House and Senate
conferees have reconciled their differences and approved the
long-awaited energy bill, the Energy Policy Act of 2003 (H.R.
Though the bill
has some good provisions it fails to adequately enhance domestic
energy supplies, a major missed opportunity to ensure reliable and
affordable energy for American families and businesses.
The good news: the
bill includes provisions that strengthen the nation's electricity
system and, at the margins, narrows the gap between supply and
demand. The bad news: it is also loaded with costly and unnecessary
new program authorizations, costly pork-barrel projects, and over
$23 billion in special interest tax subsidies.
policy flaws, Congress will likely pass this bill and get President
What is Good About
significance are energy-suppressing measures not contained
in the bill which would pick energy winners and losers, add costs
to consumers and increase regulation.
renewable portfolio standards;
- Climate change
increase in corporate average fuel economy (CAFE) standards;
regional transmission organizations (RTOs).
does contain provisions which will strengthen our energy
- Grants FERC
limited "backstop" authority to issue permits for interstate
electricity lines in bottleneck areas; and
- Repeals the
Public Utility Holding Company Act, an antiquated law that
prohibited power companies from investing in unrelated businesses;
- Delays a Federal
Energy Regulatory Commission (FERC) plan to create a "standard
market design" for the sale of electricity on the wholesale
- Allows Indian
tribes, acting as sovereign nations, to set up their own regulatory
systems for energy projects.
Bad About the Bill
have advanced policies to enhance the nation's energy security in
the long-term, but instead took the easy way out and give generous
tax breaks to special interest groups for only marginal increases
in supply for the short-run.
would have prompted:
- Opening access to
or taking an inventory of energy-rich areas currently "off-limits"
for exploration of oil and gas resources off-shore and in the Outer
- Authorizing use
of a mere 2,000 acres in the Artic National Wildlife Refuge (ANWR)
for exploration -- an area whose mean estimate of economically
recoverable oil is 10.3 billion barrels. More then twice the proven
reserves in all of Texas.
The tax breaks --
so-called "incentives" -- total over $23 billion and include:
- Over $11 billion
in giveaways for the oil and gas industry;
- About $3 billion
in tax credits for the use of renewable fuels to produce
- $2.5 billion for
investment and production credits for clean coal technology;
- Over $2 billion
for alternative motor vehicles incentives; and
- Almost $2 billion
in tax breaks for the electric power industry and other
creates an artificial market for ethanol with a mandate that more
than doubles the use of renewable fuels in gasoline, primarily
corn-based ethanol, to 5 billion gallons a year by 2012 increasing
costs to families and businesses. Congress should not be choosing
the nation's fuel winners and losers, and instead let the free
market and consumers make those determinations.
Congress is also
generous with taxpayers' money for pork-barrel projects in the name
of energy. For example, members provide $350 million in tax-exempt
bonds for four so-called "green" development projects, in:
- New York.
Likewise, the bill
provides $18 billion in loan guarantees for construction of a
3,500-mile pipeline pumping natural gas from Alaska's North Slope
to Chicago, Illinois. While providing additional supplies of
natural gas to the lower 48-states is needed, funding for this
project should stand on its own and be borne by the companies
interested in building the structure-not guaranteed with taxpayers
giveaway hidden in the bill involves an $800 million loan guarantee
to build a coal gasification power plant in Minnesota which
benefits one single company. Taxpayer money should be used only for
programs that benefit the general public interest-not to advance
the bottom-line of one specific
Not only is the
bill loaded with multi-billion tax breaks, it also includes
hundreds of millions of dollars in new authorizations for federal
spending including $2.1 billion from fiscal year 2004 through 2008
for hydrogen fuel cell research, $300 million in research and
development for photovoltaic and renewable resources, and $50
million for each fiscal year from 2004-2014 for a grant program to
improve biomass use. While these may represent laudable projects,
the private sector-not taxpayers-should bear these costs.
conference report includes some needed energy enhancing provisions.
Nevertheless, the report fails to provide long-term solutions to
the nation's growing demand for energy. Given the plethora of
policy shortcomings in this bill and its failure to sufficiently
enhance domestic energy supplies, Congress has regrettably missed
an opportunity to truly ensure reliable, affordable, and abundant
supplies of energy for families and businesses now and into the