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Senate approves energy bill
Legislation would provide no immediate price relief
By Stephanie I. Cohen, MarketWatch
Last Update: 4:55 PM ET June 28, 2005
WASHINGTON (MarketWatch) -- The Senate on Tuesday passed a broad energy bill packed with $16 billion in tax incentives and spending aimed at boosting domestic energy production to combat spiking prices and feed growing demand.
While the Senate vote still leaves lawmakers with the formidable task of resolving the many differences between the Senate bill and a version passed by the House in April, lawmakers believe a compromise is imminent and see the current bills as having the best chance of overcoming hurdles that derailed attempts to pass an energy bill over the past four years.
"Our pledge in going to the House is that this time, we're going to get an energy policy that both houses will agree upon," said Sen. Pete Domenici, R-N.M., Senate Energy chairman and author of the legislation.
Both White House and Senate officials stressed that the bill is a crucial piece of legislation, but supporters also acknowledged after the vote that the legislation will not bring consumers any immediate relief from energy prices.
"This bill does not bring down the price of gasoline at the pump in the near term. This bill does not bring the price of natural gas that ...people will pay on their utility bills or the price of electricity in the near term," said Sen. Jeff Bingaman, D-N.M., ranking member of the Senate Energy and Natural Resources Committee and a chief architect of the legislation.
The 85-to-12 vote in favor of passage underscores extensive collaboration between Republicans and Democrats in crafting this legislation to ensure success. The parties also appear united in their mounting concern that soaring prices for oil and natural gas prices are slowing U.S. economic growth.
"This is the first major bill in a long time that is bipartisan in nature," said Domenici.
Seven Democrats joined with five Republicans to oppose passage of the bill.
Natural gas impact
A goal of the bill is to initiate a gradual easing in prices, especially long-term prices for natural gas, sponsors said. The Senate bill would open more federal lands to drilling and streamline the permitting process for building liquid natural gas import terminals.
"We have two big problems, and we all know about them. One is petroleum from overseas and the other is natural gas, the price of which is putting American out of business," said Domenici.
"We think in this bill we've done something significant to increase the production of natural gas, which might indeed bring the price down," Domenici added - a sentiment echoed by the American Gas Association, a Washington-based industry group.
"The 68 million homes, businesses and industries who have been hit hard by rising natural gas prices would benefit from the energy legislation passed today," the group said in a statement.
Putting together a national energy plan was a priority of President Bush's first term. But the effort failed to clear Congress several times, hamstrung by Republican in-fighting, partisan disputes and sharp regional differences over energy policy.
The overall cost of the tax incentives totals $18 billion, but $4 billion in revenue-raisers added to the package drops the cost to $14 billion. The bill also includes nearly $2 billion in spending. This final $16 billion price tag is more than double the $6.7 billion spending bar set by the administration for the bill.
The House bill is estimated to cost roughly $8 billion, with three-quarters of the money earmarked for fossil fuel projects.
Energy Secretary Samuel Bodman said the administration will "be working very hard and looking at each of the components of this bill, as well as the bill in the House, to see what can be done about reducing the cost of the bill," adding that a price tag of slightly less than $7 billion is still the administration's benchmark.
Domenici defended the cost, saying the expense is necessary to carry out the goals of the legislation. "If you want to have a major energy bill you have to do major things," he said.
Preparing to negotiate
Senate aides are already drawing up a list of lawmakers who will meet with House representatives to iron out differences between the two bills, Domenici said.
"Obviously the House and Senate bills have differences to work out and that is what conference committees are for," said Rep. Joe Barton, R-Texas, the chairman of the House Energy and Commerce Committee.
The House bill was a Republican product that passed 249-to-183, with the help of 41 Democrats.
Domenici said he does not know if it will be possible for negotiators to reach an agreement before Congress recesses on July 29 for the August recess.
Both bills direct the biofuels industry over the next seven years to sharply boost production of ethanol, a fuel additive blended with gasoline to make it burn cleaner and meet clean-air regulations.
The compromise for the House and Senate will be over the size of the mandate -- the Senate bill would require 8 billion gallons of ethanol to be blended into the nation's fuel supplies annually by 2012, while the House bill sets this requirement at 5 billion gallons.
One of the biggest disputes will be over a renewable fuel provisions in the House bill meant to protect large refineries that produce the gasoline additive methyl tertiary-butyl ether, or MTBE, from lawsuits that claim the product is defective because it has contaminated underground water supplies throughout the country.
The Senate has refused to endorse a waiver, which some lawmakers argue would leave local water systems on the hook for billions of dollars in clean-up costs.
"House leadership indicates they are working toward a resolution. I take them at their word," said Domenici. The administration plans to sit back and wait for Congress to propose a solution, unless negotiators reach out for help.
"The president has directed me to involve myself if we believe, if the Senate believes and the House members believe that having an administration member present would be helpful in crafting a solution," said Bodman.
The House version of the bill would also open part of Alaska's Arctic National Wildlife Refuge to oil and gas exploration. Past efforts to open the refuge to exploration prompted senators to block the legislation.
Both the Senate and House versions would repeal the Public Utility Holding Company Act, a move that would ease restrictions on mergers in the utility sector.
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Senate Gives Feds Power to Approve LNG Terminal Sites
By Richard Simon and Miguel Bustillo, Times Staff Writers
http://www.latimes.com/news/nationworld/nation/la-na-energy23jun23,0,3087476.story?coll=la-home-headlines
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