Edison Electric Institute prioritizes power industry 2022 challenges
The public power industry faces a pivotal 2022 midterm election year that includes a weighty policy and regulatory agenda coupled with additional challenges both in the states and the nation’s capital, according to the Edison Electric Institute (EEI), which represents America’s investor-owned utilities.
Members of EEI’s executive team on Feb. 9 briefed Wall Street analysts, bankers, investors, and other industry stakeholders on the clean energy transformation being led by the organization’s member companies, as well as EEI’s legislative and regulatory policy priorities for the year ahead.
Brian Wolff, EEI’s chief strategy officer and executive vice president of public policy and external affairs, highlighted the challenges ahead for the industry — many of which mirror those from 2021 — including the impact of the ongoing COVID-19 pandemic on electricity customers; rising inflation and interest rates; persistent pressure within key supply chains; extreme weather events and other natural disasters; and increasingly worrisome geopolitical tensions.
Chief among them, though, is an opportunity for the industry to deliver a carbon-free energy future, which EEI companies consider perhaps the industry’s defining challenge today, and meeting it will require focused and collaborative efforts among electric companies, technology partners, policymakers, and many other stakeholders, said Wolff.
“Fortunately, our member companies — and our industry’s extraordinary workforce — never back down from a challenge,” he said. “The path forward is very clear: it’s clean.”
Thus far, largely due to the leadership of EEI’s member companies, Wolff said that carbon emissions from the U.S. electric power sector are at their lowest level in nearly 40 years, with 40 percent of the nation’s electricity now coming from clean, carbon-free sources, including nuclear energy, hydropower, wind, and solar energy.
To accelerate their efforts on clean energy, EEI companies plan to expand the deployment of renewables and preserve existing clean energy technologies like nuclear energy, said Wolff, while also promoting innovation across myriad new, high-potential and affordable carbon-free technologies and building new energy infrastructure that’s more resilient and brings on more clean energy for customers.
Emily Fisher, EEI’s general counsel, corporate secretary, and senior vice president of clean energy, helped outline EEI’s legislative priorities in which the group plans to continue lobbying efforts to advance climate and clean energy tax legislation that could deliver long-term benefits for customers, and to highlight the importance of ready access to capital through effective tax, finance and regulatory policies.
And while the Infrastructure Investment and Jobs Act was a solid down payment on funding the change for America’s infrastructure, much more is needed to achieve a clean energy future, according to EEI, which supports a clean energy tax package that includes optionality in choosing between the production tax credit (PTC) and investment tax credit (ITC) for solar; alternatives to normalization for regulated electric companies; 100-percent direct pay for clean energy credits; a nuclear PTC for existing facilities; new tax credits for transmission and for energy storage and hydrogen to help move carbon-free technologies through their development lifecycle; and expanding the various EV tax credits.
Environmental regulation and litigation also are part of the mix, Fisher said.
For example, EEI supports the Environmental Protection Agency’s (EPA’s) development of proposed federal regulations on methane emissions for new and existing sources, she said.
“Federal regulations on methane emissions across the value chain are essential to ensuring the continued use of natural gas as a 24/7 on-demand energy source,” said Fisher, adding that natural gas plays a vital role in accelerating the deployment of renewables by acting as a flexible complement to variable sources like solar and wind.
Separately, the U.S. Supreme Court in October 2021 agreed to hear a case regarding the EPA’s authority to regulate greenhouse gas (GHG) emissions. Fisher said that the decision in this case could have significant long-term implications for the EPA’s ability to regulate GHG emissions from all sources, not just the electric sector, under the Clean Air Act.
In January, she said that EEI and the National Association of Clean Water Agencies jointly filed an amicus brief at the High Court in support of EPA and its authority to regulate GHGs. Oral arguments are set for later this month and a decision is expected before the end of the Court’s term early this summer, Fisher added.
Additionally, EEI member companies will continue to advance racial and social justice, and diversity, equity and inclusion in their communities and within their own corporate structures. Having a diverse and inclusive workforce that mirrors the communities they serve benefits customers, employees and businesses, Fisher said.
“We are continuing to engage with communities and other stakeholders to build the infrastructure needed for our resilient clean energy vision,” said Fisher, “while expanding access to jobs and contracting opportunities as we stay focused on affordability.”
Toward enhancing resilience, Phil Moeller, EEI’s executive vice president of its Business Operations Group and regulatory affairs, discussed the four key regulatory policies that EEI supports:
- Reforms in transmission planning, cost allocation, permitting, siting, and generator interconnection.
- Finalization of a nationwide permit for distribution and transmission grid construction activities under the Clean Water Act.
- Removal of regulatory and legislative barriers limiting member companies’ ability to own or fully participate in the implementation of energy storage assets and other distributed energy resources.
- Policies and programs that enable data security, sharing and confidentiality.
Part of EEI’s efforts to support enhanced resilience includes addressing wildfire risks, Moeller explained. Toward that goal, he said industry and government leaders are partnering to provide more effective coordination among stakeholders, for instance, and improving how resources are allocated to ensure the effective funding of new programs.
They’re also working on community preparation efforts in high-fire risk areas and investing in research, development and deployment of technologies, like drones, that can help proactively mitigate wildfire risks, he said.
EEI says that collectively, the industry has improved its real-time situational awareness capabilities and has invested heavily in sensors, high-definition cameras, and weather stations that are placed in the field to give companies and government partners visibility into near-real-time conditions.
Moeller said the industry is also engaged with the Federal Aviation Administration on several issues around the operation of drones for wildfire prevention efforts and other infrastructure inspections.
“Specifically, our role at EEI is to focus on mutual assistance,” added Moeller, noting that addressing wildfire threats via partnerships with industry and government leaders, as well as state and local fire officials, creates a hugely beneficial, multi-level effort that also crosses into cybersecurity and supply chain security risks, among others.
Through the year ahead, EEI also will continue shining a spotlight on the industry’s financial health and how it plans to maintain it, said Richard McMahon, EEI’s senior vice president of Energy Supply and Finance.
“We will continue to educate the Biden administration, Congress and state policymakers and regulators about the value of the energy grid and the significant role our industry plays across the economy and in our local communities,” he said.
For instance, EEI members have invested more than $1 trillion to modernize their systems over the last decade, according to the organization’s annual update at the Nasdaq MarketSite, and the industry remains the most capital intensive in the United States, pumping record investments of more than $120 billion annually to make the energy grid more resilient, smarter, cleaner, and more secure.
And to carry out such plans for the grid, McMahon said EEI companies are deploying a growing amount of capital resources into adaptation, hardening and resilience (AHR) initiatives, which are increasingly becoming an important way that electric companies fulfill their mission of supplying clean, reliable and affordable energy to customers.
In October 2021, EEI published industry-level information on AHR capital expenditures based on a member company survey, which indicated that more than one-third of transmission and distribution investment is being driven specifically by AHR initiatives rather than the traditional drivers of growth or maintenance.
AHR is more than just the ability to recover from extreme weather events, McMahon said, and involves addressing potentially impactful risks by anticipating, withstanding, recovering from, and/or adapting to a wide variety of threats, including extreme weather, wildfires, earthquakes, and cyber or physical security attacks.
EEI says that its member companies will continue to bolster their collective approach to AHR, including by developing more advanced risk modeling and mitigation practices, as well as technologies and solutions for specific climate impacts.
