Senate energy chairman sees panel’s 20-1 vote as "a rather formidable step forward." Changes may come on the floor. Tougher challenges will come in negotiations with the House. A key issue there is whether to provide liability relief to producers of MTBE.
Domenici

Lawmakers and lobbyists are preparing for Senate floor debate in June on a major energy package. The bill, which the Energy and Natural Resources Committee cleared May 26, aims to spur oil and gas production, nuclear power and conservation, and bolster the electricity grid.

The panel’s 20-1 approval "is a rather formidable step forward." says Chairman Pete Domenici (R-N.M.). President Bush wants a bill on his desk this summer. "We’re hopeful that by August we might have an energy policy that could endure for a number of years," says Kim Mastalio, president of Black & Veatch’s strategic sales and marketing division.

But the path ahead won’t be a cakewalk. "They put a lot of the difficult issues and the complex issues off to the floor," says energy lobbyist Frank Maisano. "There may be significant changes." Even tougher will be a deal with the House, which in April passed a bill with big differences.

The touchiest issue may be liability relief for makers of gasoline additive methyl tertiary butyl ether. The House has MTBE protections; the Senate panel does not. Domenici says all parties know MTBE is "a real stumbling block" to a deal, but he sees "some ideas, some parameters" emerging to deal with the issue.

Conservation advocates were disappointed the committee did not tighten vehicle fuel economy, but prefer its bill to the House’s. "It’s not a home run, but at least we’re on base," says Ronnie J. Kweller, Alliance to Save Energy spokeswoman.

To deter blackouts, the committee sets mandatory electricity-reliability regulations. It repeals the 1935 Public Utility Holding Company Act, which would attract new investors for transmission projects, says Mastalio. "I think this opens the door."

But the apparent tradeoff for PUHCA was wider Federal Energy Regulatory Commission authority to review sales of generating facilities and mergers involving gas utilities. The provisions "probably go a little bit too far and are a little bit overly intrusive to operation," says Jim Owen, Edison Electric Institute spokesman. "We’re hoping that we can get some of those provisions modified either on the floor or in conference."

Farm staters like the panel’s 8-billion-gallon standard for ethanol and other renewable fuels by 2012. Sen. Tim Johnson (D-S.D.). calls it "robust but very doable." The House calls for 5 billion gallons.

To promote nuclear power, the committee authorizes a new test reactor at the Idaho National Laboratory and has loan guarantees for new nuclear and other "clean energy" plants. It extends Price-Anderson Act indemnification for Energy Dept. contractors and Nuclear Regulatory Commission licensees through 2016. The House carries Price-Anderson protection through 2025.