Energy compromise pleases industry advocates

Industry lobbyists largely welcomed the energy bill that emerged from conference committee yesterday but acknowledged that it wouldn’t immediately solve the problem of high energy costs.

“It’s not a panacea, but it’s a major step in the right direction,” Rick Shelby, the vice president of public affairs at the American Gas Association, said yesterday at a breakfast that the group jointly sponsored with The Hill.

John Northington, a Democratic lobbyist at the firm Thomas Advisors, said, “I don’t think anyone is under the illusion that this will do anything in the short term to alleviate prices.”

But he added that “the seed has been planted” to encourage more production of domestic oil and gas reserves, which could eventually reduce high gasoline and natural-gas costs. Northington’s clients include Devon Energy, an oil and gas exploration company.

Tax writers had yet to release by press time details of what is expected to be an $11.5 billion package. But that portion was to be finished by today, and attached to the non-tax language completed by conference committee at around 2:45 Tuesday morning.

Sen. Conrad Burns (R-Mont.), speaking at the breakfast, predicted that the measure would pass, which would be the culmination of a four-year effort.

“This is one of the best energy bills we’ve ever had the opportunity to move on,” Burns said.

Consensus opinion held that corn growers and ethanol blenders were among the biggest winners in the bill because it includes a 7.5-billion-gallon-per-year production mandate for the fuel additive, near the Senate’s larger target of 8 billion gallons.
The House had proposed 5 billion gallons, a target supported by major oil companies.

“We’re obviously pretty excited about how things turned out,” said Monte Shaw, a spokesman for the Renewable Fuels Association, a main backer of ethanol.

Less excited, however, were environmental groups that saw some favored provisions in the Senate bill lost in conference.

“The bill grew steadily worse over the last 24 hours,” said Marchant Wentworth, a lobbyist for the Union of Concerned Scientists.

“I can’t find one environmental group nationally who will support it.”

Wentworth pointed specifically to the refusal of House conferees to accept a Senate provision that at least 10 percent of the nation’s electricity be generated by renewable sources such as solar and wind power by 2020.

Utility groups such as the Edison Electric Institute (EEI) had lobbied hard against the provision because, they said, it would raise prices, although a federal study found its costs to be minimal. The absence of a so-called renewable portfolio standard, one of the key Democratic victories in the Senate energy bill, amounts to a big lobbying win for the EEI and other utilities.

Southern Energy, which produces power for much of the Southeast and spent more than $10 million to lobby Congress and the executive branch in 2004, had told lawmakers that it would cost it $4 billion to comply with the so-called renewable portfolio standard.

Southern had less luck, however, persuading conferees to accept more minor provisions in the electricity title that relate to how aggressively the Federal Energy Regulatory Commission can move to encourage more competition in electricity markets.

The energy bill also extends daylight-saving time by one month, sets 15 new efficiency standards for commercial appliances and provides tax breaks to encourage development of wind and solar power.

Another big winner is the coal industry, which would get tax breaks and other incentives to research and develop so-called “clean coal” technology.

The bill also eases the permitting process for liquefied-natural-gas terminals and natural-gas pipelines.

Lobbyists predicted the bill would pass Congress by the weekend, although members of the Florida delegation may try to filibuster the bill because of the inclusion of a survey of gas inventories along the Outer Continental Shelf (OCS).

That area, which lies between three to 200 miles off shore, is considered sacrosanct by some coastal senators who fear the gas inventory provision is the proverbial camel’s nose under the tent in the fight to open the outer continental shelf  up for more drilling.

A filibuster over the OCS inventory, which the Senate supported by a wide margin, is less worrisome to lobbyists than one prompted by the gasoline additive MTBE, which has polluted ground water supplies.

But conferees seem to have avoided that outcome by removing MTBE liability protection from certain lawsuits.