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House GOP: There Will Be Blood

By Kennedy Maize

Washington, D,C., November 23, 2010 — Republican blood is flowing in the halls of Congress as the GOP works to establish leadership and jurisdiction of its new House majority. The territory at stake involves energy and environment.

In the House, where the gore is great, a gun fight is underway over who will chair the all-powerful Energy and Commerce Committee, featuring a dispute over, of all things, light bulbs.

Two committee members are vying openly for the chairmanship. Two others are waiting in the wing (the right, of course), no doubt hoping that the leading candidates will finish fatally ventilate the other, providing an opening for a dark horse.

At the same time, the presumptive chairman of the Natural Resources Committee has launched a daylight attack on the Energy Committee’s energy jurisdiction. The House GOP could resolve the raging disputes next week, when the 23-member GOP steering committee meets to pick chairmen of the standing House committees. Incoming speaker John Boehner of Ohio controls four votes on the committee and Republican whip Eric Cantor of Virginia two.

During it all, the lame ducks of the outgoing 111th Congress are trying mightily, without much effect so far, to wrap up their business before Christmas. As they try to escape Washington for the holidays, they find themselves tripping over the large incoming cohort (93 freshmen in total, 84 of them Republicans) of clueless ducklings entering the 112th edition of the Greatest Show on Earth.

In the GOP House, Texan Joe Barton wants to reclaim the leadership of the House Energy Committee, where he was chairman from 2004 until the Donkeys ousted the Elephants in 2006. Barton was then ranking GOP member for two more two-year terms. In order to be the once-and-future chairman, the steering committee will have to agree to waive the House GOP’s self-inflicted rule of term limits for committee leaders. Republicans are unsure how two terms as ranking minority member counts in the three-three limit.

Barton, who knows more than the average Republican (or Democrat, for that matter) about energy and is a skillful legislator, suffers from a major political problem. During the hoop-de-doo over the BP Gulf of Mexico oil spill last summer, Barton committed truth and accused the Obama administration of extorting the British oil company into putting up $20 billion of its own money to fund damages from the spill.

While accurate, that was so politically incorrect that even the most tone-deaf Republicans were aghast. Barton was giving live ammo to the folks who claim that Republicans coddle big business and are insensitive to average citizens. He was told to move out of the committee co-pilot chair and sit below the partisan salt. The rap on Barton — one of the worst things one Republican can say about another — became that he is a “loose cannon.”

Now, Barton wants his first chair back. But Michigan’s Fred Upton, a long-serving Republican on the committee and as buttoned-down as they come, wants to be chairman of the most powerful committee in either the House or the Senate.

Upton has a major problem, too. He’s viewed as — gasp — a moderate. His chief crime, it seems, is that he supported 2007 energy legislation, signed by George W. Bush, that effectively bans incandescent light bulbs, forcing consumers to buy bulbs that use less electricity, whether they want them or not. Upton is promising that, if named chairman, he will be “reexamining” the bulb brouhaha.

Upton’s candidacy has ignited sniping from the right flank. How “liberal” is he? Very, according to the Grand Inquisitor of the holy church of rightnessness. “All socialist” is how Glenn Beck hyperbolically blessed Upton.

Hiding the brush are Republicans John Shimkus of Illinois and Cliff Stearns of Florida, ready to attack if Barton and Upton succeed in knocking each other off. Both Shimkus and Stearns are known as hard-right conservatives. They have focused most of their energy on the committee looking at telecommunications issues. Shimkus is in line to take over the House Science and Technology Committee, a generally low-wattage panel. Both are publicly supporting Barton. My impeccable Republican sources have told me that should Barton fail, Shimkus will challenge Upton to a political High Noon encounter before the steering committee.

In the meantime, Washington’s Doc Hastings (his given name is Richard and he’s not a doctor), the presumed new chairman of the House Natural Resources Committee, is seeking additional territory for his committee, at the expense of the Energy and Commerce Committee. Hastings wants to create a House Energy and Natural Resources Committee, mimicing the Senate committee of the same moniker.

In an editorial in Politico, Hastings argued, “This is a clear, common-sense reform that deserves thoughtful consideration based on its merits.” It is unlikely that the chairman of the energy panel, regardless of who that is, will see much validity in the Hastings land grab. It reminds oldtimers (yours truly) of the Brobdingnagian battle in 1980 when Democrat John Dingell defenestrated two more senior Democrats, Harley Staggers of West Virginia and Jim Scheuer of New York, to create the House Energy and Commerce Committee.

The new committee that Dingell took over has jurisdiction over energy, health, telecommunications, finance, and practically anything else a high-wattage chairman chooses to illuminate with his or her presence.

Will Hastings succeed? We should know in a week or so.

Coming next week: The Storm in the Senate

GOP Won’t Cut Federal Spending

By Kennedy Maize

Washington, D.C., Nov. 11, 2010 — Pardon my cynicism, but I don’t for a minute believe that the Republican electoral sweep earlier this month will result in significant cuts in federal spending anytime soon. Am I charging that Republican electoral doctrine is a tissue of hypocrisy? Yes, I am, and we will see that tissue tear apart when Congress decides on spending for energy programs.

Before getting to the specifics, let’s start with the general. Where can the Republicans, who have fenced off the Defense Department and entitlements (Social Security, Medicare, and Medicaid) find real budget cuts? GOP religious doctrine takes some 85% of federal spending off the cutting board. What’s left? Here are some areas where I predict the GOP will not direct its meat cleaver: the National Institutes of Health, the Department of Homeland Security, crop subsidies at the Department of Agriculture, No Child Left Behind, non-DOD defense spending, for starters.

To see just how empty GOP spending rhetoric really is, take a look at energy spending and tax subsidies (the same thing) at DOE, the Department of the Interior, and USDA. This week, the chairmen of the estimable and bipartisan National Commission on Fiscal Responsibility and Reform have suggested a series of federal spending cuts and reforms aimed at cutting the federal deficit. The commission leadership has some good ideas for getting the nation on the path toward reduced deficits, although, wisely, the cuts would not come during the current slow recovery from recession.

The panel chairmen – former Wyoming Senator Alan K. Simpson and former Clinton chief of staff Erskine Bowles – on Wednesday floated a draft report designed as the basis for a final report by the 18-member commission, created by the Obama administration when Senate Republicans chickened out of a plan for a commission created by law with the force of law. When it comes to energy spending, the chairmen propose some good ideas, several of them periodical chestnuts that have been proposed and repeatedly rejected by Republicans and Democrats.

To their credit, Simpson and Bowles do not try to wrap themselves in the American flag by fencing off military spending, suggesting some $100 billion in savings from DOD, including cutting some major weapons systems, such as the troubled V-22 Osprey tilt-rotor aircraft.

On energy spending, the first specific cut Simpson and Bowles suggest is to save $500 million in fiscal 2015 by slashing USDA’s Rural Utilities Service (RUS). Some of that will come from rural telecommunications programs, not its power plant subsidies. A suggestion for eliminating “energy tax credits for the oil and gas industry” has no savings figure assigned to it. The Simpson-Bowles plan would increase the federal gasoline tax by 15 cents per gallon starting in 2013. Two other recommendations, with no dollars attached are: “Restructure Power Marketing Administrations to charge market-based rates,” and “Require Tennessee Valley Authority to impose transmission surcharge on electricity sales.”

In an accompanying paper, the chairmen say the RUS “runs a number of programs which are outdated, overlapping, and which provide limited or questionable public policy benefits. These include the Local Television Loan Program among others.” The discussion paper also suggests $900 million in savings from cutting DOE’s applied fossil fuels research program. The discussion notes, “This funding was created at a time when the prices for these types of fuels were partially controlled and the development of technology was stunted. Today, the situation is quite different. In addition, much of this federal research duplicates what is being conducted in the private sector. The Office of Management and Budget has reported that the additional oil reserves which have resulted from technology developed by the program have been minimal.”

The chairmen’s suggestions in the area of energy spending are quite small and none, by themselves, would make much of a dent in the deficit. The same is true of most of the proposed cuts, although some are large, such as Social Security savings. Together they all put a lot of money on the table, a laudable beginning point for an important discussion.

My bet is that little to none of these recommendations actually result in spending cuts, including the tax spending reforms. All of the programs that Simpson and Bowles target have constituencies behind them. Many of the cuts have been tried before, with no success. For example, the issue of “market rates” for power from the DOE Power Marketing Administrations has come up in virtually every administration going back to Richard Nixon. The public power community – represented in Washington by the American Public Power Association and the National Rural Electric Cooperative Association – quickly mobilizes and besieges Congress to protect their access to low-cost electricity. There’s no reason to believe that won’t happen again.

The gas tax increase, a good idea, is DOA. Why? Because of the “T” word: tax. Heavens, we can’t have tax increases, even consumption tax increases. Indeed, Texas Gov. Rick Perry, an empty suit and a stuffed shirt all in one sartorial dog’s dinner, has suggested repealing the 16^th amendment, which authorizes the federal income tax. I’m surprised he doesn’t argue that the constitutional amendment is unconstitutional.

Just how unserious the GOP is about spending comes from today’s New York Times, where reporter Jackie Calmes writes, “Note to the incoming Republican majority in the House: Eliminating government programs that do not exist does not save money.” Congressional Republicans say they can save $25 billion over 10 years by killing $2.5 billion in annual spending for an emergency welfare fund. But there’s a problem with that arithmetic. The program expired at the end of September.

Ultimately, the GOP has boosted its electoral success by perpetrating and exploiting myths about federal spending. I have no doubt that many voters believed Republican (and Democratic, for that matter) candidates who said or implied that cutting federal spending is a no-brainer. But any experienced legislator knows that appeal is fraudulent. Just watch what happens when naïve or cynical newcomers to Washington try to cut earmarks. It won’t be pretty. It will be educational.

Does EPA Departure Signal Climate Change?

By Kennedy Maize

Washington, D.C., Nov. 5, 2010 – It could be a sign of the times, or merely a temporal coincidence. Liza Heinzerling this week announced she is leaving the Environmental Protection Agency, where she has been a hard-charging policy chief, to return to teaching at the Georgetown University law school.

The departure came a day after Republicans, often campaigning against Obama and EPA climate policies, “shellacked,” in the president’s words, Democrats in national elections, capturing the House of Representatives and significantly narrowing Democratic control of the Senate. As reported in Politico, Heinzerling has been one of the administration’s “most aggressive officials on global warming regulations” as the agency has moved into a regulatory vacuum created by congressional refusal to enact climate law.

Politico tagged Heinzerling as “one of the more dogmatic proponents” of using the Clean Air Act authorities to go after carbon dioxide emissions from fossil-fueled generating plants. The U.S. Supreme Court in Massachusetts v. EPA said the air act gives EPA sufficient authority to go after CO2. She helped litigate the case while at Georgetown.

Politico, citing “an environmental advocate,” described “two camps” at EPA on the issue of targeting electric plant emissions by regulation. Heinzerling, head of EPA’s office of policy and planning, is said to lead the forces advocating aggressive regulatory action, with support from former EPA administrator Carol Browner, Obama’s energy czarina. EPA administrator Lisa Jackson and air chief Gina McCarthy are said to be in the conciliatory camp, seeking to smooth relations with a Congress not much enamored of the regulatory approach. An EPA spokesman denied any division among administration policy makers and agency officials.

But Heinzerling’s departure may be less than meets the jaundiced eye. She took a two-year leave of absence from her tenured position at Georgetown to join EPA and, according to several press reports, made it clear that she would be gone from the administration by 2011.

The environmentally-oriented web magazine Grist, which praised her appointment in 2009, downplayed the Heinzerling departure. Grist noted that “her time at the EPA was self-delineated to two years at the outset — her plan was always to return to her teaching position at Georgetown. It is not necessary that she be replaced by a wilting violet when it comes to climate.”

EPR: Reactor in Crisis

By Kennedy Maize

Washington, D.C., Nov. 4, 2010 — Here’s another major blow to the increasingly problematic nuclear renaissance: France’s “European Pressurized Water” (EPR) reactor design is “in crisis,” according to a new analysis by a British economist and nuclear energy policy analyst. The problems with the “Generation III+” reactor are so serious that they threaten its future deployment, according to the report by Stephen Thomas, University of Greenwich professor of energy studies.

In his report — The EPR in Crisis — Thomas says the Areva design, begun in 1995 to add more passive safety factors to the basic Electricity de France Generation III PWR, has not been able to deliver on promises of a new, safer reactor that is dramatically less capital-intensive than past machines. In 2001, French nuclear officials claimed the EPR could be built for $1320/KW, but the costs of the two EPR units now under construction in Finland and France are well behind schedule and running more than triple the cost estimate, at $4800/KW in 2009 for the Finnish reactor. In his report, Thomas says, “It seems unlikely that all the problems that have contributed to the delays and cost-overruns have been solved; the final cost could be significantly higher.”

TVO, the Finnish utility that will own and operate the plant at Olkiluoto, is suing Areva to recover some of the costs, which could sink the utility. Says Thomas, “It is far from clean that TVO could survive financially if it had to shoulder a significant proportion of these costs.” He notes that despite being controlled by the French government, Areva has seen its credit ratings fall to BBB+, partly as a result of the EPA problems “and it would hardly be good for business if its customer was put out of business by the purchase an EPR.”

The story in France has been much the same, reports Thomas. EDF, after years of delaying, ordered an EPR for Flamanville in January 2007. Construction began on the 1630-MW unit that December, at a cost estimate of about $2590/KW, not including the first fuel load or financing costs. In May 2008, French safety regulators halted construction temporarily because of quality assurance issues related to the base mat for the plant. Delays led Areva to put the completion date back a year to 2013, with a new cost estimate of $3,265/KW. Last July, French union officials said the plant is at least two years behind schedule, and the costs are running some 1.7 billion Euros over the original 3.3 billion Euros budget. Last month, Le Figaro reported another year’s delay, which EdF has denied.

France, realizing that EPR commercialization was faltering, in October 2009 commissioned Francois Roussely, former EdF CEO, to look at the problems in the French nuclear industry. His report was a bitter contradiction of the glowing image enjoyed by EdF and the French nuclear program. Roussely found a troubling decline in the capacity factor of French reactors, while the rest of the world has seen increases. Roussely did not address the declining capacity factor of French plants. But he concluded that major design changes to address complexity and cost are needed in the EPR after Olkiluoto and Flamanville are completed.

Thomas comments that Roussely’s recommendation probably won’t work. “The EPR was designed over a long period with the specific objective of rationalising the features of earlier designs,” says Thomas. “To assume that it would be a simple and quick process to just go through the design again to simplify it seems totally unrealistic.”

As an example of the difficulty of design changes this late in the development game, Thomas cites the EPR instrumentation and control system, which has caused regulatory heartburn in Europe and the U.S. “This problem was first identified in 2008; yet more than two years later, a detailed solution to the problem still has not been presented to the regulators,” says Thomas. “Any redesign that was comprehensive enough to significantly reduce complexity and costs would almost certainly be so extensive as to require the regulators to make a very full re-evaluation of the design.”

The EPR reactor was the choice of the U.S. partnership of Baltimore-based Constellation Energy and Areva for an expansion of the existing Calvert Cliffs plant on the Chesapeake Bay. But Constellation has pulled out of the project, leaving it entirely in Areva’s hands. The French company is seeking a U.S. partner to continue the process of qualifying for a multi-billion dollar federal government loan guarantee for the $9.6 billion project. U.S. law forbids foreign ownership of U.S. nuclear power plants.

EdF is hoping to build as many as four units in the UK, using the EPR technology. EdF bought British Energy, the UK’s nuclear generator, for about 15 billion Euros in 2008. Thomas says, “The price seemed far above the value of the assets being acquired and only has any logic if new nuclear orders are placed.”

Thomas concludes, “The EPR design is in crisis.” He makes four major points to bolster that conclusion. First, he says, “Construction has gone dramatically wrong at the two sites in Europe where it is being built.” Second, the cost of the EPR is so high “that all contests where the EPR has been bid have either been abandoned (South Africa and Canada) or the contract has gone to a much lower bid from a competitor (UAE). Potential major markets, particularly the U.S., UK, and Italy, “all look problematic and reactor orders, if placed at all, will be much later than expected.” Finally, getting safety approved in France, the UK and the U.S. “is incomplete and, even if successful, the features needed to achieve regulatory approval may add significantly to costs.”

What to do? “From a business point of view,” writes Thomas, “the right course for EdF and Areva seems clear. They must cut their losses and abandon the EPR now. In the short term, this will require some painful write-offs, for example, of investments in the UK and the U.S.A., but in the long term, the losses will be much greater if they continue to try to make the EPR work.”

But this business case crashes against the rock of French politics. Thomas says that “from a political point of view, France has invested so much political and financial capital in being the world leader in nuclear technology, such a decision to abandon the design will be politically too painful until it becomes unavoidable.”

Outside of France, writes Thomas, “for the government of countries like the U.S.A. and the UK, which have invested little political capital in the French nuclear dream, the sensible course is clear: stop all investment of public money in the doomed EPR technology.”

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