Greater Investments in Energy Infrastructure Stressed in White House Quadrennial Review

Energy and Climate Report provides current, thorough coverage of clean energy, efficiency, and climate change legislation, regulation, policy, legal developments, and trends in the U.S. and...

By Rebecca Kern

April 21 — The U.S. needs to invest in modernizing and updating its aging energy infrastructure to promote economic competitiveness, energy security and environmental responsibility, an April 21 White House report recommended.

The White House's first installment of the Quadrennial Energy Review (QER) specifically focuses on the U.S. energy transmission, storage and distribution infrastructure, which includes the pipelines, wires, storage, waterways, railways and other facilities that make up the energy system.

Vice President Joe Biden discussed the report, along with Energy Department Secretary Ernest Moniz, April 21 at PECO Energy Co., an energy delivery subsidiary of Exelon Corp., in Philadelphia.

Biden said the U.S. energy infrastructure system is outdated, with much of it built decades ago, and it's unable to handle today's increased energy demands.

“So the first installment of the report offers a road map to bring the energy infrastructure to the 21st century by taking advantage of new technologies and building on our resilience to the threats that exist from climate change,” he said.

“We've dramatically increased production and reduced the cost of renewable energies like solar and wind,” he said. “Since 2009, solar power generation has increased 20-fold and wind power has tripled.”

Over the next decade, the review recommends investing in energy transmission, storage and distribution infrastructure, including accelerating pipeline replacement and maintenance of natural gas distribution systems. The review also advises investing in modernizing the electric grid and upgrading the Strategic Petroleum Reserve.

The QER is part of President Barack Obama's climate action plan issued in June 2013. He created a review task force, made up of 22 federal agencies, to submit the assessments every four years.

Investing In Infrastructure 

The QER envisions ensuring resilience, reliability, safety and security of the transmission, storage and distribution infrastructure by funding various state grant programs.

The DOE would establish a competitive financial assistance program for states to encourage applicants to speed up pipeline replacement and enhance the maintenance of natural gas distribution systems.

The funding would target transitional assistance to help low-income households absorb initial rate increases from improvements; it also would provide incentives to reduce methane emissions through system repairs. This program would cost $2.5 billion to $3.5 billion over the next decade.

The DOE also would take on a multi-year program to support state energy assurance plans to help states develop plans to respond to current and future energy disruptions. The DOE has already requested $35 million in its FY 2016 budget for this program. The program would cost $350 million to $500 million over the next decade.

Additionally, the DOE would establish a state grant program to award states that demonstrate creative approaches to infrastructure hardening and resilience, and the program is estimated to cost $3 billion to $5 billion over 10 years.

Modernizing Electric Grid 

The review also recommends modernizing the electric grid through state grant programs as well.

One state financial program would award states that cooperate with public utility commissions, energy offices and environmental regulators; counterparts in other states; and infrastructure owners and operators that oversee the power system. The program is estimated to cost $300 million to $350 million over five years.

Additionally, DOE has requested $27.5 million in its FY 2016 budget request as part of a cross-cutting grid-modernization initiative to develop foundational technology, improve security and encourage stronger institutional and stakeholder involvement. This program would cost $3.5 billion over a decade, the review estimates.

Invest In Strategic Petroleum Reserve 

The review recommends investing in the country's Strategic Petroleum Reserve, currently the world's largest emergency supply of crude oil, located in the Gulf of Mexico.

The DOE authorized a test sale of Strategic Petroleum Reserve oil to test the distribution of the petroleum reserves. Moniz said the DOE found problems while conducting the test.

As a result, the review includes a “significant proposal for essentially modernizing and improving [the Strategic Petroleum Reserve] and improving the distribution system,” Moniz said during a Bloomberg meeting for reporters in Washington, D.C., April 20.

The review estimates the investments would cost $1.5 billion to $2 billion.

Executive Actions Announced 

The White House announced two executive actions April 21 as part of its announcement of the QER release.

The DOE is creating a partnership with 17 energy companies to improve infrastructure resilience against extreme weather and climate change. The companies include investor-owned, federal, municipal and cooperative utilities, including Consolidated Edison Inc., Dominion Resources Inc., Exelon Corp., PEPCO Holdings Inc. and the Tennessee Valley Authority.

Separately, the U.S. Department of Agriculture announced it's investing $72 million to support six new rural electric infrastructure projects, including investments toward solar energy. The loans are also for transmission line improvements.

‘Strong Stakeholder Process.'

Moniz discussed the supportive stakeholder feedback that the agencies received throughout the process of compiling the QER.

“We had a very, very strong and powerful and informative stakeholder process,” Moniz said during his April 21 speech in Philadelphia.

The Edison Electric Institute (EEI), the largest association of investor-owned electric utility companies, said it was pleased with the opportunity to provide its recommendations throughout the review process.

“We appreciate the QER’s focus on the reliability, resiliency and safety of the electric grid. The industry is actively engaged with DOE and the Administration on significant efforts to improve the security of the grid,” Tom Kuhn, EEI president, said in an April 21 statement.

The American Wind Energy Association (AWEA), which represents the wind industry, said it was pleased with the review's proposals to invest more in transmission infrastructure for wind power.

“By adding more transmission, as today’s report recommends, we can tap more of this made-in-the-USA supply of energy. Such grid upgrades more than pay for themselves by reducing electricity costs and improving electric reliability for consumers," Tom Kiernan, AWEA chief executive officer, said in an April 21 statement.

To contact the reporter on this story: Rebecca Kern in Washington at rkern@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

The Quadrennial Energy Review is available at http://op.bna.com/der.nsf/r?Open=rken-9vslc5.