The largest energy
bill in more than a decade has advanced on Capitol Hill, as
the House approved the voluminous measure on July 28, by a
275-156 vote. Approval by the Senate was to follow, perhaps
as early as later the same day. It then would go to President
Bush, who is expected to sign it.
After the House vote, Energy and
Commerce Committee Chairman Joe Barton (R-Texas), who chaired
the conference committee that produced the final version,
said, "As it is implemented, I think you're going to see the
market choose to use clean coal technology for more powerplant
construction. I think you're going to see the market choose
new nuclear plant technology."
A key piece of the measure is
a package of tax incentives for oil and gas, electric utilities,
nuclear power and conservation that total $14.6 billion through
2015.
In the tax agreement, which was
reached on July 26, House and Senate conferees also included
several revenue-raising measures, reducing the tax section's
net cost to the Treasury by $3 billion.
The entire energy conference committee
report, which spans 1,725 pages, was filed in the House and
Senate on July 27. (View conference report at http://energy.senate.gov/public.
Senate Finance Committee Chairman
Charles Grassley (R-Iowa) says the tax section is "well-balanced
among renewable energy, conservation and traditional energy
sources." (A summary table of the tax provisions and estimated
costs is available at http://www.house.gov/jct/x-59-05.pdf.
The incentives include accelerating
depreciation for natural gas distribution lines, and electricity
transmission and distribution facilities, allowing companies
to write off such costs over 15 years, compared with 20 years
now.
The measure extends for two years
the current credit for electricity produced by wind, geothermal
biomass and other renewable sources. It adds hydropower and
Indian coal to the list of sources qualifying for the credit.
It also establishes new tax credits
for clean-coal facilities--integrated gasification combined
cycle projects would be eligible for a 20% investment tax
credit, while other electricity-producing clean-coal projects
could get a 15% credit.
Nuclear power would receive a
new tax credit for energy produced by new nuclear facilities.
The credit equals 1.8 cents per kilowatt hour produced over
eight years. There also would be changes in funds to pay for
decommissioning nuclear facilities, including allowing pre-1984
contributions to such funds to qualify as deductible expenses.
The Nuclear Energy Institute says that re-classification would
last for a nuclear powerplant's remaining life.
In the energy conservation area,
the agreement includes a deduction for commercial buildings
that cut annual energy and power consumption by 50% compared
to the American Society of Heating, Refrigerating and Air
Conditioning Engineers standards. A summary of the bill from
the Senate Finance Committee says, "The deduction would equal
the cost of energy-efficient property installed during construction,"
up to a cap of $1.80 per sq ft. There would be a deduction
of 60 cents per sq. ft. "for building subsystems," it adds.
Energy legislation has been a goal
of President Bush since early in his first term, but it has
had a rocky road on Capitol Hill. Bills passed the House and
Senate in 2003, but a final version was killed in the Senate
late that year, because of objections to the bill's $30-billion
price tag and to protections for makers of the gasoline additive
MTBE.
This time, the House-passed bill
contained MTBE protection, but the Senate still objected.
Barton modified the MTBE provision, to set up a fund to finance
cleanup of MTBE-related pollution. But the Senate conferees
were opposed and the provision didn't make it into the final
version. Conferees did agree to a provision that permits parties
to MTBE lawsuits seek to have the cases heard in federal courts.
Also absent from the conference
agreement was a Senate provision that would have required
electric utilities to derive 10% of their power from renewable
sources by 2020. The House objected to that "renewable portfolio
standard" and it, too, isn't in the final legislation.
Industry groups praised the bill.
National Association of Manufacturers' President and CEO John
Engler called it "a key victory for manufacturers and the
U.S. economy." But environmental groups blasted the legislation.
Philip E. Clapp, president of the National Environmental Trust,
contends that the final package "is a big fat zero" in reducing
dependence on foreign oil, cutting gasoline prices and promoting
use of renewable energy.
Among provisions of interest to
construction, the conference agreement would repeal the 1935
Public Utility Holding Company Act, a move that industry officials
and lawmakers contend will spur spending to upgrade the nation's
transmission grid. It also would extend Price-Anderson Act
liability protection for Dept. of Energy contractors through
2025.
In addition, the final bill also
directs that $1 billion in federal oil and gas lease revenue
over five years be used to restore ecosystems in Louisiana
and five other energy-producing states. That will help fund
a massive federal-state plan to stem Louisiana's wetlands
losses.
Also included is a four-week extension
of Daylight Saving Time, which supporters say will trim energy
consumption, and mandatory energy-efficiency standards for
federal buildings and refrigerators and other appliances.