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May 30, 1999
Contents
FEDERAL ENERGY BUDGET AND TAXES
1.) Senate E&W Subcommittee Slashes Renewables Budget
2.) House Science Cuts Efficiency, Renewables Funding Levels
3.) Republicans Lack Strategy for Impending Budget Showdown
4.) White House Report Calls for Increased Energy R&D Spending
5.) Failure to Renew Wind Tax Credit Causing Job Loss
6.) Congress Extends Oil Tax Subsidy
ELECTRIC UTILITY RESTRUCTURING
1.) Reps. Largent and Markey Introduce Restructuring Bill
2.) FTC Warns of Restructuring's Negative Impacts on Consumers
3.) Study Evaluates Potential of the Green Power Market
4.) DOE Study Projects Consumer Savings From Restructuring
5.) Colorado Study Projects Increased Costs From Restructuring
6.) Restructuring Reduces Demand for Lighting Efficiency Products
CLIMATE CHANGE
1.) White House Reorganizes Its Climate Change Team
2.) Congressional Testimony Notes Benefits of Energy Efficiency
3.) Ford's Shift on Climate Change May Affect CAFE Legislation
MISCELLANEOUS
1.) House Renewable Energy Caucus Grows to 151 Members
2.) Government Procurement Offers Options for Sustainable Energy
3.) U.S. Wind Energy Growth Projected to Reach All-Time High
4.) Ford to Offer Incentives to Purchase Ethanol
5.) Shell Plans Major Investments in Renewable Energy
FEDERAL ENERGY BUDGET & TAXES
1.) Senate E&W Subcommittee Slashes Renewables Budget:
On May 25, the Senate Energy & Water Appropriations Subcommittee voted to approve a Fiscal Year 2000 budget cut of 22% below the Administration's request for the U.S. Department of Energy's (DOE) renewable energy programs and 10% below the actual FY'99 appropriation. The first column is the level approved by the E&W Subcommittee; the second column is the change from the FY'99 appropriation; the third column is the difference from the Administration's FY'00 request. The full Senate may vote on the budget as soon as June 8.
[in millions of dollars] Program FY00 % Diff FY99* % Diff Request Solar Buildings 2 -44% -64% Photovoltaics 64 -11% -31% Con. Solar 15 -12% -20% Biomass Power 29.95 -5% -23% Biofuels 38 -9% -29% Wind 34 -2% -25% REPI 1.5 -63% 0 Solar Prgm Sup 2 n/a -80% Internatl Solar 3 -53% -50% NREL 1.1 -72% 0 Geothermal 24 -16% -19% Hydrogen 27 +21% -4% Hydropower 5 +54% -29% Renew Indian 4 -16% n/a Elec.Transmis. 3.5 +16% -12.5% Superconduc. 30 -8% -3% En.Storage 0 -100% -100% Fed Bldg/Remote 0 -100% n/a Program Dir 17.75 -2% -7% TOTALS 301.8 -10% -22%
In addition, $47.1 million is allocated for the Office of Science ($2.847M for PV, $26.74M for biomass/fuels, $.283M for wind, $14.26M for solar photoconversion, $2.97M for hydrogen). Uncosted balances adding up to a total of $5.142 million were taken from a variety of renewables programs.
The subcommittee also eliminated funding for the Nuclear Energy Plant Optimization program for which the White House had requested $5 million. However, the subcommittee approved a FY'00 budget of $30 million for the Nuclear Energy Research Initiative -- an increase of $5 million over the White House request.
2.) House Science Cuts Efficiency, Renewables Funding Levels:
On May 25, the House Science Committee approved FY'00 budget authorization levels for DOE's energy efficiency and renewable energy programs that are at least $180 million below the Administration's request. The Udall amendment to increase funding levels for energy efficiency and renewable energy in FY'00 and FY'01 was defeated May 25 in the House Science Committee markup of the DOE authorization bills along a near party-line vote of 17-20 with only one Republican (Rep. Roscoe Bartlett) supporting it. The Committee also rejected the proposed Woolsey amendment to increase the geothermal authorization on a vote of 16-19. The Republicans apparently justified the votes by noting a desire to stay within the budget caps.
Nonetheless, the Committee approved FY'00 authorizations above the Administration's request for both DOE's fossil fuels and nuclear programs -- $37.5 million and $5 million higher respectively. Subsequently, during the afternoon session, the Committee adopted by voice vote a Cook-Woolsey amendment to increase the geothermal authorization to $33.5 million in FY'00 and to $35.0 million in FY'01. The amendment had an offset (from the travel accounts) which the earlier Udall and Woolsey amendments did not have. The Committee chairman, Rep. James Sensenbrenner (R-WI), wants to take the DOE authorization bills to the full House floor for a vote -- perhaps in early June.
3.) Republicans Lack Strategy for Impending Budget Showdown:
The Associated Press (May 24) reports that congressional Republicans have yet to devise a strategy for avoiding a year-end spending fight with Clinton even though previous budget battles hurt the GOP. One options GOP leaders have discussed is seeking early negotiations with the White House that could cover cutting taxes and overhauling Social Security and Medicare but the prospects for such talks seem remote. The Senate Appropriations Committee is looking at raising extra money by increasing federal fees and selling portions of the broadcast spectrum. Some House Republicans say if certain spending bills bog down, Congress could allocate money at the same levels at FY'99, making it hard for Clinton to veto the measures.
4.) White House Report Calls for Increased Energy R&D Spending:
A new report titled "The Federal Role in International Cooperation on Energy Innovation" by the President's Committee of Advisors on Science and Technology was released May 24 by the White House. The report calls for doubling U.S. government expenditures on international energy R&D as well as deployment activities immediately with further increases after that. Most of the increases are for efficiency and renewables and related activities. Printed copies of the report should be available in a week or two.
5.) Failure to Renew Wind Tax Credit Causing Job Loss:
The "Tehachapi News" (May 26) reports that 80 workers at Zond will be laid off effective July 20 due to the expiration of the wind energy production tax credit at the end of June 1999.
6.) Congress Extends Oil Tax Subsidy:
NRDC's "Legislative Watch" (May 20) reports that the 1999 Emergency Supplemental Appropriations bill (H.R.1141) just approved by the House of Representatives includes a rider barring the Interior Department from requiring that oil companies pay "fair market value" for oil drilled on federal land. The rider delays the long-awaited oil valuation rule from going into effect, thus allowing oil and gas industries to dodge millions of dollars in oil royalties fairly owed to American taxpayers. The rule, which has been subject to more than two years of comments and discussion, was scheduled to take effect last summer.
ELECTRIC UTILITY RESTRUCTURING
1.) Reps. Largent and Markey Introduce Restructuring Bill:
On May 25, Reps. Ed Markey (D-MA) and Steve Largent (R-OK) introduced the "Electric Consumers' Power to Choose Act of 1999." The measure includes a flexible mandate that allows states to "opt out" of retail competition. Also included are provisions giving the FTC authority to mandate uniform consumer disclosure requirements regarding prices, generation sources and generation emissions as well as net metering and interconnection provisions and new tax credits for renewable energy efficiency. However, the bill has no federal public benefits fund provision although it makes clear that states are allowed to impose non-bypassable fees to fund such programs. Moreover, it contains only a "back-up" 3% Renewable Portfolio Standard that is triggered if EIA determines in 2005 that non-hydro renewables constitute less than 3% of generation. Public Citizen has issued a 2-page news release strongly criticizing the Markey- Largent restructuring bill as being "anti-consumer" because it would allow utilities to continue collecting over $200 billion in "stranded costs" from ratepayers. It would also encourage each state to deregulate the sale of electricity even though consumers in many states already enjoy low electricity prices. And other than its weak provision for renewable energy, it is mostly silent on protecting the environment. (Let us know if you would like us to fax you a copy of the release.) In addition, an article in "CongressDaily" (May 27) notes that DOE Secretary Richardson is saying that while the bill includes 75% of the Clinton administration's deregulation proposal, it will have 100% White House support. Moreover, Richardson said that President Clinton would sign the bill if it were on his desk today. He added that "we can live with" the 25% of the bill that differs from the White House proposal. In a letter sent to Richardson, the Sustainable Energy Coalition is objecting to the Administration's support of the bill.
2.) FTC Warns of Restructuring's Negative Impacts on Consumers:
Reuters (May 27) reports that Federal Trade Commission officials have warned Congress that consumers in deregulated electricity markets should brace for a barrage of illegal billing and shady advertising -- including claims of environmental friendliness -- similar to practices already seen in phone markets. The FTC noted that advertising spending by the power industry grew 65% in 1997 and by another 12% last year. The types of environmental claims already seen in various states include claims about the level of emissions of a product, like "20% lower than average" or "doesn't pollute the air or water;" the sources it is produced from are "nuclear-free" or "all solar;" overall effect on the environment, like "helps prevent global warming;" and, the activities of the company selling the power, like "10% of profits go to rainforest preservation." Let us know if you would like us to fax you a copy of the 3-page article.
3.) Study Evaluates Potential of the Green Power Market:
"Wind Energy Weekly" (May 19) reports that a new study "Green Power Marketing in Retail Competition: An Early Assessment" has been released by the Lawrence Berkeley National Laboratory and the National Renewable Energy Laboratory. It notes that in the first states to open their utilities to competition interest in green products has been strong but relatively few customers actually switched to green suppliers. Future growth in the green market will rely heavily on disclosure of information to consumers on the resource mix and environmental impacts associated with different electricity suppliers. However, it may take 10 years or more for green power to make significant inroads into the market, if ever. In fact, even the green marketers expect to garner only 0.5%-2% of the residential market within one year after retail competition is allowed, and 4%-10% after five years. Further details can be requested from Ryan Wiser (LBL) at 510-486-5474; rwiser@socrates.berkeley.edu.
4.) DOE Study Projects Consumer Savings From Restructuring:
Reuters (May 25) reports that a new DOE report concludes that Montana and Washington state are the only states that would see electricity rates rise under the Clinton administration's national utility restructuring proposal. The report said electricity prices in the year 2010 would be 16% lower with competition. It reinforced DOE's earlier statement that the Administration's proposal would save a typical family of four a total of $232/year, or $20 billion annually. It also flies in the face of a draft report by the Department of Agriculture -- leaked to the news media earlier this year but never officially released -- that deregulating electricity markets would actually raise rates in 19 states. The study also said DOE's 7.5% Renewable Portfolio Standard would reduce greenhouse gas emissions by 40 million to 60 million metric tons of carbon equivalent by 2010.
5.) Colorado Study Projects Increased Costs From Restructuring:
The "Denver Post" (May 21) reports that a study prepared by Stone & Webster Management Consultants for a 30-member government panel weighing deregulation of Colorado's power market predicts that Coloradans would pay 10-30% more by 2017 than if the state's power monopoly were left intact. The study also said the construction of pricier--but cleaner and more efficient-- power plants would be reflected in higher electricity rates in a deregulated market. Colorado currently depends on older, less efficient coal-fired plants that have been largely paid for. Let us know if you want us to fax you a copy of the 2-page article.
6.) Restructuring Reduces Demand for Lighting Efficiency Products:
"California Energy Markets" (May 17) reports that vendors attending this year's LightFair International Conference in San Francisco "are still smarting over electric restructuring and the subsequent snatching away of energy efficiency rebates once paid by utilities." Conference attendees noted that the advent of electric restructuring has significantly shrunk utilities' emphasis on DSM initiatives and shriveled energy efficiency product development. "Deregulation hasn't turned out the way everyone thought it would," according to one participant.
CLIMATE CHANGE
1.) White House Reorganizes Its Climate Change Team:
Roger Ballentine will be replacing Todd Stern as the Special Assistant to the President coordinating the Administration's climate change agenda. Stern will be moving to the U.S. Department of Treasury as a senior aide to Larry Summers. Ballentine was formerly the Special Assistant to the President for Legislative Affairs and worked with many members of the environmental community on the budget end-game last year, when the administration scored significant victories in the omnibus appropriations bill. In addition, he has been actively involved in the internal policy and political discussions on the climate issue. Jeff Seabright will be replacing Dirk Forrister as the Chairman of the White House Climate Change Task Force. Seabright was formally the Director of USAID's Office of Energy, Environment, and Technology and before that, an aid to former Senator Tim Wirth (D-CO). Forrister has taken a position with the Environmental Defense Fund in Boulder, CO.
2.) Congressional Testimony Notes Benefits of Energy Efficiency:
In testimony delivered May 20 to a joint hearing of Senate and House subcommittees concerning the Administration's Climate Change Technology Initiative, Alliance to Save Energy President David Nemtzow noted that energy production, transportation, and use is "the most polluting activity on Earth," accounting for more than 80% of all environmental pollution in the United States. Energy efficiency also provides the largest source of energy for the entire U.S. economy next to imported oil, according to Nemtzow, making it a vital energy resource deserving of as much support as the "coal belt and the oil patch." The full statement can be found at https://www.ase.org/takeaction/testimony.htm
3.) Ford's Shift on Climate Change May Affect CAFE Legislation:
An article in the "Detroit News" (May 21 ??) is hinting that the Ford Motor Company may want to leave the Global Climate Coalition, the "voice for business in the global warming debate." The article goes on to note that "Ford's departure from the organization would come at a cost that it will probably regret. Legislators who have defended the industry's interests on regulatory issues such as Sen. Chuck Hagel (R-NE) and Sen. Larry Craig (R-ID) could very well distance themselves from Detroit. They and other Washington allies are said to be tired of looking like the bad guys on environmental issues while the very businesses they're defending go green." In fact, Craig's office has drafted a proposed letter to Sen. Slade Gorton (R-WA) stating: "For some time now, I have been listening carefully to the concerns expressed by many in the environmental community ... that we need to do more to assess the potential occurrence, causes, and effects of global climate change. Putting the CAFE issue on the table for serious discussion as one of several possible responses to addressing these issues is appropriate."
MISCELLANEOUS
1.) House Renewable Energy Caucus Grows to 151 Members:
There is one new member of the House Renewable Energy Caucus: Rep. David Price (D-NC), the group's 151st member.
2.) Government Procurement Offers Options for Sustainable Energy:
The Renewable Energy Policy Project has issued a new issue brief, "Clean Government: Options for Governments to Buy Renewable Energy" by Virinder Singh. It notes that the way governments buy products can overlook the fact that renewable are cheap to run and the fuel is often free. Government purchases of renewables are constrained by limited experience, political leadership, and environmental considerations as well as a procurement culture that has traditionally straight-jacketed procurement officers from making innovative purchases. The paper examines case studies, financing, and purchasing options, standards for renewables, and helpful sources for learning more about government procurement and renewable energy. The paper can be found at https://www.repp.org.
3.) U.S. Wind Energy Growth Projected to Reach All-Time High:
"Wind Energy Weekly" (May 19) reports that a total of 892 MW of new wind projects and 181 MW of repowering projects should be completed in the U.S. by June 30, amounting to an investment of more than $1 billion. The largest amount of new capacity, 247 MW, is being built in Minnesota, with Iowa close behind at 240 MW. Texas ranks third with 146 MW, followed by California (117 MW), Wyoming (73 MW), Oregon (25 MW), Wisconsin (23 MW), and Colorado (16 MW). California will also host all 181 MW of repowering. The total will easily surpass 1985 when some 400 MW were installed prior to the expiration of the federal energy investment tax credit for wind.
4.) Ford to Offer Incentives to Purchase Ethanol:
PRNewswire (May 24) reports that Ford Motor Company has announced a fuel coupon program to encourage the use of ethanol fuel in Chicago as well as the twin cities of Minneapolis and St. Paul. Buyers in those cities of 1999 Ford Ranger 3.0-liter pickup trucks, all of which are flexible fuel vehicles (FFV), are being mailed a letter explaining the FFV feature along with eight coupons each worth $5 toward the purchase of corn-based E85 ethanol fuel. Buyers are also being sent maps with the locations of existing E85 retail fueling stations. Let us know if you would like us to fax you a copy of the 1-page release.
5.) Shell Plans Major Investments in Renewable Energy:
A Dow Jones Newswires (May 26) story reports that Shell International Ltd, part of the Royal Dutch/Shell Group will invest $20 million by 2001 in a new worldwide sustainable energy initiative. Shell expects to invest $25 million annually in the program after 2001. The company says its two core aims are to reduce the environmental impact of fossil fuels and to increase access to sustainable energy, particularly in developing countries.
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