Energy

What's next for PJM


With help from Gavin Bade, Annie Snider and Eric Wolff

Editor’s Note: This edition of Morning Energy is published weekdays at 10 a.m. POLITICO Pro Energy subscribers hold exclusive early access to the newsletter each morning at 6 a.m. To learn more about POLITICO Pro’s comprehensive policy intelligence coverage, policy tools and services, click here.

Story Continued Below

The head of the nation’s largest wholesale power market is stepping down at the end of June, creating more uncertainty in PJM.

A federal court in Texas ruled that the Obama-era Waters of the U.S. rule violated the Administrative Procedure Act.

The Trump administration is appealing a court decision from earlier this year that Interior has pointed to in its delay of an offshore drilling plan.

WELCOME TO WEDNESDAY! I’m your host, Kelsey Tamborrino. Matt Smith of the Greater Pittsburgh Chamber of Commerce knew Leon Panetta, a former House Budget chairman, also served as Defense secretary, CIA director, White House chief of staff and OMB director. For today: Which former Supreme Court justice stepped down to serve in the Senate? Send your tips, energy gossip and comments to ktamborrino@politico.com.

WHAT’S NEXT FOR PJM: More uncertainty is in store for PJM, the nation’s largest wholesale power market, after the surprise announcement Tuesday that CEO Andy Ott will step down from his post at the end of June. Ott has been CEO since 2015 and is slated to leave with many of his signature policy proposals unfinished, including a high-profile rewrite of PJM’s capacity market rules that has been held up at FERC for seven months, as well as a nascent effort to design a carbon pricing mechanism.

PJM did not give a reason for Ott’s departure, but his role was a difficult one — balancing the interests of states and market participants in a 13-state wholesale operation that spreads from Chicago to Washington.

States with large nuclear power sectors, like Illinois and New Jersey, have threatened to leave the market if PJM and FERC do not respect their policies to support money-losing reactors. Ott has often spoke out against Trump administration plans to prop up retiring coal and nuclear generators. On the flip side, critics say PJM has kowtowed to powerful owners of coal and nuclear plants by proposing market reforms that would raise market prices for their electricity.

Market participants told ME the enduring tension with the leadership meant that a change at the top was expected eventually, even if its abruptness caught many off guard. “Eventually a change was coming,” one PJM participant said Tuesday evening. “Lots of animosity had been accumulated.”

DISTRICT COURT OVERTURNS OBAMA WOTUS RULE: A federal judge in Galveston, Texas, struck down the Obama administration’s Waters of the U.S. rule on procedural grounds late Tuesday. Judge George C. Hanks ruled that EPA violated the Administrative Procedures Act by adding distance limits in the final regulation that were not a “logical outgrowth” of the proposal, and closing the public comment period before EPA issued the final version of a key scientific report that undergirded the rule. However, he declined to rule on plaintiffs’ substantive challenges to WOTUS, calling them “premature.”

Hanks sent the rule back to EPA for further work — noting that the agency has already “begun reviewing changes” — but did not vacate it. That’s the remedy that the three Republican state plaintiffs and industry groups requested, and it could bolster the Trump administration’s own proposed definition. But it also means the Obama-era rule remains on the books in the roughly half the states that aren’t covered by preliminary injunctions.

TRUMP APPEALS OFFSHORE DECISION: The Trump administration is appealing a March decision that declared President Donald Trump’s move to open up the Arctic to oil and gas drilling unlawful, according to a new filing with the U.S. District Court for the District of Alaska. The Justice Department is appealing the decision to the 9th Circuit Court of Appeals.

Recall: U.S. District Court Judge Sharon Gleason in late March threw out an April 2017 executive order, declaring it unlawful “as it exceeded the president’s authority,” thus immediately reinstating an Obama-era drilling ban on large portions of the Chukchi Sea in the Arctic and dozens of underwater canyons off the East Coast.

Interior Secretary David Bernhardt, named as a defendant in the new filing, last week pointed to litigation when asked about the Trump administration’s delayed offshore drilling plan. “I saw the litigation playing out and saw the court decision, and I wanted to hold off to figure out exactly the best pathway forward,” Bernhardt told the Senate Appropriations Committee.

DOE AUTHORIZES EXPANDED FREEPORT EXPORTS: The Energy Department announced the approval of additional exports of domestic natural gas from the Freeport LNG Terminal in Texas — allowing exports up to 0.72 billion cubic feet per day of gas from a fourth liquefaction train to be built at Freeport. FERC earlier this month approved the expansion of the LNG export facility. DOE made the announcement Tuesday at the Clean Energy Ministerial in Vancouver, which is being attended by Energy Undersecretary Mark Menezes and other senior officials.

Related: Eighty-three percent of U.S. oil production and 90 percent of its natural gas and natural gas liquids production come from independent oil and natural gas producers, according to a new study conducted by IHS Markit and commissioned by the Independent Petroleum Association of America.

BUCKEYE BAILOUT: The Ohio House is slated to vote today on legislation that would subsidize two at-risk nuclear power plants and increase existing payments for two coal plants in the state, all while gutting clean energy programs. Ohio insiders tell ME House passage is likely on Tuesday, but the Senate could take longer to debate the measure. Any delays could cause issues for bankrupt FirstEnergy Solutions, which must decide next month whether to refuel the Perry nuclear plant.

House Bill 6 would create a $300 million program to support the Davis-Besse and Perry nuclear plants and increase subsidies for two large coal plants owned by the Ohio Valley Electric Corp. Unlike other states, which have boosted renewable energy in nuclear support packages, the Ohio bill would pay for the new programs by eliminating efficiency targets and a 12.5 percent-by-2027 renewable energy mandate. Republican Gov. Mike DeWine has been vocal in his support for the nuclear plants and is likely to sign the bill if it passes in its current form.

TEXAS READY TO SWEAT ITS RESERVES AGAIN: Texas faces tight summer power reserve margins this year, as new power supplies strain to catch up with what is expected to be another season of record demand. This summer’s 8.5 percent power reserve margin is lower than even last year, when the industry held its breath for each heat wave forecast. But the Electric Reliability Council of Texas, which oversees the state’s power market, sailed through last summer with few problems, and whatever happens in 2019, 2020 is expected to improve. The state expects wind, solar and battery storage projects to come online, and reserve margins will rebound to 10.5 percent next year and a robust 15.2 percent in 2021.

REPORT: PENNSYLVANIA MUST DO MORE IN CHESAPEAKE: Pennsylvania’s plan to reduce pollution by 2025 in the Chesapeake Bay is “woefully inadequate,” according to a new analysis from the nonprofit Chesapeake Bay Foundation on Tuesday. EPA has called on states in the watershed to implement a so-called pollution diet by 2025.

While the other states that make up 90 percent of the bay’s pollution — Maryland and Virginia — are on track to meet their goals, the report found the Keystone State never met its nitrogen reduction targets and has detailed just two-thirds of actions required to meet its 2025 pollution goal.

The Chesapeake Bay Foundation hinted that a lawsuit may be necessary to get EPA to act. “Pennsylvania has failed to uphold its promise to reduce pollution to its surface and ground waters since the six state Chesapeake Clean Water Blueprint was launched in 2009,” CBF President William C. Baker said in a statement. “If EPA does not hold Pennsylvania accountable, CBF and others must consider legal action.”

WAIT TILL JUNE: The chances of House lawmakers clearing a bipartisan disaster relief package, H.R. 2157 (116), this week remain slim, after another lone Republican lawmaker blocked an attempt to pass the measure Tuesday. House Majority Leader Steny Hoyer said the chamber will hold a vote first thing after lawmakers return from recess, either Monday or Tuesday of next week.

— Earthjustice will announce today that Jill Tauber and Kim Smaczniak have been promoted to vice president of litigation for climate and energy, and managing attorney for the Clean Energy Program, respectively.

— “United Nations says 80 countries may ramp up climate pledges,” The New York Times.

— “Chevron executive is secretly pushing anti-electric car effort in Arizona,” AZ Central.

— “High radiation levels found in giant clams of Marshall Islands near U.S. nuclear dump,” Los Angeles Times.

— “Malaysia to send 3,000 tonnes of plastic waste back to countries of origin,” Reuters.

— “GOP criticizes its own on climate,” E&E News.

THAT’S ALL FOR ME!



READ NEWS SOURCE

This website uses cookies. By continuing to use this site, you accept our use of cookies.