Bottom Line Energy Issues - Senate Passes Energy Bill - Final Goes to Conference

May 29, 2002
May 2002 - Part 1
After six weeks of wrangling over dozens of amendments sponsored by regional interests, the U.S. Senate passed its version of the plan previously authored by the House last August. The bills now go to a conference committee that must resolve the differences to formulate a national energy policy. The final policy measure could take months winding its way through more parliamentary maneuvering by both sides, and then years to implement. Following are some of the highlights that might or might not survive in the final compromise. Authority for assuring reliability of the electricity grid was given to the states over objections to those who thought it was better assigned to FERC, which is supporting consolidation of transmission systems into six or fewer regional transmission authorities and presently controls interstate operating tariffs. The Senate plan leaves planning and voluntary coordination with the North American Electric Reliability Council.While the Senate refused to require auto makers to increase fleet mileage to 35mpg over ten years, caving in to SUV and truck operators, but did require phasing out polluting gasoline additives in favor of stimulating tripled use of ethanol additives derived from corn. It mandated that electric utilities should supply 10 percent of power from renewable sources by 2020, up from the present three percent, leaving the implementing tactics up to the Department of Energy,Environmentalists successfully beat off a White House proposal to begin drilling for badly needed oil in the Alaska National Wildlife Preserve, but it was offset somewhat with continuing tax breaks designed to stimulate oil and gas production in established leases on public lands. Oil production from the Alaska reserves at Prudhoe Bay is now half of its original flows, causing that state to assess a personal income tax to compensate for its oil revenue decline. It will be a contentious issue in the conference and may yet survive.Other highlights included loan guarantees for building a $20 billion gas pipeline from Alaska through Canada, incentives for buying gas-electric hybrid vehicles, improving coal combustion efficiency, building fuel efficient  buildings and appliances, and energy conservation. Other features favor nuclear power and hydro-power plants. Overall the Senate cost of fuel stimulation reached an estimated $14 billion, about equally split between production and conservation, but far below the $30 billions in the House bill. Aside from repeal of the 1935 Public Utility Holding Company Act that now applies to only 21 companies out of more than 300 electric and gas utilities, there are no sections in either the House or Senate versions on a national policy for electric utility deregulation. Apparently, the provisions of the Energy Policy Act of 1992 were deemed sufficient, leaving users and producers alike with the state by state response to a deregulated power generation market and state regulated distribution controlled by public utility commissions. Building owners will, therefore, need to be informed about developments in each state when making energy based development plans.One interesting Senate plan is creation of a consumer energy commission composed of 11 members, only five of whom would be consumer representatives. It would investigate pricing mechanisms and recommend solutions to future price spikes. This move comes while FERC announced formation of a similar Office of Market Oversight and Investigations headed by William Hederman. It will be staffed with “up to” 100 government experts to help assure consumer interests are factored into future market operating rules. When will the right hand ever consult with the left hand in Washington?One Senator noted that there are two things people should not watch being made, sausage and federal legislation. The final Senate bill is literal proof that politics is the art of the passable. Neither side is satisfied with the present standoff between House and Senate bills. Rodger Schlickeisen, spokesman for the Defenders of Wildlife said, “The American public would be better served if Congress went back to the drawing board rather than approving flawed legislation that undermines protection of our lands and waters while failing to significantly reduce our dependence on foreign oil.” Rep. W. J. “Billy” Tauzin (R-LA) likely will chair the conference committee. He has threatened to air public meetings of the committee on C-Span to help stimulate the compromise and avoid partisan wrangling. But, don’t bet on it.Go to Part Two

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