House panel demands more details on Chu PMA memo

The Republican majority on the House Natural Resources Committee is again after U.S. Department of Energy Secretary Steven Chu over his controversial March 16 memorandum to four federal power marketing administrations (PMAs).

Committee Chairman Doc Hastings, R-Wash., sent an Oct. 11 letter to Chu requesting specific documents and communications related to his memo. The directives in the Chu memo could considerably alter the primary missions of the PMAs of providing clean, affordable electricity to ratepayers and raise electricity costs on 40 million Americans, Hastings contended. In June, over 160 House members and Senators sent a bipartisan letter to Chu expressing concerns with the missions outlined in his memo. The House also passed appropriations language prohibiting funding for any new activities covered in the document.

“After two full Committee hearings and a number of congressional letters of concern, it is abundantly clear that there are many unanswered questions on the reasoning and implementation of this Memorandum. This letter seeks to determine some answers,” wrote Hastings in the Oct. 11 letter to Chu.

The Oct. 11 letter asks for certain categories of documents and communications, including:

  • a specified accounting of all PMA and DOE expenses (direct and indirect) incurred or committed-to-date, and any future costs, related to the March 16 memorandum;
  • all communications between the White House, the federal Council on Environmental Quality, DOE, the Western Area Power Administration (WAPA) and the other PMAs related to the March 16 memorandum;
  • all communications (related and not related to the March 16 memorandum) between Lauren Azar, the PMAs, and a DOE Joint Outreach Team (JOT). Azar has been involved with drafting the March 16 memo, played a primary role at the JOT workshops, and has been the main point of contact at the DOE for questions related to the memorandum, Hastings noted.
  • a list of all of the employees at DOE and WAPA, and any of the other PMAs, as well as, any outside consultants who have been involved with the planning, drafting and implementation of the March 16 memo. Also a list of all employees at DOE, WAPA, and any of the other PMAs, as well as any outside consultants who were involved in the planning, organization, and execution of the JOT workshops and subsequent recommendations drafting processes;
  • any correspondence from NERC or any regional reliability organization citing the PMAs for failure to properly ensure system reliability;
  • all comments from interested parties related to the March 16 memo, including those submitted at JOT workshops;
  • all jobs impact analyses and cost/benefit analyses, including analyses of an Energy Imbalance Market (EIM), that the DOE used to understand the effects of the March 16 memorandum.

Industry has said the Chu effort misdirected, disorganized

The Hastings committee held a Sept. 11 oversight hearing on concerns that Chu’s memorandum to the PMAs, including the Bonneville Power Administration, could increase electricity rates. The Chu memo to the PMAs said that those organizations had long ago gone beyond their initial role of providing power from federal hydro dams and urged them to go further in modernizing operation of the nation’s electrical grid.

“I will be directing that each of the PMA’s strategic plans and capital improvement plans recognize the changing nature of the electric sector, including but not limited to complying with NERC reliability standards, integrating variable resources, scheduling on an intra-hour basis, centralizing dispatch, responding to solar flares and minimizing cyber-security vulnerabilities,” Chu wrote in the memo.

Mark Crisson, President and CEO of the American Public Power Association, noted at the hearing that approximately 600 public power utilities in 33 states purchase hydropower from the four federal PMAs – BPA, WAPA, Southwestern Power Administration (SWPA) and Southeastern Power Administration (SEPA). While there were “admirable” goals outlined in the Chu memo, there were points that would take the PMAs beyond their basic mission, he added.

“Included in the changes proposed in this March 16 Memorandum were concepts such as construction of new transmission through third-party financing mechanisms and new borrowing authorities; ‘improvement’ of the PMAs’ rate designs; the institution of an energy imbalance market for the West; the creation of revolving funds for transmission improvements, and other changes described in the sections below,” Crisson wrote in his prepared testimony. “These plans, as introduced, were very short on specificity. They were described by Ms. Lauren Azar, the DOE Senior Advisor working on these issues, in written testimony to this Committee as ‘foundational goals.’”

Crisson added that APPA and its PMA-customer members had hoped that more specificity would soon be forthcoming. “However, the March 16 Memorandum’s rollout was only the first step in a confusing and secretive process that could be described as, at best, poorly organized, and, at worst, misleading and misinformed,” Crisson said.

Some broad goals laid out in the March 16 memo, from modernizing and increasing the efficiency of the grid to integrating renewable power to preventing future blackouts are admirable, Crisson said. “While laudable, there are numerous, well-established processes in place to address electric reliability at the bulk power system level,” the APPA official added.

APPA recommends that the DOE step back and start this process anew, and essentially ‘plug in’ to the long-established processes that identify the needs and objectives for each PMA, Crisson said.

Azar said DOE is pursuing its goals – with WAPA the first in the process

DOE’s Azar said in Sept. 11 hearing testimony that the agency is in the middle of a collaborative process to work out the specifics of the ideas outlined in the Chu memo. “DOE has begun this work with the Western Area Power Administration (WAPA) and our approach to the other PMAs will be revised in light of our experience with WAPA,” Azar added.

In addition to selling federally generated electricity, three of the four PMAs (WAPA, BPA and SWPA) own and operate 33,700 miles of transmission lines that make up a significant portion of the U.S. power grid, Azar pointed out. To bolster the competitiveness of the electricity marketplace and to ensure grid reliability, Congress in 1992 and 2005 passed comprehensive legislation creating obligations on grid operations and reliability. The Chu memo is intended, among other things, to ensure the PMAs are meeting these obligations, Azar wrote.

The overwhelming majority of the proposed activities relate to the PMAs’ obligations and goals for transmission and not to the marketing of federally generated power to the preference customers, Azar said. As a consequence, the Chu memo will have minimal applicability to SEPA, which owns and operates no transmission.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.