Bottom Line Energy Issues - Senate Debates Energy Policy

By Lewis Tagliaferre

Once more. Recall the Energy Policy Act of 1992 separated investor-owned electric companies into three segments, wholesale generation (which was deregulated), transmission (regulated by FERC), and distribution (left regulated by the states.) Subsequently, about half the states have embarked on a wide variety of schemes to permit consumer choice in selection of a power supplier. None of them are fully functioning and all are complicated by struggles between several warring factions. Consumers vs. investors, producers vs. conservationists, states vs. feds, et al. What were state regulated, fairly reliable, and consistently priced integrated power systems, albeit monopolies, have become fragmented into an uncertain mess that is more risky for consumers, suppliers, and investors alike. Add well based concern for U.S. dependence upon oil from undependable and unfriendly nations and you may understand the legitimate concern in Washington to do something differently.

Last summer, the House of Representatives passed a new energy policy bill based mostly on recommendations compiled by V.P. Cheney and a secret team of industry advisors. It favored increasing domestic production of oil and gas, (including drilling in environmentally sensitive areas) provided incentives for conservation and funded  research and development of renewable resources, while leaving choices about consumption largely up to consumers. The Republican way.  Now, the Senate is poised to debate its versions, in S. 1766 and S.517, expected to consume much of the March calendar, after the debate on campaign finance reform and committee hearings on Enron clear. Senate Democrats are complaining the House bill favors increasing fossil fuel production at the expense of the environment. They prefer more conservation and renewable energy development, even if it means infringing upon personal freedoms. Like raising auto fuel economy from 27.5mpg at present to 35mpg by 2013, and removing exemptions for ubiquitous SUVs.

The House bill does not address electric deregulation, but the Senate version grants more power to FERC over operation of electric grids and siting of transmission lines. It will take 60 pro-drilling votes from both sides of the aisle to break a filibuster threatened by Sen. John Kerry (D-MA) if the final bill includes drilling in the Alaska National Wildlife Reserve. The basic fight comes down to continuing Republican emphasis on oil and gas production or Democratic emphasis on more conservation and renewables. If you prefer one approach more than the other, NOW is the time to let your Senators know.