You already know the Republicans gained more congressional seats this week than in any election since 1938.
But what does it mean for your portfolio and to our approach to domestic energy?
Here’s what you should know…
With the big shift in Congress, many energy-important committees are getting new chairs.
Henry Waxman, co-sponsor of the failed cap-and-trade bill, will vacate his position at the top of the House Energy and Commerce Committee. He’ll be replaced by Fred Upton, who supports nuclear energy as a way to create jobs in his home state of Michigan and around the country.
He’s straightforward about his position:
Despite nuclear power’s tremendous potential, the nation is lacking a coherent policy as we look toward the future. Nuclear was largely ignored as the job-killing cap-and-tax scheme made its way through the House last June. The world’s leading emitters understand the importance of nuclear power in reducing emissions. It is well past time we do the same or risk being left behind.
The House Natural Resources, Ways and Means, and Oversight and Government Committees will all get new Republican chairs.
And if Lisa Murkowski wins her write-in battle in Alaska, she’ll be the chair of the Senate Energy and Natural Resources Committee.
The changes were enough for Bloomberg to run this headline: Nuclear Power Benefits From Republican Wins.
Threading the nuclear needle
I think we all knew that cap-and-trade was dead. I said as much seven months ago.
But just to be sure, West Virginia democratic gubernatorial candidate Joe Manchin literally shot a hole though the legislation for a campaign TV commercial.
Joe Barton, who will be the number two House Republican in the Energy and Commerce Committee, said on NPR this week “there will be no cap-and-trade bill… It’s not just endangered, it’s extinct.”
Even Obama is showing newfound flexibility, telling reporters this week that “Cap-and-trade was just one way of skinning the cat. It was not the only way. It was a means, not an end, and I’m going to be looking for other means to address this problem.”
Other means to address this problem is political speak for “I’ll scratch your back if… ”
And it’s clear what the Republicans want scratched.
Richard Lugar has already said he’ll introduce compromise energy legislation next year that would promote building nuclear plants in conjunction with a renewable portfolio standard.
You see what “other means” means?
Even some key Democrats are liking the idea. Delaware’s Tom Carper sits on the Senate Environment and Public Works Committee and thinks Lugar’s idea is a great way to “thread the needle” for a bipartisan compromise.
Carper added that “maybe the best we can do is a clean-energy standard that gives initial credit to nuclear…”
Feeding at the Washington Trough
Washington is a town of backroom handshakes. I think we’ll see an energy bill with a scaled-back version of an RPS and incentives for nuclear and clean coal by this time next year.
John Walke, a director at the Natural Resources Defense Council, agrees. He says even though nuclear is prohibitively expensive without government subsidies, “the nuclear and coal sectors have always been very successful feeding at the Washington trough.”
Remember, Obama has already called for tripling federal nuclear loan guarantees to $54 billion.
And nuclear companies are loving it…
NRG (NYSE: NRG) CEO David Crane has already said he sees a pro-nuclear bill coming out of Congress some time soon. Crane backed cap-and-trade last year, but has been quick to adapt to the new attitude in Washington.
NRG has applied for federal loan guarantees to build two new reactors at a site in Texas. Southern Company has already been awarded $8.3 billion to build two plants in Georgia.
Constellation (NYSE: CEG) has won $7.5 billion to build a new reactor in Maryland with Electricite de France (PARIS: EDF), though terms of the deal are still being worked on.
And one day after the election, Toshiba (PK: TOSBF) filed paperwork with the Nuclear Regulatory Commission to “renew and amend” design certification for its Advanced Boiling Water Reactor (ABWR).
According to a release issued by the company:
Submittal of this application represents a great step forward in offering proven ABWR technology to the U.S. market as a key power generation option and in meeting U.S. customers’ demand in the next decade and beyond.
But Toshiba isn’t the only Asian nuclear company with ambitious U.S. plans…
I’ve found a company under a buck that’s about to import a similar reactor from Korea. It plans to build the first U.S. investor-owned nuclear plant in years, making shareholders a fortune in the process.
And in the coming weeks, my colleague Chris DeHaemer will have a new report on how to profit from the nuclear fuel side of this political shift.
Call it like you see it,