Full Senate Starts Consideration of Energy Bill This Week
The Senate voted 91-0, last night (6/11/07) on the "motion to proceed" to consideration of its version of a comprehensive energy independence bill, S. 1419, the Renewable Fuels, Consumer Protection and Energy Efficiency Act of 2007. The Senate started debating the bill in earnest today, with numerous amendments expected in coming weeks.
The bill is designed to reduce reliance on oil imports and increase energy efficiency. It would boost corporate average fuel economy (CAFÉ) standards to 35 miles per gallon by 2020 and expand the renewable fuels production mandate to 36 billion gallons by 2022, with 21 billion of those gallons coming from advanced biofuels such as cellulosic ethanol rather than corn ethanol. It would also provide funding to spur production of advanced biofuels and new-technology vehicles, increase appliance and federal building efficiency and advance the demonstration of carbon sequestration technologies. Lastly, the measure would create new civil and criminal penalties for gasoline "price gouging."
The Senate Finance Committee is expected to mark-up an energy tax package later this month that will likely be added to the energy measure before final passage.
We anticipate several major floor battles. They include, but are not limited to, an intense debate on corporate average fuel economy (CAFÉ) standards, a federal renewable portfolio standard (RPS), funding for coal-to-liquid (CTL) technology, and additional environmental restrictions on bio-fuels.
CAFÉ Amendments Expected
On CAFÉ, the bill currently mandates an average of 35 miles per gallon by 2020 for cars and light trucks. Sen. Carl Levin (D-MI) is working on an amendment that would modify the underlying bill to require 36 mpg for passenger cars by 2022 and 30 mpg for light trucks by 2025. Levin has said his bi-partisan approach would "boost efficiency without harming the domestic auto industry." His amendment, which is still under development, is also said to include industry incentives for biofuels, plug-in hybrids, and other "leap ahead" technologies.
RPS vs. CPS Standard
On the federal "renewable portfolio standard" (RPS), there is competition between two proposals: one being advanced by Senate Energy and Natural Resources (ENR) Committee Chairman Jeff Bingaman (D-NM) that would require utilities to provide 15 percent of their power from renewable energy sources by 2020. The other proposal is being advanced by the ENR Committee's Ranking Member Pete Domenici (R-NM). It would create a broader "clean portfolio standard" (CPS) that allows carbon storage and sequestration projects, new nuclear and new hydropower generation as well as energy efficiency and demand side management programs to count toward a federal mandate of 20 percent by 2020. (For a copy of the Domenici CPS amendment please contact Lori Pickford at lpickford@morganmeguire.com.)
The dueling plans are generating heavy lobbying, with some utilities, particularly those in the Southeast, pushing the CPS while environmentalists are pressing lawmakers to restrict the plan to renewable sources.
Coal-to-Liquid Amendments Expected
Sen. Jim Bunning (R-KY) is planning to offer an amendment to require use of coal-to-liquid (CTL) fuels for the transportation sector. Bunning and the late Sen. Craig Thomas (R-WY) offered an amendment when the bill was before the Senate Energy and Natural Resources Committee to create a mandate of 21 billion gallons for coal-based transportation fuels by 2022. Their plan said that greenhouse gas emissions from the fuel's production and use could not exceed that of conventional gasoline. Their amendment failed by one vote in committee.
Current speculation is that Sen. Bunning may agree to increased testing and subsidies for a limited number of CTL projects, as opposed to fuel production mandate.
Biofuels Amendments Under Development
The Chairman of the Environment and Public Works (EPW) Committee, Barbara Boxer (D-CA), is working with Sen. Bingaman on a package of amendments to strengthen the biofuels title of the bill. The current Senate bill expands the biofuels mandate from 8.5 billion gallons in 2008 to 36 billion gallons per year by 2022. Starting in 2016, an increasing amount of the goal must be met with advanced biofuels such as cellulosic ethanol.
The amendment are likely to mirror the provisions of the biofuels bill Boxer introduced earlier, including environmental requirements on biofuels crops and requiring biofuels to meet higher emissions reduction goals.
House Committees Moves Forward; But Energy & Commerce Hits a Snag
In the House, several committees are working on pieces of an energy package that the Speaker wants to bring to the floor for a vote before the 4th of July recess.
The Energy and Air Quality Subcommittee chaired by Rep. Rick Boucher (D-VA) plans to mark-up a multi-title bill next week. The bill addresses alternative fuels, vehicle efficiency standards, appliance efficiency standards, "smart grid" technologies and loan guarantees for advanced energy facilities, such as projects that capture and sequester carbon. The Boucher bill is controversial because it provides incentives for development of coal-to-liquid fuels, as well as for biofuels. In addition, a number of Democratic committee members object to provisions in the bill that would prevent states and the Environmental Protection Agency (EPA) from setting greenhouse gas (GHG) emissions restrictions for tailpipe emissions and to the relatively modest increases required in vehicle fuel efficiency standards.
Last week, Reps. Ed Markey (D-MA) and Tom Allen (D-ME) joined ten other Democrats on the committee in a letter to full Energy and Commerce Committee Chairman John Dingell (D-MI) and subcommittee chairman Rick Boucher (D-VA), expressing strong concerns about these transportation fuel provisions.
The House Natural Resources Committee, chaired by Rep. Nick Rahall (D-WV), is in the process of marking up its portions of the energy bill. The Resources committee is expected to complete action this week. Highlights of the bill include:
Repeal of Section 368 of the Energy Policy Act of 2005 that directed five federal agencies to jointly designate pipeline and transmission corridors on federal lands. The bill substitutes a study of the need for such designations, and will severely limit the location of designated corridors and require the maximum level of mitigation practicable for such corridors. APPA and EEI opposed these provisions of the bill;
Approval of an amendment by Rep. Ed Markey (D-MA) to eliminate many provisions in the original Rahall draft that were opposed by the wind industry. Although the Markey amendment was supported by wind advocates, concerns remain about the provisions;
- Adoption of an amendment by Rep. Cathy McMorris Rodgers (D-WA) that recognized "large and small conventional hydropower" as a renewable resource, in the context of the corridor study noted above. The amendment will require federal agencies to consider hydropower in addition to wind and solar when studying barriers to access to transmission by renewable resources; and;
- Provisions to: 1) create a national inventory of locations for storage of carbon dioxide and authorize carbon storage and sequestration research; 2) require the Department of the Interior to mitigate the effects of climate change on wildlife; and 3) require reports on the effects of climate change on ocean and coastal ecosystems and coastal communities.
The Ways and Means Committee, chaired by Rep. Charlie Rangel (D-NY) planned originally to mark up its energy tax bill tomorrow (6/13). Mark-up is now delayed to allow Democrats on the committee to further refine the bill.
Of particular interest to NEPPA, is the inclusion of the Clean Renewable Energy Bond (CREB) program. According to Democrats on the Committee, the Chairman's mark includes an extension of the CREB program, with a $2 billion volume cap ($1.2 billion for municipal utilities and $800 million for cooperative utilities), as well as significant technical modification to the CREB program.
The overall package is expected to total close to $20-$25 billion in energy tax incentives with revenue offsets coming from the repeal of current tax incentives available to large multi-national oil companies. Republican opposition to the offsets has eliminated any effort to advance a bi-partisan title in the Ways and Means Committee; therefore, Democrats are caucusing individually, and will advance a bill most likely sometime next week.
APPA Hosts Wholesale Market Summit
On Thursday, June 7, the American Public Power Association (APPA) hosted the "Wholesale Market Summit, Part IV: Next Steps in the Electric Market Reform Initiative (EMRI)." The purpose of the meeting was to update members on the results of various EMRI studies and to discuss possible next steps. Pat Hyland participated on behalf of the Northeast Public Power Association (NEPPA), and Brian Forshaw was there for Connecticut Municipal Electric Energy Cooperative (CMEEC).
During the all-day summit, APPA members discussed possible "micro" and "macro" responses to issues that have arisen in restructured electricity markets. There was consensus that APPA should continue its campaign and focus on number of "micro" responses, such as stricter market monitoring procedures and standards, increased market transparency, reforms to RTO governance and increased accountability, among other things. APPA will be developing a summary of the meeting, including suggested action items for further discussion by the membership.