Former FCC Chair & Team Working on a New Energy Bill


Reed Hundt is known for being the first chairman of the Federal Communications Commission to lead a spectrum auction, setting the stage for the modern U.S. wireless industry. Hundt is now in his second act as a green policy advocate, and tells me in an interview this week that he, along with John Podesta’s Center for American Progress and Al Gore’s Alliance for Climate Protection, are beginning a project to draft an energy bill for the next Congress.

Hundt, who referred to the project as “skunkworks,” says the group plans to unveil the contents of the new energy bill by mid-November. “We’re going to get out a blank piece of paper and start all over,” says Hundt. That’s because the group sees no chance of passing the same legislation in the next Congress. In addition, Hundt thinks the economic and political climate have changed enough over the last three years — including the lack of an international climate agreement, the recession lowering U.S. energy consumption and lower energy prices — that the country needs an entirely new proposal.

Here’s an edited excerpt of my interview with Hundt on what the new bill proposal would entail:

E2T: How will your bill be different from the current pending legislation?

Hundt: The way we look at it is that the legislation that failed ran from a [economic and political] climate that spanned roughly 2007 to 2010. That effort was based on the following factual statements:

  1. That natural gas was $12 a thousand cubic feet. Now it’s at $4 a thousand cubic feet.
  2. Gasoline at the pump was $4 per gallon. Now it is 33 percent below that.
  3. That the electricity demand in the U.S. would average 2 to 2.2 percent compounded growth annually. Actually it’s dropped because of the recession.

It’s dropped so much that the nation as a whole won’t need new demand until 2017. Now there are states that are exceptions to that, where people are still moving in, but that’s true for the nation as a whole. The previous energy legislation was all dependent on this demand growth, with the idea to meet growth with efficient measures and renewable power. But with demand dropping, you’ve got a very different economic picture.

The next big difference between 2007 to 2010 is that it was thought necessary to encourage new-generation construction because of the growth assumption. But now, the assumption is that we need to help the utilities to figure out how to close the generation facilities that produce mercury. It’s about what will they do about the mercury emissions, not the CO2. The oldest coal-fired facilities are intense mercury emitters. Carbon capture and storage is one thing, but no one wants mercury falling down in the rain and getting in the food chain. Another assumption is that the EPA would regulate carbon emissions, which isn’t likely, but the EPA will regulate mercury. No one expects that the next Congress will be pro-mercury.

The last aspect is that the previous legislative effort was based on the notion that the U.S. would build a legislative jigsaw piece that would fit into the international puzzle, and do something domestically that was a compliment to an international agreement. That’s not going to happen. There isn’t going to be an international treaty within the next several years.

The facts have changed; the economic situation has changed; so we’re getting out a blank piece of paper, and we’re writing a different bill.

E2T: What will your bill look at specifically?

Hundt: The bill will focus on jobs and also on “lowering the cost of clean.” Instead of raising the price of carbon initially, we’re going to lower the cost of clean energy, and then in the not-too-distant future, there will be a more welcoming attitude for clean energy, and then we can put a price on carbon. It’s a two-step process: one — jobs and lowering the cost of clean energy, and two — putting a price on carbon.

The government can lower the cost of clean energy by focusing on long-term finance and take advantage of the very cheap borrowing rates that exist today. Borrowing rates are so staggeringly low right now in the government sector. The Treasury is selling debt at 2.5 percent on a 10 year note; it’s just incredible. We’re also talking about scaling out of the breakthrough technologies that the Department of Energy has funded. The DOE is coming to the end of the stimulus package, and the next step is to scale out those breakthroughs. As you scale them out, you lower the unit cost.

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