Congressional Democrats are preparing legislation that would compel U.S. utilities to expand their share of generation from carbon-free sources. While utilities broadly back that goal, they want to see specifics before weighing in, panelists said during an Aug. 17 webinar on a federal clean electricity standard.

"I think there are a lot of advantages to [a clean electricity standard, or CES] but, as always, the devil's in the details," David Brown, Exelon Corp.'s senior vice president of federal government affairs and public policy, said during a panel discussion hosted by ConservAmerica. "There are any number of factors in here that affect its workability, starting with how far and how fast you go and what the expectations are."

The U.S. Senate passed a $3.5 trillion budget resolution Aug. 11 that aims to open the door to sweeping new climate and clean energy programs. Although bills to implement the budget have yet to be introduced, leaders of the Senate Budget Committee have called for the creation of a "clean electricity payment program" that would award incentives to load-serving entities that add carbon-free power and would issue penalties to those that do not satisfy the program's standards.

The proposal is inspired by past legislation to create a national CES, which would require utilities to grow the percentage of "clean" electricity they provide by a particular date. Democratic leaders have said the budget proposal will put the country on track to generate 80% of U.S. electricity from emissions-free sources by 2030, an interim target for President Joe Biden's goal to decarbonize the power sector by 2035.

But absent legislative text, industry members are unsure what the clean power program's targets will be and how easily load-serving entities can comply.

A potential CES or clean power payment program could be an "attractive and interesting" way to reach Democrats' climate goals, said Roger Martella, chief sustainability officer for General Electric Co. But much depends on what the "glide path" is for adding renewables under the program and how to fulfill the policy's goals in a resilient way, the executive said.

Martella also urged the inclusion of natural gas in any clean power standard or payment program. "We feel strongly that gas should be part of the solution in the near term and the long term," Martella said.

With Exelon owning a large nuclear fleet, Brown recommended a policy that is "both tech-neutral and age-neutral," noting that "not all clean energy sources are treated equally" by existing tax incentives and other programs to promote emissions-free electricity.

Process challenges

To improve chances of enactment, Democrats, who hold a narrow Senate majority, want to advance a potential clean power program through budget reconciliation. The process allows legislation to pass the 100-seat Senate with support from a simple majority rather than the 60 votes needed to avoid a Senate filibuster. But to qualify for reconciliation, which is limited to proposals that affect the federal budget, Democrats are structuring the CES as a clean power payment program.

"It is very difficult to structure policy that ought to really go by regular order for reconciliation, and that's where I get a little bit nervous," Federal Energy Regulatory Commission member Neil Chatterjee said during the webinar.

Chatterjee, who previously served as an adviser to Senate Republican Leader Mitch McConnell, said he would not pre-judge Democrats' plan until he sees the text of the bill. But using reconciliation "is not an ideal way to construct policy," Chatterjee said.

"I personally would like to see Congress take leadership on energy policy and pass legislation that addresses carbon mitigation at the federal level so that commissions like FERC aren't put into this situation where we're having to play referee between states and markets," Chatterjee said. "But my preference would be for that legislative package to move forward via a regular order process and not through the complex, byzantine reconciliation rules."

If Democrats try to move aggressive climate policies through reconciliation, "not a single Republican is going to vote for this," making it more likely that a future administration and Congress could reverse the measures, Chatterjee said.

"It is very difficult to make long-term investment decisions when you're having to peg it to the political pendulum swinging back and forth," Chatterjee said. "I have some agita about what is appearing to be a partisan process to get this done in terms of its long-term stability."

As Congress looks for ways to bolster clean generation, FERC has launched a proceeding to improve transmission planning in competitive markets, which the industry sees as key to expanding renewable deployment. Although Chatterjee applauded FERC Chairman Richard Glick for initiating the rulemaking, "I'm under no illusions that it's going to be easy," Chatterjee said.

A decade after FERC issued its Order 1000 transmission planning rule, Chatterjee said agency members broadly agree the policy has not achieved its intended goals. But the consensus ends there, the commissioner said, with divisions emerging over how to improve siting, cost allocation and interregional planning for new projects.

In terms of changing FERC transmission policy, "I think it's going to take a couple of years," Chatterjee said. "It's not going to be an easy process, but I commend the chairman and my colleagues for taking it on and I wish them well. But it's going to be a challenge."

Chatterjee's term at FERC expired at the end of June. The Republican commissioner has continued to serve at the agency while the Biden administration decides on a Democratic nominee to replace him. Chatterjee can serve until the end of the Congressional session if he so chooses and has not been replaced by then. He has indicated that he will leave relatively soon, however.