Energy Policy Act of 2005--Conference Report

ENERGY POLICY ACT OF 2005--CONFERENCE REPORT

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Ms. CANTWELL. Mr. President, I thank my colleagues for their hard work on this important legislation. We are here to talk about passing an Energy bill that is not a complete answer to all our energy needs. This is not the end of discussion about energy independence and getting off our overdependence on foreign oil, but it is an important first step. My colleagues need to understand that the provisions in this bill are nuts-and-bolts important for our energy economy, moving forward. As a Senator who supports this legislation, there are certain technologies, certain investments in this legislation that I hope will win the day and will help us build a different kind of energy economy, based on newer technologies and energy supplies than the ones we have today. But this bill represents a compromise that was forged in the Senate and was fought hard for by my colleagues, both Democrats and Republicans, when they went to conference.

I am proud that it has an extension of renewable production tax credits so that our utilities can continue to invest in even more renewable energy; that for the first time it has a renewable clean energy bond section, so that local governments and public power can make greater investments in renewable energy; that it has an extension of the renewable energy production incentive program for public power; that there are efficiency provisions in the bill for appliances and other types of standards that will save 3.5 quads of energy.

That is the same as building 85 powerplants. It has a hybrid vehicle incentive provision. It has a biodiesel incentive program. It reinstates the oil spill liability trust fund, which was going broke and which helps us clean up oil pollution, and taxes those who are the polluters. It has research on the smart grid technology that is going to get us more efficiency in our transmission system, and it has incremental steps to push the States toward better standards on net metering. For the Northwest, the electricity title in this legislation is clearly a victory, and I would say the efficiency title in this bill is also a victory.

We are moving closer to the key tools we need to upgrade our transmission system. We will have many more debates about what this body can do, though, to continue to diversify off of foreign oil. But we should take the step today to secure that transmission system and get reliability standards in place, something this body has debated now for more than 5 years. After a Western blackout, after a New York blackout, after people in Ohio and Michigan have been affected, the least we can do is push this legislation to improve the security and reliability of our electricity grid.

I ask my colleagues to support this legislation as a first step, a short stroke of success, and get about going back to the broader decisions we need to make truly start moving in the direction toward energy independence.

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Ms. CANTWELL. Mr. President, I rise today to discuss the conference report on H.R. 6, the Comprehensive Energy Policy Act of 2005. I stand before my colleagues today with very mixed feelings about this legislation. This conference report has many meaningful achievements and measures that can help provide this Nation, our researchers, and innovators, with the basic tools to start moving America forward toward a new energy strategy for the 21st century. Yet it is far from perfect. It sidesteps many of the most fundamental energy security challenges we face--challenges like our dependence on foreign oil and global climate change, which grow more intractable the longer we wait to address them. It contains provisions that I simply do not support. It is certainly not the Energy bill that this Senator would write if I alone held the drafting pen--the kind of legislation that would put this Nation on a far more ambitious path toward greater energy security in the global economy. I know many of my colleagues feel exactly the same way.

And yet I believe all Senators must clearly acknowledge that this legislation is in many ways superior to the Energy bill conference report we considered during the 108th Congress. And that is true in some very meaningful ways for my region, the Pacific Northwest.

When the Senate, last month, approved its version of this legislation, I noted that I appreciated the skill and thoughtfulness with which the chairman and ranking member of the Energy Committee, Senators DOMENICI and BINGAMAN, had navigated a path forward for this bill. I suggested at the time that they would need every bit of that skill in coming to resolution with the House of Representatives, on a piece of legislation worthy of this Senate's support. Frankly, I doubted very much that it could be done.

But I stand here today ready to vote for this conference report--with reservations, of course--but in recognition of the fact that this legislation is probably better than many of us had reason to expect; and as good as the current political will of Congress would allow. For that, I give enormous credit to the chairman and ranking member. As a member of the Senate Energy Committee, I want to say that I have appreciated the bipartisan nature in which they have handled this bill from the outset. At every turn, they have treated this Senator--and her constituents' interests--with complete fairness. The process by which this legislation was assembled should serve as a model for this body.

I want to talk briefly about what I view as some of the most important achievements of this legislation--particularly for my region and the great State of Washington. These are some of the basic tools that can help serve as building blocks to a more ambitious energy strategy for America.

First and foremost, it is important to understand that the Pacific Northwest is a region completely unique when it comes to our energy system. More than 70 percent of the electricity production in Washington State is derived from hydroelectric sources--designed around our great river, the mighty Columbia. This was a system built as part of President Franklin Delano Roosevelt's efforts to electrify the West. As a result, we are a region with a rich and diverse energy history, an uncommon collection of public and private institutions, a large Federal presence that starts with the Bonneville Power Administration, BPA, and a diverse array of stakeholders rightly concerned about the river's multiple uses. I know all of my colleagues from the Northwest who sit on the Energy Committee--there are five of us, in fact--appreciate this tremendous heritage, our region's history of cost-based power, and the valuable asset that we inherited from our predecessors, great leaders like Senators Jackson, Hatfield, and Magnuson.

That is why we worked hard, in a bipartisan manner at every turn, to safeguard the Northwest's system of cost-based power--the engine of our regional economy. That is why the electricity title of this legislation is so important to my region, and to the ratepayers of Washington State.

I am proud this legislation specifically protects the Northwest's transmission system, by prohibiting the Federal Energy Regulatory Commission, FERC, from converting the Bonneville Power Administration's existing system of cost-based, firm transmission contracts to a market-based auction of financial transmission rights.

Now, this auction of financial transmission rights was a central tenet of FERC's controversial and ill-fated standard market design, SMD, proposal. All of us from the Northwest were united in our opposition to SMD because we recognized right away that it was a scheme with the potential to result in tremendous amounts of cost-shifting onto our ratepayers, and to substantially undermine our cost-based system. The provision that protects the Northwest's existing system is thus an important achievement because it slams the door on any sort of future FERC-imposed proposal like standard market design. I would also note that the Senate-passed Energy bill would have slammed the door on SMD once and for all. This became unnecessary, however, when FERC's new chairman officially terminated the commission's SMD proceeding earlier this month. I think that was a very wise choice and think it speaks quite well of the commission's new leadership.

Also important to my region are provisions that this bill does not contain. Specifically, this conference report omits the administration's legislative proposals--unveiled earlier this year--to hamstring BPA's ability to invest in regional infrastructure and upend Bonneville's system of cost-based power sales. The Northwest Power and Conservation Council has estimated the administration's proposal would raise regional power rates by $1.7 billion. That would translate to a $480-a-year rate hike for families in some of Washington's most rural communities. Again thanks to the bipartisan efforts of Northwest Senators, those legislative proposals were dead on arrival.

When it comes to protecting Washington State consumers, I must also mention a number of other provisions. At long last, the bill establishes mandatory, enforceable reliability rules for operation of the Nation's transmission grid. This effort also began in the Pacific Northwest--after an August 1996 blackout resulting from two overloaded transmission lines near Portland, OR which caused a sweeping outage that knocked out power for up to 16 hours in 10 States, including Washington. As a result, both a DOE task force and the industry itself in 1997 recommended mandatory reliability rules for operating the transmission grid. The Senate first passed this legislation just over 5 years ago, in an effort begun by my predecessor, Senator Slade Gorton. It is legislation that I have championed since I have arrived in the Senate, an effort that gained more urgency with the Northeast blackouts of two summers ago; and I will be very pleased to see this measure through to the end.

This bill also takes steps to respond to the disastrous western energy crisis, which extracted billions of dollars and hundreds of thousands of jobs from our regional economy. As I have recounted many times on this floor, the illegal and unethical practices of Enron and others sent Washington power rates through the roof. This Energy bill puts in place the first ever broad prohibition on manipulation of electricity and natural gas markets. These provisions are modeled on a measure that I have authored that has now passed the Senate twice, and I am pleased that they are included in this conference report--particularly given the far inferior provisions contained in the House legislation, which would have in many ways gone in the entirely opposite direction.

In light of the now-infamous audiotapes of Enron traders and others conspiring to gouge consumers, the legislation also gives Federal regulators new authority to ban unscrupulous energy traders and executives from employment in the utility industry. In addition, it substantially increases fines for energy companies that break the rules. And importantly for my constituents, this legislation prohibits a Federal bankruptcy court from enforcing fraudulent Enron power contracts, including $122 million the now-bankrupt energy giant is attempting to collect from Snohomish PUD. That would translate to more than $400 from the pockets of every family in Snohomish County, WA, who have already seen their utility bills rise precipitously as a result of the western energy debacle.

For all these provisions, I am tremendously grateful to the chairman and ranking member. I know they faced a steep uphill battle with the House in retaining these measures, and I applaud and thank them for their efforts in ensuring that the Senate positions prevailed.

I should also mention the renewable fuels provisions of this bill, which I believe will help put Washington State farmers and entrepreneurs in the biofuels business. Today, production of biofuels is dominated by the midwestern region of the country, as traditional policies have supported corn- and soy-based fuel production and helped that technology gain maturity. However, the key to lowering costs and establishing a truly national strategy is to make an investment in new technologies that will diversify biofuels production in the United States.

Researchers at Washington State University estimate that our State has the capacity to produce 200 million gallons of ethanol from wheat straw, and up to 1.2 billion gallons with technology improvements. Meanwhile, biodiesel is another emerging opportunity for Washington State farmers, using canola or yellow mustard. These crops are particularly well-suited to Washington State, providing high yields without irrigation.

Around Spokane, it is estimated that 500,000 acres a year could be put into oil seed production, enough oil to produce 25 million gallons of biodiesel. Statewide, at least 2 million acres could be put into oilseed production for biodiesel.

There are a number of very important provisions in this bill that will help my State capitalize on the promise of biofuels, including an Advanced Biofuel Technology Program I authored, to help demonstrate these new technologies; important market-based incentives for refiners to diversify the types of biofuels they use; and financial support in many forms for cellulosic ethanol and biodiesel production.

These are very important achievements that will help transform biofuels from a boutique regional industry to something that can become part of a truly national strategy to help supplant our Nation's petroleum imports--lowering costs and helping provide greater economic security to our farmers at the same time.

But in addition to renewable fuels, we should acknowledge the provisions of this legislation promoting renewable electricity generation. Obviously, this legislation does not go as far as I would like. I vigorously support a renewable portfolio standard--even a more aggressive standard than what passed the Senate. It is unfortunate, indeed, that the House would not accept this provision, and those of us who strongly advocate it will continue to attempt to move the RPS forward.

But this legislation does extend through the end of 2007 the existing production tax credit for renewable energy, such as wind resources. It is estimated that this credit can help save Washington State ratepayers $260 million over the next 10 years. As Northwest utilities add wind resources to help bolster regional power supplies, these investments are also helping fill the coffers of local communities. For example, a new wind project near Ellensburg, WA, has generated an additional $2 million in revenue for Kittitas County. Similarly, wind energy is helping provide another source of income for Northwest farmers. Growers in Columbia County, WA, home to the new 150 Megawatt Hopkins Ridge wind project, receive about $5,000 per turbine located on their land. One farmer estimates the revenue generated by the project will equal the income generated by 250 acres of harvest.

For the first time, the Energy bill creates clean renewable energy bonds, to support investment in renewable energy resources by governmental entities, including tribes, agencies such as BPA and other public power entities. I am also pleased that for 20 years the Renewable Energy Production Incentive, REPI, Program, which provides a direct payment to public power entities, which do not qualify for tax credits, for renewable electricity production. Eligible resources are expanded to include ocean energy. The REPI Program has already been used by multiple Washington State public utilities to make renewable energy investments.

Washington State is also home to the Pacific Northwest National Lab, and for that reason, the research and development title of this legislation bears mentioning. The Energy bill conference report authorizes hundreds of millions of dollars of investment in research ongoing at the Pacific Northwest National Lab and Washington State universities, including systems biology research, distributed and smart energy technology research and development; bio- and nanotechnology related to the production of bioproducts; and advanced scientific computing.

The Energy bill's ``personnel and training'' title is also worth noting, since it will help provide a skilled energy workforce for the 21st century, as the energy industry braces for a critical shortage. Washington State is poised to help train the next generation of engineers and innovators in this area. The legislation requires the Secretaries of Energy and Labor to monitor workforce trends in the area of electric power and transmission engineers and identify critical national shortages of personnel. It also authorizes the Secretaries to establish a grants program of up to $20 million a year to enhance training--including distance-learning, such as the program now being pioneered at Gonzaga University--in electric power and transmission engineering fields. While fewer than 15 universities nationwide offer world-class, Ph.D.-level programs in power engineering, both Washington State University and the University of Washington offer strong programs in this area. In addition, Gonzaga University this year established a specialized masters of science degree and certification program in transmission and distribution engineering.

This conference report also streamlines technology transfer rules for national labs such as PNNL, and extends the 20 percent R&D tax credit to energy research done by nonprofit consortiums involving small businesses, National Labs, and universities to promote interaction and collaboration between public and private researchers. The research and development and workforce provisions of this bill hold some of the most promise in putting in place the building blocks for a real, innovative energy strategy for the 21st century.

Years in the making, the Energy bill also includes bipartisan reform of the hydroelectric relicensing process. The hydro provisions included in this legislation are designed to improve the accountability and quality of Federal agencies' decisions. At the same time, the compromise restores the rights of the public to participate in the process on equal footing with license applicants--provisions that have been missing in previous versions of the bill. Over the next 15 years, 70 percent of Washington State's non-Federal hydro must go through the hydro relicensing process.

Another provision of importance to my State is this legislation's reinstatement of the oil spill liability trust fund, OSLTF. Earlier this year, a Coast Guard report found that the OSLTF--which has been used to clean up spills in the Puget Sound--would run out of money by 2009. The OSLTF was established in the 1990 Oil Pollution Control Act, and has been funded through a per-barrel fee on oil companies until it reached its statutory cap of $1 billion. The fund was designed to be maintained from interest on that original $1 billion, but increasing cleanup costs and low liability caps have eroded the principal amount. The Energy bill would reinstate the fee in April 2006 or thereafter, once the Secretary finds that the balance in the account falls below $2 billion. The bill authorizes application of the fee through 2014.

Lastly, I want to mention this legislation's provisions to provide energy assistance to some of our Nation's neediest families. The Energy bill would boost authorization for the Low-Income Home Energy Assistance Program, LIHEAP, from its traditional level of $2 billion to $5.1 billion, for 2005-2007. LIHEAP funding is critical for some of Washington State's most vulnerable citizens. As a result of the western energy crisis, electricity rates have gone up more than 20 percent statewide while 72 percent of low-income families in Washington use electricity to heat their homes. And already, the 105,000 Washingtonians with incomes below 50 percent of the Federal poverty level spend 34 percent of their entire annual pay on home energy bills. In recent years, less than 30 percent of Washington's eligible families have been able to receive energy assistance--as demand has for LIHEAP dollars has far outpaced their availability. More than doubling available LIHEAP funding would provide a much-needed boost to local organizations in Washington struggling to meet the needs of their communities.

As my colleagues can see, this legislation is tremendously complex. I have listed many of the provisions important to my constituents. Of course, there are a number of other measures with which I simply disagree. Perhaps that is to be expected of a 1,700-page piece of legislation that touches every sector of the American economy. For example, the inventory of Outer Continental Shelf oil and gas resources is wrong-headed, and I oppose it. I would note, however, that in order for the inventory to move forward, it must be funded. I know this Senator believes any such inventory would constitute a tremendous waste of taxpayer funds, and the fight is far from over on this issue.

Similarly, I oppose the liquefied natural gas provisions of this bill because I believe States and local communities need a bigger role in these decisions. Some of the nuclear provisions of this bill are particularly offensive, in that they create an inherent conflict of interest at the Nuclear Regulatory Commission, which should not be subject to the cross pressures of protecting public safety and the public interest, at the same time the commission is under fiscal pressure to unwisely accelerate its proceedings under the guise of some new form of ``risk insurance.''

I oppose the Clean Water Act and Safe Drinking Water Act rollbacks in this bill. The National Energy Policy Act provisions are similarly unnecessary. But I recognize that they are far less sweeping than those originally proposed by the House. If this Senator had her way, we would not be repealing the Public Utility Holding Company Act. Yet I am at least comforted by the fact this legislation hews closely to the compromise on utility mergers reached by the Senate.

Moreover, the tax package does not resemble the tax package I would have written. On this point, I agree with the President: The oil and gas industry does not need these incentives, given where prices are at today.

I am not the first Senator to say it, and I won't be the last. This bill is not as I would have written it. It has the flaws that I have listed. It is also incomplete. It is a status quo bill when it comes to one of the most difficult challenges to our economic and national security faced by this generation: America's dangerous dependence on foreign oil. This bill does not address this festering problem. It will not provide relief to consumers at the gas pump. Any suggestion to the contrary would be simply false.

It is clear to this Senator that if this body is truly serious about putting in place a framework that will allow the United States to compete in the global marketplace; a framework that will allow America to control its own destiny in the coming decades as it relates to our energy security, our work is not done. Tomorrow isn't soon enough to go back to the drawing board and get serious about our dependence on foreign oil. And this Senator will keep fighting to do just that. Our work on energy security has hardly begun--it is far from finished if we want to live up to our responsibilities to future generations of Americans. We must not leave to them a Nation crippled by its addiction to foreign sources of oil--an over-dependence that jeopardizes our economic future and national security.

On the contrary, it is our responsibility to face up to a simple fact: The accidents of geology make it impossible for this Nation to drill its way to energy independence, since we are situated on just 3 percent of the world's proven oil reserves. We must recognize that fact and read the economic indicators. We must consider emerging competitors such as China and India, and recognize the seismic shifts that are likely to occur in the dynamics of world energy markets.

I firmly believe that future generations of Americans will measure us on how we choose to address the challenges of energy security and climate change. They are that vital to this Nation's security and our economic future.

But this Senator also recognizes that the leadership of this Congress is not yet prepared to take that step; that my colleagues and I who believe so fundamentally in the importance of enhancing our oil security have more work to do to change the hearts and minds of our colleagues. The American people must also demand better leadership from their elected officials when it comes to energy security. And this Senator stands ready to work across the aisle to do what is necessary to make meaningful progress on these issues.

This bill is not perfect. We have much more work to do to bolster our energy security, and this Senator is ready to roll up her sleeves and do it. But on the whole, this bill provides some basic building blocks toward a better energy future. For that reason, I will support the Energy bill conference report and urge my colleagues to do the same.

http://thomas.loc.gov/