Volume 5, Number 20 - August 11, 2005
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Energy bill passes
Before adjourning into its August recess, Congress passed the national energy bill.
Congress passed H.R. 6, The Energy Conference report, a huge 1,725-page bill. The vote in the House was 275 to 156 and the Senate passed the final measure by 74 to 26. President Bush promptly signed the bill. Congressional leaders delivered on their promise to pass a bill and have it on the President’s desk before the month-long August recess.
“The bottom line is that we now have an energy bill that provides a good steppingstone to address America’s growing energy demands. Natural gas is a part of the solution, along with many other forms of energy,” stated Logan Magruder, president of the Independent Petroleum Association of Mountain States.
“At the end of the day, American consumers need more natural gas, and this bill will help natural gas producers get on with the business of producing natural gas, which ultimately allows all of us, as consumers, to maintain our quality of daily life and helps our economy and national security,” remarked Marc Smith, executive director, IPAMS.
“For the first time, the cost of the conservation and efficiency tax incentives exceeds the incentives for domestic oil production,” according to Senate Energy and Natural Resources Chairman Pete V. Domenici. “The incentives to encourage the purchase of hybrid and alternative-fuel vehicles alone cost $874 billion. For those who say this bill doesn’t do enough to reduce oil consumption, I say they don’t understand tax law. We provide consumers and businesses with strong incentives to buy hybrid and alternative-fuel vehicles without hurting the economy or killing manufacturing jobs like a CAFÉ mandate would have done. We have new and expanded tax incentives for the manufacture and purchase of highly-efficient appliances, the construction of energy efficient homes and the purchase of solar equipment. We provide tax credits for the purchase of energy-efficient water heaters, heat pumps, air conditioners, furnaces and other equipment.
Domenici continued: “We do more for the production of clean and renewable energies than Congress has done before. Using bonds and production tax credits, we provide a total of $4.1 billion in incentives to encourage the production of renewable energies. This tax package, like the authorizing package, is a green bill. It encourages conservation, efficiency and the use of clean and renewable energies. I congratulate the House and Senate tax writers on their excellent work.”
Democratic committee staff of the Senate Energy & Natural Resources Committee provided a summary of “good policy provisions” of the bill, which include:
• New standards for reliability on the national electric transmission grid, to prevent future blackouts.
• Major Senate provisions strengthening consumer protection in electric markets (new merger review, protection for utility customers in the Enron bankruptcy from exorbitant contract termination fees, improved market transparency, first-ever broad prohibition on market manipulation and filing false information).
• Higher enforcement penalties for violations by utilities of U.S. electricity laws.
• Major new federal programs and 15 new product standards that will reduce natural gas use in 2020 by 1.1 trillion cubic feet and peak electric demand in 2020 by 50,000 megawatts, equivalent to the capacity of 85 power plants (600 MW each).
• Energy Star program authorized for first time.
Renewable energy production
• Encourages the development of commercial markets for forest thinnings, which ultimately will reduce the cost of forest restoration. Kept out House language that would have subsidized the cutting of old-growth forests.
• Hydroelectric dam relicensing provisions improved from Senate language (which was preferred over House language), to promote fairness to all parties.
• Improves many aspects of the current Federal Geothermal Leasing Program to encourage production while ensuring environmental protection (e.g., simplifies the royalty structure; provides for competitive leasing).
• Strong, far-reaching program to move towards a hydrogen economy, with emphasis on hydrogen cars.
Strategic Petroleum Reserve
• Permanent authority to operate the Strategic Petroleum Reserve.
• Guidance not to fill the SPR when fills would appreciably affect price.
• DOE authorized to fill the SPR to one billion barrels.
• Authority for the Nuclear Regulatory Commission to improve security at nuclear power plants.
• Enhanced whistle-blower protection for NRC and Department of Energy employees and DOE contractors.
Strong energy research and development (R&D) programs
• Increased emphasis on developing clean, next-generation energy technologies.
• New clean coal programs to develop systems that can ultimately capture and remove carbon dioxide.
• Agricultural biomass R&D program added on Senate floor kept intact.
• New direct spending for advanced oil and gas production technologies exploration in non-moratorium areas, but beyond the reach of current technology.
• Reforms to DOE management of R&D to improve consistency and effectiveness of these programs.
The Democrats also noted the following “bad policy provisions” in the energy bill:
• Exemption of hydraulic fracturing from coverage under the Safe Drinking Water Act (however, hydraulic fracturing with diesel fuels will still be subject to federal regulation).
• Exemption of oil and gas construction sites from storm water runoff regulations under the Clean Water Act.
• Expedited federal judicial review for permits and federal authorizations related to natural gas pipelines and liquid natural gas facilities – e.g., Clean Air Act permits for such projects will be reviewable only by Federal Courts of Appeals.
• Overly generous royalty relief for energy production on federal lands.
Senator Craig Thomas commented on the bill: “We took a balanced approach to this energy legislation. The bipartisan process helped us find a comprehensive way to deal with our energy situation. We knew we had to conserve more energy, produce more energy, diversify our energy supply and modernize our energy delivery system. We worked hard, listened to a lot of good ideas, and I’m proud to have been part of this legislation that is now the law of the land. Our country will prosper through this sound energy policy for the future.”
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