CAC Legislative Update - Week Ending January 25, 2008

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While property tax reform issues take center stage in the 2008 session of the Indiana General Assembly, CAC’s efforts continue to focus on development of a sustainable energy policy that promotes the economic, public and environmental health of Indiana while protecting the pocketbooks of ratepayers and taxpayers.

This has been one of the more fast-paced short sessions in recent history, in large part due to the number of energy-related bills that have been heard in committee. Thursday (1/24) was the last day for bills to be voted out of committee to remain alive, and next week will be the deadline for bills to pass their house of origin….at which time the session will already be half over.

HB 1001- Property Tax Relief
The Governor’s plan for property tax relief passed out of the House of Representatives on 1/24/08 by a vote of 93-1. The bill was amended considerably on second reading in a largely respectful process executed with support from both sides of the aisle. The bill will now move to the Senate.

 

Good Bills

HB 1102 - Renewable Energy Development (Dead)
Unfortunately, our best chance for passage of a purely-focused Renewable Electricity Standard (RES) was defeated in the House Commerce, Energy and Utilities Committee on 1/24/08 by a vote of 8-3. Authored and championed by the Committee Chairman, Representative (Rep.) Dave Crooks (D, Washington) with co-authorship by Rep. Ryan Dvorak (D, South Bend), HB 1102 would have required electric utilities to provide at least 10% of their electricity from renewable resources, such as wind, solar and biomass, by 2018.

Voting with Chairman Crooks and Rep. Dvorak in support of the bill was Rep. Sandra Blanton (D, Orleans), a freshman legislator who replaced retiring Rep. Jerry Denbo. Of the eight Reps. voting against HB 1102, five live in areas with strong wind potential, thereby voting against their district’s best economic interests: Chester Dobis (D-Merrillville), Ed Soliday (R-Valparaiso), Dan Stevenson (D-Highland), Tim Neese (R-Elkhart), and Jack Lutz (R-Anderson).

The remaining three Reps. voting “no” live in areas near to particulate pollution hot spots, voting against legislation that would improve their state’s public and environmental health: Kreg Battles (D-Vincennes), Bob Behning (R-Indianapolis), and David Frizzell (R-Indianapolis). Rep. Paul Roberston (D, Depauw), the twelfth member of the committee, and who indicated to CAC his support for HB 1102’s passage, was absent for the vote, surfacing shortly thereafter to vote on other bills before the committee.

Failure to pass HB 1102 out of committee does not mean the death of an RES for the 2008 legislative session, as a bill in the Senate (SB 224, discussed below), containing a pseudo-RES which we do not support in present form, is likely to remain in play in the second half of the session. However, our chances of passing a true RES; one that decreases – not increases – our disproportionate contribution to greenhouse gas and toxic air emissions and contains provisions that stimulate meaningful economic development in a new energy market, are slim.

SB 0295 - Renewable Energy Standards (Dead)
Rep. Crooks’ visionary leadership in developing true renewable energy policy through HB 1102 is mirrored in the Senate this session in the form of SB 0295, introduced by Senator Tim Lanane (D, Anderson). Senator Lanane’s even more aggressive approach calls on utilities to supply 25% of Indiana’s electricity using only truly renewable resources by 2025. This 25 x 2025 standard was recently adopted in Illinois, 75% of whose RES will be achieved through wind resources (and last time we checked, the wind still blew from West to East, further confirming Indiana’s ability to capitalize on over 40,000 MW of wind energy potential– almost twice the electric generation capacity currently in place in Indiana – as established by the U.S. Department of Energy’s National Renewable Energy Lab).

Unfortunately, Senator Beverly Gard (R, Greenfield), Chair of the Senate Committee on Energy and Environmental Affairs, failed to give Senator Lanane’s bill a hearing; hence, SB 295 is now dead (though its language could still be resurrected).

 

Despite the coal-fest that continues to dominate in the Indiana General Assembly to the exclusion of a diversified energy portfolio beneficial to Indiana’s future economic, health and environmental well-being, two positive bills have made it out of committee and are winding their way through the legislative process. Each gives hope that our efforts to advance sustainable energy policy this session will bear fruit.

HB 1090 - Climate Registry
This bill would require Indiana to become a member of the Climate Registry, a collaboration between states (39 have joined), Canadian provinces and tribes to develop and manage a common greenhouse gas emissions reporting system in anticipation of future mandatory reduction policies. Authored by Representative Ryan Dvorak (D, South Bend), HB 1090 would ensure Indiana’s place at the table in developing policies related to CO2 air emissions. Given Indiana’s disproportionate contribution to greenhouse gas emissions (1st in the nation in per person CO2 air emissions and 5th in CO2 air emissions from coal-fired power plants overall), Indiana’s participation in the Climate Registry is key to acknowledging our shortcomings and facing our challenges for the betterment of generations to come.

HB 1090 passed 8-2 out of the House Environmental Affairs Committee on 1/23/08 and is eligible for vote on 3rd reading in the House as early as 1/29/08.

HB 1280 - Energy Efficient Buildings
This bill would require large, state, educational, and local public works building projects (other than public schools) – those that are newly constructed, as well as those subject to repair or alteration – to be designed with the goal of achieving the silver rating under the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system, the Green Globes Two Globes level or an equivalent rating system accredited by the American National Standards Institute.

These systems rate buildings based on the sustainability of the site, the materials and other resources, water and energy efficiency, indoor environmental quality, and innovation in design. CAC testified in support of HB 1280 because it will help to improve Indiana’s poor rating (41st among 50 states and D.C. according to the American Council for an Energy Efficient Economy) in energy efficiency investments. The ACEEE estimates that adopting a comprehensive set of policies for advancing energy efficiency, of which building standards is but one component, could lower national energy use by 18% in 2010 and 33% by 2020. Along with policies to advance renewable energy, these policies could dramatically lower U.S. CO2 emissions while saving consumers and business $500 billion net by 2020.

HB 1280 passed 7-3 out of the House Environmental Affairs Committee on 1/23/08 and is eligible for vote on 3rd reading in the House as early as 1/29/08.

 

Bad Bills

HB 1044 – Livestock Waste Anaerobic Digestion Systems (ammended with a bad Renewable Electricity Standard)
The renewable electricity debate began this session when Rep. Dale Grubb (D, Covington), attempted to amend his version of an RES into HB 1044. An innocuous bill as introduced, Rep. Grubb’s true intent was to offer an amendment in the House Agriculture and Rural Development Committee seeking to establish a so-called RES – although one containing coal in the definition of “renewable resources” – on par with his failed attempt last year to push a pro-utility agenda that included no less than three specious “tracker” provisions that weaken the utility regulatory process and bestow unreasonable profits on Indiana’s largest investor-owned monopoly utilities (IOUs) at ratepayer expense.

Other than the Indiana Farm Bureau, which testified in support of the RES portion of the bill, Citizens Action Coalition, other environmental advocacy groups, and the Indiana Energy Association itself (the trade association representing Indiana’s IOUs), testified in opposition to Rep. Grubb’s amendment. Committee Chairman Phillip Pflum (D, Milton), decided not to take a vote, and when he failed to call HB 1044 in a subsequent meeting of his committee, the bill died.

Though misguided and unsupported even by the utilities he is attempting to benefit with additional tracker language attached to a “dirty” (containing coal) RES, Rep. Grubb is nevertheless undeterred in his mission to claim an RES in his name alone, and without regard for the diminishing window of opportunity to jump start a true renewable energy market while effectively reducing Indiana’s disproportionate contribution to greenhouse gas and other toxic air emissions and the significant costs associated with future carbon dioxide regulation.

SB 0224 - Various Utility Matters
Senator Brandt Hershman (R, Monticello), Chair of the Senate Utilities and Regulatory Affairs Committee, held a hearing in his committee on his version of a pseudo-RES – in the form of SB 0224. SB 224 gives the appearance of an RES – renewable energy resources are defined to include largely non-polluting, renewable sources of energy (other than energy from burning tires, garbage and other waste in waste-to-energy facilities). However, of the meager 6% standard to be achieved by the year 2020, 50% of it can be met using “advanced energy resources”, a new term that nevertheless includes old, non-renewable resources such as waste coal (extremely high in mercury content) and “clean” coal (an oxymoron).

Also troubling from CAC’s perspective is the inclusion of language permitting development of “other non-carbon dioxide emitting or low carbon dioxide emitting electricity generating technologies”. While IGCC (coal gasification) technology, “with the capability for carbon capture and sequestration through storage or enhanced oil recovery” (neither of which are designed to permanently and safely remove CO2 from the atmosphere, a process that, by the industry’s own best estimates, is over a decade-and-a-half away) is cited as an example, the term also embraces nuclear power, an issue we thought we had put to rest once and for all after the Marble Hill debacle.

Another bill provision would allow Indiana’s IOUs to “track” research and development costs associated with greenhouse gas emissions. While CO2 capture and sequestration (CCS) is critical to reduce global warming’s most dire consequences, U.S. taxpayers are already paying for research. Indiana ratepayers should not be required to underwrite incredibly expensive experiments (in the billions of dollars) that may never prove successful (though utilities will no doubt profit from them), and that investors on Wall Street are unwilling to finance.

The point of all of this is that incentives for using coal in new and theoretically improved ways abound. Both Indiana and the federal government are actively supporting the development of “clean coal technology” in the form of federal, state and local tax incentives and rate adjustment mechanisms allowing utilities to “track” construction and operations costs and to earn profits above and beyond what they would otherwise be allowed to earn. While touted as a tried-and-true technology, only a few IGCC plants are currently operating in the U.S., and none have been commercially established on the scale of the Duke-Edwardsport plant, recently approved by the IURC, or others still being pursued (for example, see the discussion on SB 223 below). Additionally, of the 20 or so new IGCC plants that have been proposed (many of which have since been shelved because too risky in view of anticipated and costly CO2 regulation), only one – a long-term D.O.E. project dubbed FutureGen – would be equipped with the technology needed to capture the millions of tons of CO2 these plants would produce every year.

On the other hand, commercially viable “off the shelf” technologies for reducing greenhouse gas emissions, which more than half the states in the U.S. are aggressively pursuing – namely, energy efficiency and renewable energy – are given lip service in SB 224; but with the inclusion of coal and possibly nuclear power, render a renewable electricity standard (RES) meaningless, while guaranteeing further development of non-sustainable CO2-emitting coal plants and hazardous nuclear waste. Yet another tracker provision would reward utilities for upgrading their electric lines and transmission and distribution facilities – quality-of-service investments for which utilities should be penalized, not rewarded, if not making on an ongoing basis.

Nonetheless, SB 224 passed out of committee on 1/22/08 by a vote of 6-3, despite vigorous opposition by CAC and the Indiana Industrial Energy Consumers (INDIEC). SB 224 is eligible for third reading in the Senate as early as 1/29/08. If the Senate votes for its passage, the bill will be in play during the second half of the session.

SB 0223 & HB 1117 - Coal Gasification and Substitute Natural Gas
On the subject of IGCC plants, SB 0223, authored by Senator Brandt Hershman (R, Monticello), and its companion in the House – HB 1117, authored by Rep. Russell Stilwell (D, Boonville), both passed out of committee on a fast track reminiscent of enabling legislation passed last year. These bills would allow a foreign venture capitalist firm that seeks to build a coal gasification plant in Southern Indiana to assign tax credits, passed last session (which we also opposed), to coal and substitute natural gas producers outside of Indiana.

SB 223 and HB 1117 represent a classic “bait & switch” scheme that builds on a proposal legislators were duped into passing last year on the false promise (now clear by the plain language in both bills) that the coal gasification plant – for which commercial reliability has yet to be established (in the words of the principal himself) – would use Indiana coal, and would produce substitute natural gas in Indiana, in accordance with the Governor’s Hoosier Homegrown Energy Plan.

Apart from the millions of tons of new CO2 and other toxic air emissions the proposed plant would annually spew into the atmosphere (Indiana ranks 49th in terms of environmental quality per FORBES.com), we opposed last year’s legislation because it locked natural gas suppliers, and hence ratepayers, into 30 year contracts for the substitute natural gas, whatever the price, that neither the Indiana Utility Regulatory Commission or other governmental entity could subsequently change or even review.

The old adage - “If you fool me once, shame on you. If you fool me twice, shame on me” – befits SB 223 and HB 1117. Ratepayers should be protected from money-making schemes of venture capitalists too risky for Wall Street and based on bait and switch tactics that will do further harm to Indiana’s economic, public and environmental well-being. Nevertheless, and over CAC’s strong objections to these bills, SB 223 passed 10-0 out of the Senate Utilities and Regulatory Affairs Committee on 1/17/08 and is eligible for vote on 3rd reading in the Senate on 1/28/08. HB 117 passed 9-1 out of the House Commerce, Energy and Utilities Committee on 1/24/08 and is eligible for vote on 3rd reading in the House as early as 1/29/08. Assuming both bills pass out of their respective chambers of origin in the exact same form, they could be presented to the Governor for signature into law at the start of the second half of the session.

Stay tuned for further developments on these and other bills making their way through the 2008 legislative session. Future reports will also focus on other matters pending before the Indiana General Assembly of importance to our members.


Paul Chase, J.D.
CAC Governmental Affairs Liaison

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