Fight resumes on energy bill; Renewables, taxes are key stumbling blocks 

The White House Monday again warned of a possible veto if congressional Democrats produce an energy bill that raises taxes or forces utilities to use renewable energy to generate electricity.

House Speaker Nancy Pelosi, D-Calif., announced plans to bring an energy bill to the floor this week, after Democrats – following months of negotiations – cobbled together a compromise plan to raise fuel-mileage requirements for cars, trucks and sport utility vehicles.

And while other key details of the bill remain sketchy, the Bush administration is clearly unhappy with the direction Democrats are trying to take.

“It appears Congress may intend to produce a bill the president cannot sign,” Allan Hubbard, director of the White House’s National Economic Council, said in a letter to Pelosi on Monday.

Pelosi later met with Hubbard to discuss the administration’s concerns.

Asked about the meeting, Pelosi spokesman Drew Hamill said the speaker “is hopeful that, when the president reviews the final bill language, he will join the business, labor and environmental communities and support this legislation.”

Bills never reconciled

The Senate and House both passed their own energy bills earlier this year. Unable to organize a formal conference committee to iron out the differences in the two bills, Democratic leaders have been crafting a new bill themselves.

The centerpiece of the package is a provision requiring new cars, trucks, SUVs and minivans to achieve, on average, 35 miles per gallon by 2020. That would be an increase of about 10 miles per gallon from the kind of fuel mileage the nation’s vehicle fleet currently attains.

The Senate had passed its own 35-mile-per-gallon language in its energy bill, but automakers – and their allies in the House – had complained the provision did not give them enough flexibility to meet the standard.

To overcome the objections, Democratic negotiators agreed to allow manufacturers to distinguish between cars and trucks when assigning fuel-mileage requirements.

But House Democrats also said the bill they bring to the floor later this week – probably on Thursday – would require utilities to generate 15 percent of their electricity from renewables such as wind and solar power.

That was the language the House included in its energy bill earlier this summer. But many utilities in the Southern states objected, arguing their states do not have the renewable resources to meet such a standard. And they predicted such a provision would mean higher utility bills for their ratepayers.

On Monday, Hubbard wrote that a renewable electricity standard that is “unfair in its application, is overly prescriptive in its definition by excluding many low-carbon technologies and does not allow states to opt out, would hurt consumers and undercut state decisions.”

Senators off-guard

Pelosi’s announcement late Friday that a renewable electricity standard would be included in the energy bill caught many in the Senate off-guard.

Sen. Pete Domenici of New Mexico, the ranking Republican on the Senate Energy and Natural Resources Committee, fired off a statement noting that such a provision “will make this bill untenable for many in the Senate.”

To avoid a filibuster in the Senate, the renewable-electricity standard would need at least 60 votes. Whether supporters of the measure have that many votes in the closely-divided chamber remains unclear.

Rep. Edward Markey, D-Mass., a champion of the renewable electricity issue, contends the measure “is not controversial with the majority of the House or the Senate. There (are) still the makings of a resolution of this issue. … I think the goal should be to get to the 60 votes.”

Democrats also are negotiating over whether to tack on a tax package to the energy bill.

At the very least, lawmakers need a way to pay for the higher fuel-mileage requirements, which – because motorists would be able to drive farther on a tank of gas – are estimated to cost federal coffers about $2 billion over 10 years in federal gasoline excise taxes.

Covering that shortfall is not especially controversial. But the House energy package approved in August would have rolled back $16 billion in tax breaks for the oil and gas companies. But the Senate rejected an effort to add a tax package.

Predictions vary

The Bush administration has objected to using the tax code to “single out specific industries,” meaning the oil and gas sector.

Whether Democratic leaders can – or will – write a bill that President Bush can sign into law remains unclear.

“It seems like they shifted from doing a bill to doing a message bill,” argued Lee Fuller, vice president of government relations for the Independent Petroleum Association of America.

Rep. Joe Barton, R-Ennis, has expressed skepticism the bill will ever pass both houses.

But Kevin Book, senior vice president for energy policy, oil and alternative energy, at Friedman, Billings, Ramsey & Co., surmises that by next week the House will offer a stripped-down energy bill, sans a renewable electricity standard or tax package.

With both Republicans and Democrats under pressure to deliver on energy legislation before the Jan. 3 Iowa caucuses, “we expect the House to proceed back to a leaner energy bill,” Book wrote in a report.

By David Ivanovich

Houston Chronicle

3 December 2007