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Washington Energy Updates

 
    Contact: Carol Connors
Director of Government Relations
cconnors@localpower.org
April 2014
 
   
  Current Congressional Action on Energy
  • Tax Reform??? - With the somewhat surprise announcement March 31 by House Ways and Means Committee Chairman Dave Camp (R-MI) that he will depart Congress at the end of 2014, many wonder whether his retirement will translate into the demise of his landmark comprehensive tax overhaul proposal. However, as discussed in great detail in WADE's March Washington Energy Update, Rep. Camp's tax initiative has sparked much debate and will likely continue into the next Congress. Meanwhile, the tax-writing Senate Finance Committee approved by bipartisan voice vote April 3 the "Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act" authored by Chairman Ron Wyden (D-OR). The measure extends tax breaks that have or will expire at the end of this year. Senator Wyden in his opening statement before the Committee vote emphasized that the tax extenders were a stopgap effort to add some certainty to America's "dysfunctional tax system" and help stabilize the U.S. economy until permanent tax reform is implemented. Among the provisions are a number of energy-related tax relief extensions of two years such as: the 10 percent credit for existing home energy efficiency improvements; tax credits for taxpayers using renewable electricity, the wind production 2.3 cent per kilowatt hour tax credit or a 30 percent investment tax credit (ITC); the energy efficient commercial buildings deduction of $1.80 per square foot by way of improved lighting, cooling, heating, hot water and ventilation systems; the 30 percent ITC for alternative fuel pumps; the $1.00 per gallon tax credits for biodiesel and renewable diesel; the credit for the construction of energy efficient new homes that reach a 30 - 50 percent reduction in energy consumption; the 50 cents per gallon alternative fuel mixtures (including liquefied natural gas or LNG) tax credit; and, the tax credit for new fuel cell motor vehicles--$4,000 for combined hydrogen and oxygen to create electricity for light vehicles, $40,000 tax credit for heavier vehicles. All these incentives are costly, close to $20 billion over 10 years.

  • LNG Exports - H.R. 6, the "Domestic Prosperity and Global Freedom Act" introduced by U.S. Rep. Cory Gardner (R-CO) on March 6 (please refer to the March 2014 WADE news alert for specific details) was approved by the House Energy and Commerce Subcommittee on Energy and Power the week of April 21 on a straight party-line vote of 15 Republicans to 11 Democrats. In brief, the bill would provide that all pending LNG applications for export to non-Free Trade Agreement (FTA) countries for which a notice has been published in the Federal Register as of March 6, 2014, will be granted without delay or modification. An amendment offered by Subcommittee Ranking Member Bobby Rush (D-IL) to disclose the names of the countries receiving the exports was accepted. The full Energy and Commerce Committee marked up H.R. 6 on April 29. Industry experts are not expecting the U.S. Senate to consider the measure. In another House venue, the Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements held a hearing April 30 entitled "Examining the Effect of Liquefied Natural Gas Exports on U.S. Foreign Policy". Chris Smith, Principal Deputy Assistant Secretary for Fossil Energy at the U.S. Department of Energy (DOE) and Amos Hochstein, Deputy Assistant Secretary for Energy Diplomacy at the U.S. Department of State testified.

  • Energy Efficiency - As mentioned in both the January and February WADE news alerts, S. 2074, known as the Shaheen-Portman bill, provides incentives for building efficiency investments and is progressively making its way through the legislative process. Efforts are underway to schedule the measure for full U.S. Senate floor consideration in May. Leadership discussions are still ongoing with regard to specific content but the bill generally profits from bipartisan support and will likely gain Senate approval. Among other provisions, it includes the Hoeven-Manchin language that would repeal the prohibition on fossil fuel-generated energy use in new and refurbished federal buildings. In the other chamber, the U.S. House of Representatives has already uniformly passed a series of energy efficiency measures, many identical to provisos in the Shaheen-Portman legislation. Notably absent, however, is the Hoeven-Manchin language encapsulated in H.R. 2351 and authored by U.S. Rep. Ed Whitfield (R-KY) who is Chairman of the House Energy and Commerce Subcommittee on Energy and Power. The Committee Ranking Member U.S. Rep. Waxman (D-CA) sponsored the fossil fuel ban in a 2007 energy bill and is vigorously opposed to lifting it. Separate hearings will be held on H.R. 2351 this spring. After Senate passage of S. 2074, the key congressional players will meet in a House-Senate conference to reconcile differences between their energy efficiency versions. H.R. 2689, the Energy Savings Through Public-Private Partnerships Act, authored by Reps. Cory Gardner (R-CO) and Peter Welch (D-VT), facilitates the use of energy savings contracts to encourage private sector investment to upgrade the energy and water efficiency of federal facilities was reported by the Energy & Commerce Committee on April 30. If passed, the bill would help shift funding for energy and water upgrades of federal facilities from taxpayers to the private sector via energy saving contracts or utility energy service contracts equal to $1 billion in each year during the 5-year period beginning on January 1, 2014.

  • More on Energy Efficiency - The "Energy Efficiency Tax Incentives Act", S. 2189, was introduced April 1 by U.S. Senators Ben Cardin (D-MD), Dianne Feinstein (D-CA) and Brian Schatz (D-HI) and was referred to the Senate Finance Committee. It would amend the Internal Revenue Code of 1986 to establish a new performance-based tax credit for homeowners who make energy use improvements. The $2,000 tax credit would be provided for a 20 percent reduction in house energy usage, increasing by $500 for each five percent energy use declines up to a maximum credit of $5,000. The measure if enacted (which is considered extremely doubtful) could conceivably boost the sales of household appliances that use natural gas because the savings is an average of $654 over electricity-based appliances.

  • Appropriations Hearings - The Senate Appropriations Subcommittee on Energy and Water held a hearing on April 9 to review the Department of Energy's (DOE) Fiscal 2015 budget request at which DOE Secretary Ernest Moniz testified. Of interest to WADE members, Senators Lisa Murkowski (R-AK) and John Hoeven (R-ND) queried the Secretary on the Department's "foot-dragging" in its processing of LNG applications. The Senate Appropriations Subcommittee on the Interior, Environment and Related Agencies sponsored a hearing also on April 9 to address the Environmental Protection Agency's (EPA) FY '15 budget blueprint. Senator Murkowski expressed her concerns to EPA Administrator Gina McCarthy about the agency's expansion of its study on oil and natural gas hydraulic fracturing ("fracking") and its relationship to drinking water beyond what was intended by Congress.
U.S. Natural Gas and Oil - The United States could become a net exporter of natural gas in the near future, announced Adam Sieminski, Administrator of the Energy Information Administration (EIA), the energy data development and analysis agency within DOE. He spoke at a monthly gathering of energy industry members of the Natural Gas Roundtable (NGR) on April 29. EIA predictions have more to do with financing and which companies sign up for long-term contracts and not with U.S. government approval of LNG exports. Furthermore, the rapid rise in natural gas extractions from hydraulic fracturing because of resource finds and more efficient drilling-estimated at 35 billion cf/d in 2014-raises the issue of where the gas can go if domestic consumption cannot keep with supply. With regard to oil, there has also been a sharp increase in shale production, a prediction of 3.5 million barrels per day in 2014. U.S.-gasoline use is shrinking as the younger generation is not driving as early or buying cars as much as the baby boomers did, so U.S. refineries are selling more abroad with a recent estimate of 3.6 million barrels daily. This amount represents a 25 percent increase from the same time last year and could lead the United States to become a net exporter of gasoline by 2015. The issue that some Members in Congress argue must be addressed is the long-time ban on U.S. oil exports outside of North America.

To Be or Not to Be? Keystone XL Oil Pipeline - Many in Washington, DC are asking if the Obama Administration will ever make a decision about the TransCanada construction of this controversial pipeline, proposing to bring oil extracted from Canada's northwestern tar sands to the U.S. Gulf coast, a $5.4 billion project. The latest delay was an April 18 announcement by the U.S. Department of State to halt its review, reserving its right to resume analysis before Nebraska's Supreme Court addresses an appeal of a lower court's approval of a landowner's challenge, expected in the next few months. Making a decision could prove to be a political juggling act. If approved, the President could paint the decision as supportive of more domestic jobs (which U.S. labor unions are urging) and a plus for North American energy production, while helping the November election outcome for a number of vulnerable Democratic Senators in pro-energy states. Or, if denied, President Obama could incite his environmental support base to rally voter turnout in November. Third, he could just punt again and use the decision as a bargaining chip in what could feasibly be a Republican controlled Congress next year. A roll of the dice...
 
     
 
 
     
 
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