Republican News

May 01 2003

HIGHLIGHTS OF THE ENERGY POLICY ACT OF 2003 AND THE ENERGY TAX INCENTIVES ACT OF 2003

Bipartisan Energy Bill Conserves Energy, Increases Production of Renewable, Traditional, Emerging Energies

Washington, D.C. – S. 14, the Energy Policy Act of 2003, is a bipartisan comprehensive energy bill that contains 11 titles which diversify America’s energy portfolio, ensuring clean, affordable and reliable energy for decades to come. Provisions in these titles create jobs, increase energy conservation, expand production of current energy sources and develop more clean and renewable energies for the future. Highlights of the bill are listed below. S. 597, the Energy Tax Incentives Act of 2003, will be amended into S. 14 during floor action. Highlights of that bill are included after the highlights of S. 14. Highlights of The Energy Policy Act of 2003: Title I: Oil and Gas Permanently authorizes the Strategic Petroleum Reserve: The Strategic Petroleum Reserve is critical to ensuring an uninterrupted supply of domestic oil and should be permanently authorized. Production incentives for marginal wells: Royalty relief to encourage small oil producers to continue producing oil even in poor economic times. Royalty relief for deep water wells: Encourages oil exploration in the more technically-challenging and costly deep waters of the Gulf of Mexico to ensure an affordable and reliable supply of domestic oil. Incentives for ultra-deep natural gas wells: Encourages natural gas development in technically-challenging areas of the Gulf of Mexico that require drilling to depths beyond 15,000 feet to ensure an affordable and abundant supply of natural gas. The creation of an Office of Federal Energy Permit Coordination. Creates a pilot program in five regional Bureau of Land Management Offices aimed at cutting the bureaucratic red tape that currently delays oil and gas development at leased sites for as much as two years. This program, if successful, could ultimately cut the cost and time delays of domestic oil and gas production while maintaining existing environmental protections and public input. Streamlines permitting for critical energy corridors: Allows DOE to expedite creation of western energy corridors on federal land for oil and gas pipelines and electricity transmission. This ensures reliable and affordable delivery of oil, gas and electricity to consumers. Authorization for the Alaska Natural Gas Pipeline: Facilitates the construction of a pipeline to bring 35 trillion cubic feet of natural gas to the lower 48 states, stabilizing the natural gas market and ensuring abundant supplies of clean energy to consumers. Title II: Coal Clean Coal Technology Deployment: $2 billion authorization for deployment of clean coal technology to ensure the cleanest use of America’s most abundant traditional energy. Coal fuels the majority of America’s electricity. Title III: Indian Energy Authorizes Indian Tribes to enter into leases and business agreements for energy development under regulations to be promulgated by the Secretary of the Interior. This title allows American Indian Tribes the freedom to develop their traditional and renewable energy resources just as any other American citizen, group or corporation would be allowed to do. This provision encourages economic prosperity on tribal lands and offers new sources of traditional and renewable energy to American consumers. American Indian lands comprise about 5 percent of U.S. land but hold an estimated 10 percent of all energy reserves in the United States, including unlimited wind energy on the Great Plains, 30 percent of known coal deposits in the West; 5 percent of known American onshore oil deposits and 10 percent of known onshore natural gas deposits. Encourages the development of renewable energies, particularly wind and hydropower. Establishes an Office of Indian Energy Policy and Programs within DOE and authorizes a federal grant and low-interest loan program to aid tribes in developing energy infrastructure. Title IV: Nuclear Energy Permanent Reauthorization of Price-Anderson, the long-standing liability insurance system for all nuclear operations in the country. This system has existed for more than 40 years and never required payment from the federal government. Advanced Fuel Cycle Initiative: Authorizes $100 million to research new strategies for reducing the volume and toxicity of nuclear waste, simpler siting for future repositories and full energy recovery from spent fuel. Deployment of New Plants: The Secretary is empowered to provide loan guarantees and power purchase agreements to assist in financing new nuclear power plants up to 8,400 Megawatts. The Secretary must determine that the plants are necessary for energy diversity, energy security or clean air attainment. New plants are essential if nuclear is to continue to provide its low cost, reliable and clean energy. A nuclear plant has never been built in the current, de-regulated environment and the last order for a plant was in 1978. Development of Advanced Nuclear Plants: An advanced reactor will be built at the Idaho National Engineering and Environmental Laboratory to demonstrate both electricity and hydrogen production. This new reactor will feature improved safety, reduced waste, higher efficiency, and increased proliferation resistance and physical security. This research project is an advanced reactor hydrogen cogeneration project to move America toward a an advanced nuclear energy and hydrogen economy. Strong university and research programs are authorized to train the next generation of nuclear specialists. Title V: Renewable Energy: Provides new incentives for the increased development and use of clean and renewable energy. Mandates a federal renewable energy resources assessment to assist in the long-term planning for the expansion of renewable energy production. Reauthorizes the Renewable Energy Production Incentive Program. Streamlines the relicensing of hydroelectric facilities to ensure continued reliability of clean and reliable energy. Requires federal agencies to purchase 7.5% of their power from renewable energy sources by 2011. Encourages exploration and development of geothermal energy, including a call for a rulemaking on a new royalty structure that encourages new production. Provides grants for turning forest materials from high-risk areas for fire or disease into biomass energy. Title VI: Energy Efficiency: Requires a 20 percent improvement to federal energy efficiency in the next 10 years. Directs agencies to procure energy-efficient products and improve energy efficiency performance for new federal buildings. Authorizes grants for energy efficient projects in low-income urban and rural communities. Authorizes funding for states to establish appliance rebate programs to encouraged improved energy efficiency. Sets several new energy efficiency standards for consumer products, including transformers, traffic signals, compact fluorescent lamps, ceiling fans, vending machines and commercial freezers and refrigerators. Improves the energy efficiency of public housing. Title VII: Transportation: Reforms the EPACT alternative fuel vehicle mandate program to encourage the use of alternative and renewable transportation fuels. Requires federal agencies to increase fuel economy of new federal fleet passenger cars and light trucks by at least three miles per gallon by 2005. Improves efficiency of railroad locomotives and requires study of potential technologies to reduce long haul truck idling. Grants expanded authority to the National Highway Transportation Safety Administration to set fuel economy standards for passenger cars and light trucks, taking into account vehicle and passenger safety as well as the impact on U.S. jobs. VIII: Hydrogen: Authorizes $1.8 billion for the President’s Hydrogen Fuel Cell Initiative to develop clean, renewable hydrogen cars. Reauthorizes and increases funding for existing research programs into stationary and transportation hydrogen applications. Creates an array of demonstration programs to develop hydrogen applications on Indian land, in national parks and international programs. Creates a pilot program to craft the full range of technologies required to put hydrogen vehicles on the road in the foreseeable future, building on the President’s Hydrogen Fuel Cell Initiative. Establishes public education and university education programs in hydrogen research and applications. Amends the Energy Policy Act of 1992 to require agencies to purchase 5 percent of new vehicles as hydrogen-powered vehicles in 2006 and 2007, increasing to 20 percent in subsequent years. Requires the federal government to offset its total electric energy consumption through the use of fuel cells. Title IX: Research and Development: Addresses research & development needs in energy efficiency, distributed energy and electric energy systems, renewable energy, nuclear energy, fossil energy, Science and energy and environment and management. The title recognizes the vital role played by the Office of Science in support of our nation's research infrastructure in the physical sciences. It authorizes increased funding for this office to correct years of stagnant funding. Solid State Lighting research to achieve far higher light bulb efficiencies. High Temperature Superconductivity research to decrease today's losses in power transmission Solar Production of Hydrogen research, including the creation of: a new program to study solar energy production of hydrogen Nanotechnology Research for atomic level storage hydrogen; Genomes to Life research to expand current genome maps and tailor biological systems for specific needs. Outcomes may include bio-production of hydrogen or improved environmental cleanup Water treatment technologies research to develop lower cost, energy efficient approaches to key needs like desalination or removal of arsenic A new Under Secretary position for energy and science. Two new Assistant Secretary positions: one for science and one for nuclear energy. Title X: Personnel and Training: This title contains a number of programs to ensure that we have an adequate energy workforce in the decades to come. Instructs the Secretary of Energy is to survey the workforce in key energy industries and where there is a shortage, provide traineeships and fellowships to help train the next generation of energy workers. Title XI: Electricity: Ensures reliable and affordable electricity, repeals antiquated laws that have cost consumers billions of dollars and prohibit onerous federal meddling that could cost consumers billions of dollars more. It increases penalties for market manipulation and enhance consumer protections. Remands proposed rulemaking on Standard Market Design and prohibits FERC from issuing a final order until July 1, 2005. Provides a Sense of the Congress that membership in Regional Transmission Organizations is voluntary, promoting competitive markets and benefitting consumers. Amends the Federal Power Act to protect access to transmission lines by utilities who have service obligations to consumers and businesses, ensuring a reliable electricity supply to retail customers. Requires FERC to establish by rule within one year transmission pricing policies and policies for the allocation of costs associated with interconnection of new transmission facilities not located within RTOs. This provision encourages the construction of new transmission infrastructure to update America’s outdated and inadequate transmission grid. Repeals PURPA’s mandatory purchase requirement, an onerous federal requirement that has discouraged competition and resulted in high costs to consumers. Repeals the Public Utility Holding Company Act, an outdated federal law that has discouraged modernization of America’s transmission grid. Makes the electricity market more transparent and resistant to manipulation by establishing an electronic system to provide accurate information on the availability and price of wholesale electric power. Amends the Federal Power Act to prohibit the filing of false information and makes round-trip trading, a tactic for artificially raising power prices, a violation of the Act. Increases penalty for violations of the Federal Power Act and the Natural Gas Act, provisions aimed and discouraging future fraud and market manipulation. Directs the FTC to draft consumer protection rules regarding the disclosure of consumer information. Highlights of the Energy Tax Incentives Act of 2003: Title I: Renewable Energy Extends placed-in-service date for wind, closed-loop biomass, and poultry waste facilities and adds open-loop biomass, geothermal energy, solar energy, small irrigation power, municipal bio-solids, and recycled sludge as qualifying energy resources. The credit is 1.8 cents per kilowatt hour with no inflation adjustment for facilities placed in service after the date of enactment. The title also will allow for tradeable tax credits for tax-exempt entities. Title II: Alternative Vehicles and Fuel Incentives Provides a credit for the purchase of new qualified fuel cell, hybrid, or other alternative fuel motor vehicle. The buyer claims the credit, except in the case of a tax-exempt entity, in which case the seller may claim the credit. Makes several modifications to the rules regarding the small producer ethanol credit and provides a new credit for qualified biodiesel fuel mixtures. Title III: Conservation and Energy Efficiency Provisions Provides a new credit to an eligible contractor for energy-efficient property installed in a qualified new energy-efficient home during construction, and a new credit for the purchase of qualified energy efficiency improvements for existing homes. Provides new deduction for energy-efficient commercial building property expenditures. Provides a new credit for the production of energy-efficient clothes washers and refrigerators. Provides a new personal tax credit for the purchase of qualified wind energy, photovoltaic, and solar water heating property that is used exclusively for purposes other than heating swimming pools and hot tubs. Provides a credit for certain high efficiency electric heat pump hot water heaters, electric heat pumps, natural gas furnaces, central air conditioners, natural gas water heaters, and geothermal heat pumps. Provides a new 30 percent business energy credit for purchase of qualified fuel cell power plants for businesses. Provides accelerated depreciation for qualified energy management devices and water submetering devices. Provides new credit for the purchase of combined heat and power projects. Title IV: Clean Coal Incentives Creates three new credits for clean coal properties. There is a production credit for electricity produced from qualifying clean coal technology units, electricity produced from qualifying advanced clean coal technology units, and investments in qualifying advanced clean coal technology units. Title V: Oil and Gas Provisions Provides incentives for development of the Alaska natural gas pipeline. Provides a new credit for the production of crude oil and natural gas from marginal wells. The credit is not available if the market prices for oil and gas exceed certain levels. Provides accelerated depreciation for natural gas gathering lines. Allows small refiners to claim an immediate deduction for up to 75% of the qualified capital costs for purpose of complying with the Highway Diesel Fuel Sulfur Control Requirements. Also provides a credit of five cents per gallon for each gallon of low sulfur diesel fuel produced by a small business refiner. Increases the barrel-per-day limitation for special tax rules governing independent producers. Allows geological and geophysical costs to be amortized over four years and delay rental payments to be amortized over two years. Title VI: Provisions Relating to Electric Industry Restructuring Modifies special rules for nuclear decommissioning costs. Clarifies rules regarding the “85-15 Rule” with respect to rural electric cooperatives. Permits a taxpayer to elect to recognize gain from a qualifying electric transmission transaction over an eight-year period. Title VII: Additional Provisions Extends accelerated depreciation and wage credit benefits on Indian reservations. Expands R&D credit for energy-related research by universities and for payments to research consortia for energy research. ###