07.29.05

Energy Bill Passes Senate 74-26

Key Cantwell Provisions for the NW

WASHINGTON, D.C. – U.S. Senator Maria Cantwell (D-Wash.) today voted to pass the energy bill conference report. The Energy Policy Act of 2005 (HR 6) passed the Senate by a vote of 74 to 26.

Cantwell’s statement (below) is followed by a summary of provisions included in the energy bill that benefit the Northwest. "While not ideal, this energy bill takes several critically important steps forward for the Northwest. It opens up opportunity for our farmers to get into the biofuel business. It stops Enron from raiding Snohomish ratepayers’ wallets. It does not allow for drilling of the Arctic.

"It does not include my amendment that sets a goal of reducing America’s overdependence on foreign oil, side-stepping the most important energy challenge before us. Unfortunately, the leadership of this Congress lacks the political will to tackle those important issues at this time.

"But on the whole, this legislation is better than many of us ever expected. It has some important provisions for the ratepayers of the Pacific Northwest, and some vital tools for the clean energy entrepreneurs and innovators that will help pave the way toward a better energy future.

"Now that we’ve passed a bill heavy on the nuts and bolts, it’s time to get serious about a more visionary approach to curbing our addiction to oil. The fight to bolster America’s energy security is just beginning."

ENERGY BILL CONFERENCE REPORT PROVISIONS THAT BENEFIT THE NORTHWEST

Protecting Washington State Ratepayers:

Safeguarding the Northwest’s system of cost-based power—the engine of the regional economy: The energy bill contains a specific provision that protects the Northwest’s transmission system, and maintains the Bonneville Power Administration’s (BPA’s) system of cost-based power. Earlier this year, the Bush Administration proposed converting the Northwest to a system of market-based rates, which would have cost the region $1.7 billion—a $480 rate hike for families in some of Washington’s most rural communities. Protecting the Reliability of the Electricity Grid: At long last, the bill establishes mandatory, enforceable reliability rules for operation of the nation’s transmission grid. This effort actually began in the Pacific Northwest—after an August 1996 blackout resulting from two overloaded transmission lines near Portland, Oregon, 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 reliability legislation in just over five years ago.

Responding to the Western Energy Crisis:

The illegal and unethical practices of Enron and others sent Washington power rates through the roof. The energy bill puts in place the first-ever, broad prohibition on manipulation of electricity and natural gas markets. It gives federal regulators new tools to fine energy companies that break the rules and bar rogue energy traders and executives from the utility industry. The energy bill also contains a provision that prohibits a federal bankruptcy court from enforcing fraudulent Enron power contracts, including $122 million from Snohomish PUD. Putting Washington State Farmers & 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. Today, those feedstocks provide 90 percent of the ethanol and biodiesel production in the U.S. 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 U.S. 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’s 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.

Seizing The Technology Lead:

The bill establishes a $550 million "Advanced Biofuel Technologies Program," to demonstrate technologies for production of biofuels from a more diverse array of materials—many of them common to Washington state.

Building a Market for New Biofuels:

The energy bill provides important market-based incentives for the very first producers of new sources of biofuels. Agricultural producers across the country have long advocated a "Renewable Fuels Standard," (RFS) to ramp up the amount of ethanol and biodiesel blended with traditional fuel in the U.S. The bill creates a 7.5 billion gallon RFS through 2012. But in addition, it contains measures to more than double the incentives for refiners to use ethanol made from cellulosic sources such as wheat straw, and to ensure that by 2013 the U.S. is producing at lest 250,000 gallons of ethanol from these new sources. It also sets a goal of producing a billion gallons of cellulosic ethanol by 2015. These provisions are designed to help build a market for the very first producers of ethanol from non-traditional, non-corn sources—an important way to help move the technology toward broader commercialization. Federal Support for Biofuels Infrastructure: The bill recognizes that a national biofuels strategy is in the long-term energy security interests of the U.S. and provides financial support for this emerging industry. The legislation authorizes federal loan guarantees for the first cellulosic ethanol facilities, to help commercialize the technology. It is expected that the first commercial-scale cellulosic ethanol plant will be located in the Pacific Northwest. It also extends and expands biodiesel tax credits, and creates a new tax incentives for the installation of clean refueling infrastructure, such as E85 and B20 pumps at gas stations.

Providing Incentives for Renewable Energy Investment:

The legislation extends through the end of 2007 the existing Production Tax Credit for renewable energy, such as wind resources. It’s 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, Washington, 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, Washington—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.

The legislation extends 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 public utilities make renewable energy investments in Washington state, 55 percent of which is served by public power. REPI funds have been used to support Energy Northwest’s wind and solar investments. In addition, the REPI program has helped support renewable energy projects in Snohomish and Klickitat Counties.

Promoting 21st Century Research, Development & Energy Workforce:

This legislation 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 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 nation-wide offer world-class, PHD-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. The energy bill 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 non-profit consortiums involving small businesses, national labs and universities—to promote interaction and collaboration between public and private researchers.

Reinstating the Oil Spill Trust Fund:

Earlier this year, a Coast Guard report found that the Oil Spill Liability Trust Fund—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 clean-up 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.

Boosting Low-Income Energy Assistance:

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 state wide—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.