Washington Energy Report
June 19, 2009

On Wednesday, the Senate Energy and Natural Resources Committee completed 12 weeks of markup of Senator Jeff Bingaman’s (D-NM) comprehensive energy legislation in which dozens of amendments were adopted. The bill, called the American Clean Energy Leadership Act, was approved on a vote of 15 to 8 and will now go to the full Senate for a vote.

The bill requires electric utilities to meet 15 percent of their electricity sales through renewable resources of energy by 2021, with up to 26.67% allowed to be met through energy efficiency (see May 29 edition of the WER). Qualifying resources include wind, solar, ocean, geothermal, biomass, landfill gas, incremental hydro, hydrokinetic, waste-to-energy, and new hydro at existing dams with no generation.

Sen. Bingaman lowered the renewable standard to gain Republican votes on the committee, but some Democrats were unhappy with the compromise. Sen. Robert Menendez (D-NJ) voted against the bill’s passage because he felt the standard was too weak and that other provisions did not do enough to encourage distributed generation. Sen. Bernie Sanders (I-VT) said that he was reluctant to vote for the committee’s bill, and that he will try to increase the renewable standard on the Senate floor.

The bill establishes an “interstate highway system” for electricity by creating a new planning system based on local, state and regional input. States will be allowed to take the initial lead in deciding where to build high-priority national transmission projects.

In markups last month, the committee approved an amendment from Sen. Bob Corker (R-TN) that would trim the Federal Energy Regulatory Commission’s (“FERC” or “Commission”) authority to allocate costs of interstate transmission projects. His amendment would require that FERC first show that costs of a new line “are reasonably proportionate to measurable economic and reliability benefits.” Such a requirement could create new financial hurdles for developers proposing large new power line projects.

The bill also has provisions that attempt to ensure that the U.S. electrical grid is protected from cyber vulnerabilities, threats and attacks, by giving the Secretary of Energy and FERC the authority and responsibility to respond quickly if any threats or attacks occur (see May 29 edition of the WER).

The bill also includes provisions to open the Eastern Gulf of Mexico to leasing and exploration for oil and gas, making over 3.8 billion barrels of new oil resources and 21.5 trillion cubic feet of new natural gas resources available (see June 12 edition of the WER). It would also create a 30-million barrel petroleum product reserve so that U.S. supplies of gasoline and diesel fuel will not face sudden shortfalls and price spikes due to the shutdown of refineries by hurricanes and other natural disasters.

Other provisions would provide almost $6.6 billion for energy innovation and technology and facilitate the large-scale demonstration and early deployment of carbon dioxide capture and storage technologies by providing a legal and regulatory framework for the first 10 “early mover” projects.

Unlike the House energy bill co-authored by Rep. Henry Waxman (D-CA) and Rep. Ed Markey (D-MA), Sen. Bingaman’s legislation does not include provisions to cap greenhouse gases. However, Senate leaders may combine the energy bill with climate legislation that Senate Environment and Public Works Committee Chairman Barbara Boxer (D-CA.) hopes to craft later this summer.

A complete summary of the bill is available on the Senate committee’s website at: http://energy.senate.gov/public/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=a3fe85e3-8145-4b45-bb0b-1df967416a1f&Month=6&Year=2009&Party=0.