On Saturday, August 4, the House passed an energy bill, H.R. 3221, the New Direction for Energy Independence, National Security, and Consumer Protection Act, by a vote of 241-172, largely along party lines. The House also passed an energy tax bill, H.R. 2776, Renewable Energy and Energy Conservation Tax Act of 2007, by vote of 221-189, which was then added to the larger energy bill, H.R. 3221, before final passage.
H.R. 3221 is a compilation of several committee-passed bills and would, among other things, increase renewable fuels infrastructure, increase appliance and building efficiency, enhance carbon sequestration research, increase the availability of alternative fuels (such as E-85), establish a loan-guarantee program for advanced vehicle battery technology and expand further development of plug-in hybrid vehicle technology.
After last minute changes to garner enough votes for passage, the House adopted a federal Renewable Portfolio Standard (RPS) amendment, offered by Reps. Tom Udall (D-NM) and Todd Platts (R-PA). The amendment, adopted 220-190, requires private utilities (with 1 million MWh or greater in annual retail sales) to produce 15 percent of their electricity from renewable energy sources, such as wind, solar, biomass, etc., by 2020. It also allows up to 4% of the 15% to be met through energy efficiency measures. Federal utilities and consumer-owned utilities are exempt from the Udall-Platts RPS.
Private utilities and others are likely to lobby aggressively against the inclusion of a RPS in a final conference agreement between the House-Senate, or at a minimum, have it apply to federal and consumer-owned utilities, as well.
The Senate-passed bill does not contain an RPS because the lead Senate sponsor, Sen. Jeff Bingaman (D-NM), did not have the 60 votes needed to stop a filibuster when the Senate considered its energy bill in June. Most observers speculate that Bingaman had 56 or 57 votes. After passage of the House bill, however, Bingaman issued a press release indicating that he would work to include an RPS in the final bill.
The House defeated an amendment, 169 to 245, offered by Reps. Michael Arcuri (D-NY) and Maurice Hinchey (D-NY), which would have repealed FERC's "back-stop" authority to construct or modify transmission lines within DOE-designated National Interest Electric Transmission Corridors (NIETC), granted in the Energy Policy Act of 2005 (EPAct 2005). In place of this, the amendment would have required companies to proceed in accordance with state law. APPA and others opposed the amendment.
In addition, before going to the floor, House leadership stripped out a provision from the Natural Resources Committee title that would have rolled back a provision from EPAct 2005 dealing with Energy Right-of-Way Corridors on Federal Land (Sec. 368). Sec. 368 of EPAct 2005 currently directs five federal agencies (Agriculture, Energy, Commerce, Defense, and Interior) to designate corridors for oil, gas and hydrogen pipelines and electricity transmission and distribution facilities on federal lands in the 11 contiguous Western States. The House Resources Committee had, instead, inserted a study of the need for such designations, and would have required the maximum level of mitigation practicable for such corridors. APPA opposed the amendment and welcomed its elimination before the energy bill moved to the floor.
The House also adopted a tax title to the energy bill that provides a number of incentives for renewable developers and energy efficiency and conservation measures. The Senate bill does not include a tax component.
Of interest to NEPPA is the inclusion of provisions related to the Clean Renewable Energy Bond (CREB) program, called the "New CREBs". The bill provides an additional allocation for New CREBs of $2 billion and creates a new category of eligible "public power providers," consistent with the Federal Power Act definition (i.e. those with an "obligation to serve"). The bill divides the $2 billion allocation authority between projects of public power providers and rural electric coops only. Public power is to receive 60 percent of the national volume cap and rural electric coops are to receive 40 percent. The bill does not include a sunset provision for the program; current law sunsets the CREB program at the end of 2008. The bill also adopts the APPA supported "pro rata" allocation methodology (vs. the current IRS "smallest to largest" project) for public power providers.
Also of interest in the tax title are provisions to extend for four years (until 12/31/12) the renewable energy production tax credit (PTC) and the investment tax credit (ITC) for solar and fuel cell projects for private developers, and credits for individuals for purchasing plug-in hybrid vehicles ($4,000/vehicle). In addition, the bill extends incentives for energy efficiency improvements in commercial buildings, and creates two new tax credit bonds; one for energy efficiency improvements in homes and the other to assist state and local governments in implementing a variety of conservation measures.
The House bill does not include provisions on the controversial Corporate Average Fuel Economy (CAFE) standards; the Senate bill increased CAFE to 35 miles per gallon by 2020.
The bill now heads to a House-Senate conference committee where differences between the two versions must be reconciled. While there are many similarities between the House and Senate energy independence bills, there are major differences on controversial issues, including the RPS, tax incentives and CAFE, that signal a difficult conference ahead.
In addition, the Administration has threatened to veto the House bill. In a statement issued the morning the House was expected to consider the bill, the Administration said "Because H.R. 2776 and H.R. 3221 fail to deliver American consumers or businesses more energy security, but rather would lead to less domestic oil and gas production, higher energy costs, and higher taxes, the President's senior advisors would recommend that he veto these bills."