jerry Brown. “I commend President Obama and Secretary Chu for making another major investment in California.”

“This clean energy project will create more than 1,000 jobs and strengthen the economy of Riverside County. Investments like this one are critical to reducing America’s dangerous dependence on foreign oil, protecting our children from pollution and creating clean energy jobs here in California,” said Senator Barbara Boxer.

And while we do not know just how much the government will have to pay out of pocket, we do know that STA had at least $50 million in debt at filing.

What we do know for sure is that at least the firm’s financial advisors made money on the deal. From the company’s Investors page:

World-Class Financial Advisors


In October 2009 Solar Trust engaged Citigroup Global Markets Inc. and  Deutsche Bank Securities, Inc. as advisors to assist in securing more than $6 billion in financing for construction of the company’s solar  power plants in California and Nevada. Citigroup and Deutsche  Bank are also providing advisory services for Solar Trust’s efforts to  develop models for debt and equity project financing for  its solar power plant projects.

Great job there Citi and Deutsche: can you please advise us how much in taxpayer cash you received as part of your incalculable “advice” please?

Also, as noted earlier on, as part of its first day filings, the company was prompt announce the procurement of DIP funding (link), which will come in the form of a $22.3 million secured loan (against what assets?) at Libor + 800bps, courtesy of NextEra Energy Resource, LLC. The same NextEra featured in the following press release:

NextEra Energy Resources’ subsidiary closes on $935 million financing and secures a DOE loan guarantee for its Genesis solar project

JUNO BEACH, Fla. – NextEra Energy Resources, LLC, announced that its subsidiary, Genesis Solar, LLC, has closed on construction and term financing consisting of $702 million in project bonds, a $150 million project term loan facility and an $83 million project letter of credit facility. The U.S. Department of Energy has provided a loan guarantee of 80 percent of the principal and interest on the project bonds and project term loan under its Financial Institution Partnership Program. Proceeds from the financing will be used primarily for the construction of the Genesis project, a 250-megawatt utility-scale concentrating solar thermal generating facility featuring proven parabolic trough solar thermal technology, located in Riverside County, Calif.

“This financing marks a significant milestone in the development of the Genesis project,” said Armando Pimentel, executive vice president and chief financial officer of NextEra Energy, Inc., the parent of NextEra Energy Resources. “We are very pleased with both the strong investor reception for this financing, which we view as a validation of our solar development efforts, and the receipt of a loan guarantee from the Department of Energy Loan Programs Office.”

That’s right: one ward of the state, bailing out another ward of the state, all to reduce those evil carobn emissions. Although that is not all. NextEra is also a subsidiary of the publicly traded, albeit with very private investors, NextEra Energy (NEE). Which means that every dollar extracted out of Solar Trust via the DIP, and ultimately via a Credit Bid in which NextEra will acquire the STA assets at pennies on the dollar, will go straight to NEE’s shareholders. Who are these shareholders you ask? Here they are: spot the odd one(s) out.

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And that is how in crony America taxpayer money goes from one insolvent pocket, to another, to Wall Street, all under the guise of idealistic pursuits and clean energy.

There is more to this story but we will stop here as we have had enough.

For those interest here is the first day affidavit, as well as the DIP term sheet. And the last time we saw an Org Chart this fun, the company’s name started with En and ended in ron.

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Obama energy officials funded solar firms despite ‘junk bond’ ratings from S&P, Fitch

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With oil pump jacks as a backdrop, President Barack Obama speaks at an oil and gas field on federal lands Wednesday, March 21, 2012, in Maljamar, N.M. (AP Photo/Ross D. Franklin)By Gene J. Koprowski

The U.S. Department of Energy backed hundreds of millions of dollars in loans for discredited solar power start-ups whose corporate debt was already sullied with “junk” ratings by Standard & Poor’s and Fitch Ratings, two of the world’s leading credit agencies, a federal government investigation has shown.

Despite the finding, Energy Secretary Steven Chu vigorously defended the ethics of his agency in a hearing last week held by House Oversight Committee Chairman Rep. Darrell Issa.

Details are emerging this week about the Energy Department’s practices that indicate the agency spent a disproportionate amount of funding on these tainted solar power projects.

Congressional aides interviewed personnel at Fitch and S&P, and officials inside Obama’s Energy Department, as part of their investigation.

A company called Solopower was cited in a “dire” warning by S&P, which accurately forecast that the firm would “fail to meet its debt obligations.” Nonetheless, it received $170 million in federal funding guarantees, investigators told The Daily Caller.

Another company, Abound Solar, was approved for a $400 million loan guarantee by Obama officials, investigators said. Fitch Ratings, however, had earlier assigned a “junk credit” rating to Abound. Fitch deemed the firm “highly speculative” and “lagging in technology” behind its competitors.

It was also rated less creditworthy than Solyndra, another infamous administration solar power investment, which caused scandal for the White House last year when it declared bankruptcy.

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The Anti-Energy President

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He really meant it when he said prices would “skyrocket.”

By PETE DU PONT

Our America today is very different from the America of some years ago. Government spending is greatly increased, as is the regulation of our economy. The growing size and reach of our government is sapping our nation’s strength and independence. And our current president’s policies have been quite different from our leaders of some years ago.

One of the best examples of these public policy changes is the huge increase in government regulation in how we generate and use energy, with its negative impact on supply, its focus on financing new and inefficient energy industries, and the resulting higher costs.

The policy of the Obama administration has been not to increase the energy supplies that are so critical to our nation’s economic health, but to limit them, to increase energy prices, and to make energy more expensive.

Eliminating tax deductions for the oil and gas industries is at the top of the President’s list, which would increase the price of gasoline and home heating oil for everyone. But this fits in with the Obama administration’s overall inclination to hamper domestic production, whether through slowness in granting new permits or refusal to open new areas for exploration. In fact oil, production on federal lands was flat between 2009 to 2011, while production on nonfederal lands increased almost 7%.

And it is not just petroleum. Mr. Obama‘s Environmental Protection Agency wants to increase regulation of coal-fueled electricity plants, which produce almost half of our electricity, so as to drive up the price of electricity and force plants to close. None of this should be surprising, for as we know, Obama’s energy secretary, Steven Chu, told The Wall Street Journal in 2008 that we must “figure out how to boost the price of gasoline to the levels in Europe.”

The president admitted that his cap-and-trade energy proposals, had they come to pass, would cause energy prices to “skyrocket” and bankrupt coal companies. In the Mr. Obama’s words, coal fired plants can be built, but if they are, “it will bankrupt them because they’re going to be charged a huge sum” for emitting the greenhouse gases.

On the other hand, the current administration is throwing money at “green” energy companies, exemplified by the failed $535 million federal loan guarantee in Solyndra. Alternative energy sources do need to be developed, but it is clear that the federal government is not a wise allocator of taxpayer dollars in this effort. These sources will never be developed to the point of affordability unless the free market is allowed to sort good technologies from bad without the skewing of investment that comes from government trying to pick winners and losers. America badly needs very different national energy policies that will increase our energy supplies, reduce the cost of energy, and get America positively moving again.

Approving the Keystone pipeline so that more energy comes into America is an important first step. The president has twice rejected congressional efforts to approve it.

We must encourage hydraulic “fracking,” of underground reserves in shale. Already there are many fracking gas efforts underway, and the government’s latest estimates of the gas available from shale are about 500 trillion cubic feet. We currently use about 24 trillion cubic feet per year, so shale gas can add around 20 years to our supply.

The Obama administration must open up more areas for exploration and production, from drilling in the Alaska National Wildlife Refuge to reducing the number of prohibited areas offshore. It simply must do what it can to speed up the permit granting process. And it must recognize that now is not the time, if there ever is a good time, to raise taxes on energy producers.

Finally, a look at the George W. Bush’s and Mr. Obama’s efforts to increase government regulation—not just in energy, but across the economy—shows the difference between the two presidents. In his first three years in office Mr. Bush put into place 28 major regulations. Mr. Obama’s three years have seen 106 major regulations. In dollar terms the Bush regulations cost $8.1 billion and Obama’s $46 billion.

So where America is and what it is doing in energy policies has changed a great deal in the past three years, mostly in a regressive direction. Energy is essential for a strong America, but the current administration seems to be doing all it can to keep us from tapping the reliable energy supplies we have right here in our country—coal, oil, and gas—and from our neighbor to the north. Instead we are being pushed towards other energy sources that are inefficient, expensive and will only provide a fraction of the energy a strong America needs.

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Steven Chu on Solyndra: Enough already !!!

Energy Secretary Steven Chu has just about had it with House Republican accusations about Solyndra and other clean-energy companies that won billions of dollars in federal loan guarantees.

“After hundreds of thousands of pages of documents sent over, there’s not any whiff that this was a politically influenced decision,” Chu told reporters Tuesday shortly after wrapping up House committee testimony on the controversial program. “That’s true of all the loans.”

Chu’s frustration was apparent after spending more than two hours before the Oversight and Government Reform Committee answering pointed GOP questions concerning his handling of more than $14.5 billion in stimulus-funded loan guarantees.

Earlier in the day, Rep. Darrell Issa’s panel released a blistering report claiming Chu had “turned a blind eye to the risks” associated with many of the companies applying for the loan guarantees, putting billions of dollars in taxpayer money in jeopardy.

During the hearing, House Republicans peppered Chu with questions about a “revolving green door” of current and former Obama administration officials and campaign fundraisers who have connections to the stimulus-funded loan guarantee winners.

Rep. Jim Jordan (R-Ohio) asked Chu whether his decisions had been influenced by several specific people tied to the administration, including former National Economic Council Chairman Larry Summers, who before joining the White House worked as a part-time managing director at D.E. Shaw, a New York-based investment firm that has an ownership stake in the Kahuku Wind project.

Chu replied that Summers’s connections to the Hawaii wind farm had nothing to do with it securing a $117 million loan guarantee in July 2010.

The DOE chief also had similar replies when asked about Commerce Secretary John Bryson, who before joining the administration sat on the board of directors at BrightSource, which won a $1.6 billion loan guarantee in April 2011 to support the Ivanpah Solar Energy Generating System in California’s Mojave Desert; Nancy-Ann DeParle, a deputy White House chief of staff for policy who served on the board of directors at Noble Environmental Power, the owner of the Granite Reliable wind energy project that won a partial $168.9 million loan guarantee last September; and Michael Froman, a deputy assistant to Obama and deputy national security adviser who worked at Citigroup, a major investor in SolarReserve, winner last September of a $737 million loan guarantee.

“There seems to be a pattern,” said Rep. Jason Chaffetz (R-Utah). “There’s so many names on this list. I just want to know personally what are you doing to follow through on our concerns that these people are personally financially benefiting from the decisions that they’re in positions to influence people when they have major financial gain on the upside of these loans.”

Chu responded that all of the DOE loan guarantees got greenlights based on their merits and without White House involvement. The DOE chief also said he hadn’t referred any of the specifics to the department’s inspector general, though he said he’d ask the DOE general counsel to review whether any of the officials breached a “firewall” designed to stop such conflict of interest concerns.

“We will look into this,” Chu told reporters after the hearing. “But again it’s easy to raise something and say, ‘Oh, by the way, this person had a connection to that company.’ Then there’s a big leap to say we funded the company because of it.”

Chu noted prominent Republicans and GOP donors have ties to some of the stimulus winners. But he also noted, “It’s not relevant to what we funded and that’s the bottom line.”

This article first appeared on POLITICO Pro at 3:59 p.m. on March 20, 2012.

Steven Chu on Solyndra: Enough already – Darren Samuelsohn – POLITICO.com.

Chu Uses Power Marketing Administrations to Implement Green Agenda

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Romina Boccia
March 20, 2012 at 5:25 pm

When it comes to finding alternate pathways to force their green agenda onto Americans, President Obama and his Administration know how to dream up creative solutions. In this latest installment, Energy Secretary Steven Chu is directing Power Marketing Administrations (PMAs) to invest in a smart electrical grid that also serves as test bed for cybersecurity technologies.

PMAs are federal agencies within the Department of Energy (DOE) that distribute and sell electricity from federal hydroelectric dams at cost-based prices, which allows them to sell the electricity at below-market rates. There are four PMAs split up by region: the Bonneville Power Administration, the Western Area Power Administration, the Southeastern Power Administration, and the Southwestern Power Administration. In the past, PMAs have relied heavily on taxpayer money to finance their capital investments.

In his March 16 memo, Chu instructs the PMAs to upgrade their transmission infrastructure, in part to enable more intermittent and unreliable “alternative” energy sources to travel over the grid. Chu also requests rate structure changes that provide incentives for energy efficiency programs, demand response programs, integration of variable resources, and preparation for electric vehicle deployment.

If the PMAs need such investments, then they should be made because it makes business sense—and funded through PMA revenues—not with taxpayer dollars because the President is running out of more transparent ways to advance his green energy agenda.

None of these are inherently bad ideas, if they were undertaken by the private sector on its own accord. Secretary Chu instructing the PMAs to “to take a leadership role in transforming our nation’s electric sector,” however, seems like a backdoor move to work toward the Administration’s agenda of incorporating more alternative energy sources in the power grid. This approach is bad policy for several reasons:

  • Without a law by Congress requesting that PMAs sell electricity at market prices, PMA customers will see their rates go up, while distortions in the price of electricity between PMA and market-based rates would continue to persist. PMAs should not exist to subsidize customers’ energy use through below-market rate electricity sales. However, raising these rates to bankroll the President’s economically unsustainable green agenda is also bad policy. Instead, the PMAs should simply sell their electricity at market rates and make whatever investments will help them meet their customers’ demands.
  • Taxpayers will likely be on the hook to subsidize the PMA spending on smart grid and cybersecurity technologies. In the memo, Chu announces reforms “necessary to ensure the borrowing authority programs are building the infrastructure this Nation needs while protecting and providing value to the taxpayer,” which suggests that taxpayers will subsidize the upgrades in one form or another.
  • The role of PMAs is to distribute and sell hydroelectric energy, not to be used as test beds for new grid technologies. They should make the upgrades necessary to allow proper functioning but should not serve as a testing ground.

Chu’s directing the PMAs to help carry out this Administration’s green energy aspirations on taxpayers’ and ratepayers’ dime is bad policy. Smart-grid initiatives should be led by the private sector—if they make sense—and the role of government should be in identifying and removing regulatory barriers to private-sector investments. PMA infrastructure that needs upgrading or replacing should be paid for by bringing MPA rates in line with market rates for electricity, instead of burdening taxpayers with additional spending.

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