Energy Round Table with Senator Wyden

In each issue of State & Local Energy Report, we ask a prominent energy leader a handful of questions and publish the interview in this section. For our current issue we expanded that format to an Energy Round Table, bringing together top state officials to ask a national leader about the most pressing issues in the field.

Our first guest at the Energy Roundtable is U.S. Senator Ron Wyden (D-OR), who took over as chair of the Senate Committee on Energy and Natural Resources after Senator Jeff Bingamin (D-NM) retired at the end of the last session. While many state officials know Senator Wyden from his long tenure on the energy committee, this forum provided a unique opportunity for him to discuss his priorities now that he holds the gavel.

Energy Round Table Participants:

  • Vaughn Clark, Chair, National Association of State Energy Officials (NASEO), and Director of Energy Programs for the State of Oklahoma
  • Larry Dawson, Chair of the National Energy Assistance Directors’ Association (NEADA), and Director of LIHEAP for the State of Illinois
  • Jeff Genzer, Legal Counsel, NASEO and NEADA
  • Charles Gray, Executive Director, National Association of Regulatory Utility Commissioners (NARUC)
  • Philip Jones, President, NARUC, and Commissioner, Washington State Utilities and Transportation Commission
  • Steve Payne, Director, Community Services and Housing Division, Washington State Department of Commerce
  • Brad Penney, General Counsel, National Association for State Community Services Programs
  • Mark Wolfe, Executive Director, NEADA and Energy Programs Consortium

Senator Ron Wyden of Oregon: Let me do this very briefly. You know, any time the whole question of the role of the states comes up, it’s not really a speech unless you pay tribute to the laboratories of democracy about four or five times, and I’m sure all of you wish there was some substance to back it up. And we’re going to see if we can under-promise and over-deliver. That is going to be our objective. It’s our view that you all have really led the way in adopting renewable energy portfolio requirements, led the way in energy efficiency, on greenhouse gas reductions, and of course you’re the primary economic regulator of utilities that all across America day in and day out delivers electricity and natural gas to consumers, businesses, and households, and millions more.

Now, I’m hopeful—and I touched on this in the speech to the National Association of Regulatory Officials last year—I hope that there can be a new partnership between the federal government and the states. I mean, clearly, one size does not fit everybody when it comes to energy. I went to West Virginia to meet Senator [Joe] Manchin’s constituents recently, and Senator [Mary] Landrieu from Louisiana, and what works for Oregon is not necessarily going to work for their constituents. So we ought to start with the proposition that we really want to allow the states to bring their talents and creative juices to this, and particularly on both sides of the equation—supply and demand.

Now, historically, the [Senate Committee on Energy and Natural Resources] has focused more on supply than on impacts to consumers. I want to make sure that consumers are a bigger part of the picture in the days ahead, and that would apply to both the federal and the state level. Since you all are the primary regulators for electricity and gas, make sure that you and all of your state colleagues get your ideas to us. Senator [Lisa] Murkowski [of Alaska] and I have made it clear that we really see this as a time to break the gridlock. Elections ultimately are renewals. A lot of things stalled out over the last eight, ten months—there are a variety of reasons for it—and we think that senators on a bipartisan basis would like to break the gridlock. So for those of you representing state agencies, make sure you get us your ideas, and we want you to be part of the solution in the days ahead. Let me use that as a kind of an opening salvo.

Philip Jones, president of the National Association of Regulatory Utility Commissioners (NARUC) and commissioner of the Washington State Utilities and Transportation Commission: My question is [about] the prospects for comprehensive energy legislation during the next year or two. Is it likely to be done in a comprehensive manner or on a piecemeal basis? We’re aware of the Murkowski bill on the Blue Ribbon Commission [on America’s Nuclear Future], nuclear waste, Sheehan-Portman on energy efficiency, and some talk about a renewable energy portfolio standard on a federal level, so there are a lot of bits and pieces. But can you talk about the prospects for comprehensive legislation?

Wyden: Let’s start with a sense of the priorities. The first is, you’ve got to acknowledge the dramatic changes in the energy landscape, starting with the challenges and opportunities for natural gas. We’ve seen [an] enormous amount of natural gas produced in our country. Natural gas is fifty percent cleaner than the other fossil fuels, and its implications ripple all the way through the economy, energy policy, effects on renewables. There are a host of questions there, and that will be a priority early on. Certainly, continued development of low-carbon energy technologies, including renewables [and] energy efficiency. And we’re going to have to be more nimble and more creative in terms of addressing those issues given the tough budget constraints. And then, as I touched on in my opening comments, making sure that these issues really are looked at through a prism that puts consumers as a very critical priority in this and not just an afterthought. My sense is that there will be an interest among senators in discrete pieces of legislation that solve the problem, like streamlining the process, say, for licensing hydroelectric projects and existing dams or irrigation systems. Then, I think, there may be interest in broader bills such as one that pursues issues that stem from natural gas, but I want to have a chance to work closely with Senator Murkowski—we’ll do it in a bipartisan way—to move legislation that makes sense and can get through both the Senate and the House.

Vaughn Clark, chair of the National Association of State Energy Officials (NASEO) and director of energy programs for the State of Oklahoma: To talk a little more about your consumer interest, some of us have a more direct interaction with consumers through the Weatherization Assistance Program and the State Energy Program, both of which help with economic development, job creation, and also deal with low-income households and making them more energy efficient. We really appreciate the support you have shown in the Senate, and we want to thank you so much for that. However, on the House side, we continue to face appropriations hardships. We were wondering if you had any recommendations on how we might look at funding levels that would continue to allow us to run these programs on a nationwide basis so that all states would have the ability to continue the weatherization program and State Energy.

Wyden: I know you all in Oklahoma have been doing good work on this throughout the country. Here’s my sense: there’s going to be a tough battle to protect federal funding for a whole host of energy programs that are really cost effective and produce real value for the dollar. So it’s not just weatherization and State Energy programs, but I think there are going to be some challenges for all the energy programs. My sense is [that] with the Low Income Home Energy Assistance Program [LIHEAP], what we should try to make the case about is that weatherization actually helps solve a problem, not bandage it. What happens is, folks need help . . . paying their utility bills, but if their home is weatherized, they just need that assistance again the following year. So why not fix the problems rather than bandage them? And I think there’s also a pretty good argument, particularly for low-income seniors, [that] if they can’t get help at home in terms of assistance with weatherization and paying utility bills, . . . they often get sick and end up needing very expensive health care service, often institutional service. So we ought to be advocating for these needs. First they’re morally right, but second they’re also a very effective way to make sure that you save costs down the road.

Steve Payne, director of the Community Services and Housing Division, Washington State Department of Commerce: To follow up on what you were saying, the issue that we have for 2013 is [that] the current continuing resolution is so far below what has historically been funding this program, that as Vaughn alluded to, . . . if we stay at $68 million as currently proposed, there could be states that shut down the weatherization program altogether. And what we’re picking up in Congress is that there are members and staff who believes that there are sufficient funds in the pipeline to actually meet 2013’s funding needs. And that is just not the case. What more can we do to help get across that this program is actually jeopardized? We’re not just talking funding, but it’s actually jeopardized by the low funding figure.

Wyden: I think there are a number of ways that we can do it, and we can help you get that message out. If you get to our staff—Joshua Sheinkman, the staff director; Dave Berick; and others—the kinds of case studies that will let us in effect build a story to show that this is not just those in human services being advocates, [and] that this really is now not just trimming a bit of fat, [but] this is really raising a question of whether these programs can survive, we will go take that message out and work with you to make sure that we can hold off approaches. And I know you’ve been concerned about the House. I know you’ve been concerned about the continuing resolution. You get us some updated, current information about how dire the situation is, and we will take that case . . . [to] Congress and get it out across the country and build some new support.

Jeff Genzer, legal counsel to NASEO and the National Energy Assistance Directors’ Association (NEADA): The Sheehan-Portman bill is one of the bills that had bipartisan support in the Energy Committee last year. Do you see that bill having a chance of expanded bipartisan support with some changes?

Wyden: I think that Senator [Jim] Sheehan [of Rhode Island] and Senator [Rob] Portman [of Ohio] have a number of very thoughtful ideas in their approach. I expect that a bill along those lines . . . is going to be reintroduced. Last year some elements of their legislation—provisions of the Bingaman-Murkowsi Appliance Efficiency bill—were in effect combined and became law. Now, without getting too deep in the weeds, I think it’s fair to say the scope of what actually became law was pretty narrow. So the question now becomes, What’s next?

My understanding is that Senators Sheehan and Portman are going to look at a new piece of legislation that really builds on some of the ideas that they had been interested in in the past—building energy codes, building efficiency projects, financing industrial efficiency, federal energy efficiency. But at this time I really don’t have any specifics. I think discussions are just beginning among the senators’ offices and stakeholders, so I think it would be a very good time for you all and [the] advocates to weigh in. I think it’s also worth noting that the federal government can promote energy efficiency since federal funds are being used to make infrastructure investments, building schools with the stimulus package, disaster recoveries—all of these are areas where the federal government is involved. And I intend to be very involved in it, and I’m very supportive of what Senator Sheehan and Senator Portman are trying to do.

Mark Wolfe, executive director of NEADA: Senator, when the states look at this, they’re really evolving into public-private partnerships. States are using their own funds, or in some cases funds from the ARRA [American Recovery and Reinvestment Act] period, to support loan loss reserves or secondary market development for residential loans. Do you see these kinds of partnerships as a priority as we go forward, especially in terms of finding additional federal support to work with states to develop models for these kinds of public-private partnerships between banks and states and other lenders?

Wyden: Yes, I’m very interested in these public-private partnerships. I think they’re an attractive concept. I think clearly in the area of efficiency financing there is ongoing interest. It’s certainly a challenge, . . . [with] the reluctance of commercial banks to make the loans for energy efficiency projects. It’s kind of chicken and egg if we need the work to get done and at the same time people are saying, “Hey, we’re not so sure we’re going to do it because we’re not convinced it’s going to pay off.” So the question is, Can we find new approaches for expanding these investments? And I will tell you, I’m particularly interested in exploring the potential of these energy savings performance contracts, because what’s attractive about that is utilities and others could be in a position to put some of the money up front because they see that this is a viable idea. It’s almost a vote of confidence in a promising kind of approach. So we’re going to look very carefully at that. We’re going to look at revolving funds. I think that there is very substantial potential payback in this general area. Payback in terms of those who handle the front-end costs, and then consumer savings in the important sectors such as the buildings sector. And we intend to have very focused discussions with stakeholders about how we can exploit this potential, and we would invite the states to be part of it.

Wolfe: I think that’s great because . . . finance is an important side, but the other thing we have to focus on, too, and that I’d like your thoughts on, is still creating demand for the product. We’ve seen that the Department of Energy has had a lot of interest in supporting the finance tools, but where we see less activity is, for example, campaigns for energy efficiency education, campaigns to help explain to the consumers the benefits of making these choices. Those are some of the things we haven’t seen a lot of. I was wondering if you see that as an appropriate role for the Department of Energy?

Wyden: And what would you like to see the Department of Energy do, specifically? I’m just trying to get my arms around it.

Wolfe: I think possibly supporting a national campaign on energy efficiency.

Wyden: Around energy efficiency?

Wolfe: Yes, to help educate the public about—

Wyden: Yes, I think if you’re talking, for example, depending on Secretary [of Energy Steven] Chu’s exact plans, I think there is an opportunity for [him] to use that office as a real bully pulpit, to make the case for why energy efficiency makes sense, for what the potential is, to highlight, for example, in his or her travels, approaches that are appealing, that work, and that can be copied around the country. I think that is a natural for the department.

Genzer: One of the issues that I know utility commissioners and the state energy officials have had relates to cyber attacks. We know that’s a big issue for Congress. Chuck, did you want to ask a question about that?

Charles Gray, executive director of NARUC: I would very much. I just wondered exactly what we expect to see from the Senate and the House this year on cyber legislation. Last year there were significant efforts made to move legislation, and I’d just be interested in the senator’s views on how that is likely to proceed.

Wyden: The threat, particularly with respect to energy targets, is real. There is a new report from the Department of Homeland Security noting that over forty percent of the cyber attacks during the fiscal year 2012 were against energy targets. There still are some challenges in terms of putting together a bipartisan policy that really lasers in on how to protect this country in an effective way. Now, the electric utilities are already subject to cyber regulations under the electric reliability systems. More ought to be done—more could be done—to strengthen these reliability regulations. My own view is, Congress shouldn’t go out and reinvent the wheel and legislate a whole new leviathan to protect the electric grid. My concern is that if you just spend a lot of money first, what you’re doing is creating this huge new undertaking where vast sums of money are spent and you haven’t really lasered in on the problem. My hope would be that the creativity of the best approaches in the private sector gets a wide berth in terms of what’s done to deal with cyber security threats, [and] that there are expanded protections for personal privacy, because I’m concerned that some of what has been proposed comes up short in that area. And that the Congress pull on the good work done in the current system rather than legislate a whole new system for the electric grid.

Genzer: So one of the questions that everyone seems to be asking after the president’s inaugural address is, Do you expect Congress to take up climate legislation in any form?

Wyden: Well, a couple of points. First, I think there are a variety of practical steps that can be taken to address the climate issue. It seems to me that when you take those kinds of steps, you’re advancing a low-carbon economy, and that is clearly a sensible approach. Now, we’ve talked about energy efficiency; we’ve talked about natural gas, which is fifty percent cleaner than the other fossil fuels. So a variety of the bills that you have already asked about in the last half hour or so, when seen through the prism of climate change, are clearly initiatives that will help deal with a planet that is getting hotter and storms that are getting greater and forest fires that are more intense. Four or five of the things you all have asked about . . . are largely consistent with this idea of trying to advance a low-carbon economy, which is a way—a very practical way—to deal with the climate change question.

Genzer: Thank you, Senator. You did touch upon the [LIHEAP] program. I just want to check with Larry Dawson, who runs that program for the State of Illinois.

Larry Dawson, Chair of NEADA and director of LIHEAP for the State of Illinois: I think at this point I’ve heard pretty much what I needed to hear. I did want to mention, though, [that as] part of my state role in Illinois, I do also manage the weatherization programs. We are avidly watching what’s going on with the funding level there, and the direction of the Department of Energy or energy policy [in] working more at a consumer level is definitely of great interest to us.

Wyden: That’s encouraging. And yes, I think that as much as anything, having served on the Energy Committee for a decade plus, I don’t think anybody has ever gotten up in the morning and said, “Well, let’s spend our day being rotten to consumers.” I think that the focus has always been on energy supply, on regional kinds of questions, and I just want to see the consumer get a bigger place at the table and a bigger role in these debates. And that’s what we’re going to try to do.

Genzer: The last question I have is [about] the issue of energy tax provisions. Obviously, Congress dealt with the short-term extenders at least through 2013, [and] obviously one of the big issues is whether things like the production tax credit for wind and other energy efficiency and clean energy measures are going to get extended beyond 2013. And that’s, again, always been an issue that I know you’ve watched very closely. What do you think the prospects are, or how do you see that?

Wyden: Where I think the Senate has been now, for really the last year or so, with respect to energy and the tax code—and I sort of come at it from two perspectives: I chair the Energy and Natural Resources Committee and I serve on the [Senate Committee on Finance] as well, so we’re sort of at the intersection of the two approaches—is the Congress has really made the judgment that it wanted to make sure that for the short term, which is essentially what the year with a little bit of extra time extension is about, the production tax credit and various other kinds of incentives is all about. There were investments that would have been jeopardized had that not gone forward. We were able to protect those and provide something of a glide path to the next debate, an even bigger debate, which is: What ought to be done in terms of tax reform? What are the principles that you want to build around? And I want to see a more level playing field among energy technologies.

I want to see what really comes to be seen as parity, where you don’t have some energy sources and some energy technologies kind of on a fiscal rollercoaster where they go up and down and up and down [but] don’t have any certainty and predictability. And then you have other sources basically in a position to have long-term opportunities and long-term plans because their incentives are locked in, [and] are really embedded in the tax code. So we’re going to look at those issues. My colleague Senator [Chris] Coons of Delaware has come up with some interesting ideas that would look at how to use the tax code for the future, . . . and we’ll certainly touch on them in the Energy Committee. And then because I serve on the Finance Committee, we’ll have a chance to work with Chairman [Max] Baucus and [the] Democrats and Republicans on the committee to look at energy as part of tax reform. For those who want a little bit more insight into my thinking on it, I put together what is really the first bipartisan tax reform bill in a quarter century with Senator Dan Coats, the Republican from Indiana, and that also gives some sense of how I look at tax issues.

Genzer: Thank you, Senator. I think that does it.

Wyden: Let’s put this in the “to be continued” basket. You all are doing a lot of good work, and we are looking forward to working closely with you.