TPPA PRESENTATION Robert Talley Talley & Associates, Inc July - - PowerPoint PPT Presentation

TPPA PRESENTATION

Robert Talley Talley & Associates, Inc July 22, 2014

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Today’s Presentation

Policy Issues

• Congressional Activity
• Regulatory Activity
• GHG Regulation

Speed Review of Congress

• What’s Wrong?
• Underlying Causes
• Texas Delegation Assets

Election Outlook

• House
• Senate
• Impacts of Election

Closing Thoughts

REVIEW OF CONGRESS

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Congressional Overview

• Partisan Divide

Stalls Many Issues

• House Passed Bills

DOA in Senate

• 2015 Appropriations

Bills in process now;

• utlook uncertain
• Lame Duck

Anticipated

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Key Take-away: The 113th Legislative Failure to Launch!

Congressional Overview

• Understanding the

Partisan divide

• Voting blocks

within the Senate and House have hardened

• Magic 60:

Threshold in Senate harder to attain

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Key Take-away: Partisanship in Senate can’t get worse

Congressional Overview

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Key Take-away: Electoral map shaping Congressional voting

Impact of Partisan Redistricting Increasingly Obvious: Partisan “Safe” districts increasingly the norm

113th Texas House Power Ranking

• 3rd Most Powerful State Delegation (behind CA &

FL)

• Of the 21 Standing Committees in the House:
• House Science Committee Chairman Lamar Smith (R-

TX)

• House Homeland Security Chairman Mike McCaul (R-

TX)

• House Financial Services Committee Jim Henserling

(R-TX)

• House Rules Committee Pete Sessions (R-TX)
• House Ethics Committee Mike Conaway (R-TX)
• 3 of 12 Powerful Appropriation Subcommittee

‘Cardinals’ are Texans

• Controlling spending on military construction, veterans

affairs, foreign operations, and homeland security

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Key Take-away: Texas well placed to influence new laws if they were happening

POLICY ISSUES

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Utility Policy Issues in 113th Congress

• Energy Efficiency Legislation
• Broad, bipartisan support
• Delayed in Senate due to procedural issues
• Pent up demand for consideration of energy issues
• Considered dead for year
• Cybersecurity & Physical Security
• House has passed legislation directing better information sharing

and coordination between industry and the government

• Senate Majority Leader Reid in mid-April said legislation was

unlikely but in late April directed Committees to develop new legislation

• Next Step: Senate Floor & then Conference

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Key Take-away: Uncertainty in legislative process even for popular items

Utility Policy Issues in 113th Congress

• Financial Issues
• Tax Reform & Municipal Financing
• House Tax package attacks muni tax exemption
• Senate proposal never got momentum
• Tax reform dead for year
• Tax Extender package
• Credits for Renewable Energy
• Energy Efficiency Tax Credits
• Considered likely in Lame Duck
• Appropriations
• October 1 Fiscal Year End
• No Appropriations bills anticipated to pass prior to elections

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Key Take-away: risk for key financial tool lowered for near term but still real

Key Regulatory Issues

• Greenhouse Gas Regulations
• EPA’s Clean Power Plan
• Traditional Pollutant Regulations
• Cross State Air Pollution Rule
• Ozone Standards
• Solid Waste and Water
• Coal Combustion Residuals
• Effluent Guidelines
• Cooling Water Intake Guidelines
• Physical/Cyber Security Considerations
• Gas/Electric market interaction – Reliability?
• Quadrennial Energy Review

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Key Take-away: Regulatory risks exist but are identified and manageable

GHG Regulation

• What it does:
• 17% national reduction from 2012 emissions starting in 2020
• Reductions, calculated as emissions rate, vary by state
• Built on four pillars of reduction culminating in 2030 reduction goal
• Largely implemented at state level
• Result is considerable uncertainty as to specifics
• State’s don’t have to follow EPA model
• Some early questions regarding legality of EPA’s

approach

• Decision to go ‘outside the fence’ in setting goals
• Does SCOTUS Decision on Tailoring Rule ‘speak’ to EPA?

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Key Take-away: This is a marathon, not a sprint

GHG Regulation

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Key Take-away: State reductions are significant; are they attainable?

Source: Van Ness Feldman Law Firm

TX CO2 Rate Reduction Measure % Contribution to Goal Improve coal efficiency 9% Increase natural gas cc generation 45% Increase renewables 31% Increase energy efficiency 14% Include at-risk nuclear 1%

What Might It Mean For Your Utility?

30% Reduction in GHG from 2005 by 2030

Plant Efficiency Env Dispatch Increased RE/ARN Increased EE

State Options for Meeting EPA Goals

Where Will Compliance Obligation Rest?

• Wholesale Providers?
• Retail providers?
• Distribution Utilities?

Reporting Obligation?

• Who will have to

report what?

• What will it entail?

Key Take-away: Uncertainty

ELECTION OUTLOOK

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Election Outlook: House

• 217 votes necessary to control House
• Likely stays in Republican Control (198 “safe” R seats)
• 42 Members Retiring (2R & 2D seats likely switch)
• Less than 20 seats deemed ‘toss-up’
• Likely scenario suggests R’s retain 230-245 seats
• No major leadership shake-ups seen
• Loss of institutional Knowledge
• 35% of House has less than 4 years experience
• Potential for a majority of House to be in 4th year or newer (62
• r more Freshmen)

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Key Take-away: loss of institutional knowledge creates multiple problems

Election Outlook: Senate

• Republicans need

6 seats to regain control of the Senate

• Polling shows

Obama approval at all time low; Republican voter ‘intensity’ much higher than Democratic ‘intensity’

• Democrats

defending 21 of 36 seats; 7 in states carried by Romney

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Key Take-away: 3 months is an eternity in politics

Source: Larry Sabato’s Crystal Ball, July 7

Election Outlook: Senate

• A Republican Senate; what happens?
• Significant change in national political dynamic
• Messaging Issues for 2016 Presidential

election: Supreme Court, Obamacare and women’s reproduction rights, EPA regulations, Energy development, Deregulation of Wall Street and Consumer Protection

• Leadership changes: TX Senator John Cornyn

#2 in Senate Leadership

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Key Take-away: 3 months is STILL an eternity in politics

Policy Issues in 114th Congress

Pent up demand to address a number of energy issues

• Greenhouse gas emission

concerns

• Natural gas fracking

related issues

• Energy infrastructure

issues

• Energy market issues
• Energy export policy

issues

• EPA regulation of electric

utilities

• Electric reliability issues
• Nuclear waste disposal

issues

• National security issues
• Energy efficiency issues
• Long term energy tax

policy issues

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Key Take-away: increasing pressure for energy legislation?

114th Texas Committee Power Ranking

• In addition to retaining most of the 113th Committees
• Retirement and Term Limit Impacts
• House Ways & Means Committee Chairman Camp

Retiring

• Next in Line? Sam Johnson (R-TX), Kevin Brady (R-TX) or dark

horse candidate Paul Ryan (R-WI)

• House Armed Services Chairman Buck McKeon (R-

CA) term limited

• Next in line: Mac Thornberry (R-TX)
• House Agriculture Chair Lucas (R-OK) term limited
• Next in line: Ethics Chair Mike Conaway (R-TX)
• Conaway loses Ethics Chair

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Key Take-away: Texas clout only increases in 2015

WRAPPING UP

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Closing Thoughts

• Just because the system SEEMS broken, doesn’t mean it

is!

• Congressional oversight will continue
• Fewer laws doesn’t necessarily mean less policy change
• Regulators continue to plug away
• An Once of Prevention is Worth a Pound of Cure
• Communications on utility priorities remain critical
• Federal
• State
• Local

Key Take-away: Ignore the Federal Government at your own risk!

Questions?

Robert Talley Talley & Associates, Inc.

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