Senate fattens energy bill with tax incentives

Wednesday, April 24, 2002

Associated Press WriterWASHINGTON (AP) -- The Senate is on track to finish energy legislation this week after agreeing on $14 billion in energy tax breaks and staving off attempts to scuttle an agreement that would require ethanol in gasoline.

Among a series of last-minute additions to the bill was a proposal, approved Wednesday, aimed at promoting the use of combined heat and power facilities to produce electricity. The measure, sponsored by Sen. Tom Carper, D-Del., was approved unanimously after an attempt to kill it was defeated 60-37. These facilities are attractive to environmentalists because they use energy more efficiently than conventional power plants.

On Tuesday, senators voted 86-13 to limit further debate on the energy legislation to 30 hours and set late Thursday as the deadline for a final vote on the bill, which has been before the Senate for nearly six weeks.

With a deadline set, senators scurried to offer a last round of amendments, although none was likely to jeopardize the bill, which is expected to pass. The House already has approved a significantly different version, mirroring President Bush's energy agenda. The two will have to be merged.

On Wednesday, senators rejected, 58-39, an amendment by Sen. Maria Cantwell, D-Wash., that would have directed stronger consumer protection measures by the Federal Energy Regulatory Commission in electricity markets. She said the increased consumer protection is needed in the aftermath of market abuses by power providers in the West.

Sen. Jeff Bingaman, D-N.M., the bill's manager, said the bill already provides adequate consumer protections "and will cure many of the problems" that surfaced in the West when electricity prices soared out of control.

The most glaring difference between the House and Senate bills is that the House would open the coastal plain of the Arctic National Wildlife Refuge to oil drilling, while the Senate rejected disturbing the Alaskan refuge with development.

The Senate bill also contains a requirement that would triple the amount of ethanol to be used as an additive in gasoline. The ethanol mandate is opposed by many House members and is not included in the energy package they passed last August.

Also Tuesday, the Senate turned back, by a 68-31 vote, an attempt led by senators from California and New York to strip the Senate bill of the ethanol requirement.

Democratic Sens. Dianne Feinstein of California and Charles Schumer of New York argued that the ethanol mandate would produce gasoline shortages and price increases of 7 cents to 9 cents a gallon.

"California will be required to use ethanol it doesn't need" to clean the air, Feinstein complained.

The ethanol proposal was crafted as part of a compromise that also bans the gasoline additive MTBE, which has been found to contaminate drinking water, and ends the requirement that refiners use an oxygenate to meet clean air standards. Its repeal could jeopardize the energy bill, supporters of the measure said.

Daschle, D-S.D., whose state is a prominent ethanol producer, disputed claims that the mandate, which would triple the amount of ethanol to be produced by 2010, would cause fuel shortages or gas prices to increase significantly.

He called such claims "dead wrong ... a myth" and cited Energy Department estimates that the ethanol would add no more than a penny a gallon on to the cost of gasoline.

The energy tax package, added to the bill by unanimous vote Tuesday, would provide $14.1 billion in tax breaks. About half the money would go for energy conservation and support for renewable energy sources. The other half would help producers of oil, gas, coal and nuclear power.

Motorists would receive a $1,000 tax credit for buying hybrid gas-electric cars and homeowners $2,000 to install solar panels for heating water or other purposes. A $250 to $300 tax credit would be established to help homeowners install fuel-saving insulation, windows and doors, more efficient air conditioners or heat pumps.

The tax incentives and breaks include:

--$4.4 billion for oil and gas producers.

--$3.2 billion for electric utilities that develop clean coal technologies and for nuclear power plants.

--$4 billion to encourage energy conservation and efficiency and use of alternative fuels in vehicles.

--$2.3 billion to encourage development of renewable fuels, including wind, solar, geothermal and biomass sources.

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