US Senate approves comprehensive energy legislation

Washington (Platts)--28Jun2005

The US Senate Monday passed by 85-12 a $16-bil energy bill that mandates 8-bil
gal of ethanol be used in gasoline by 2012, gives the federal government
exclusive authority over the siting of LNG plants and mandates grid
reliability standards for the nation's electricity infrastructure. The House
and Senate now need to negotiate differences in their respective energy bills
before a final bill can be voted on again in each chamber and, if approved,
signed by the president. 

Significant differences remain between the House bill, approved in April, and
the Senate bill. Two of the biggest are drilling in Alaska's Arctic National
Wildlife Refuge and liability protection for makers of gasoline additive MTBE.
Both provisions were included in the House bill but excluded from the Senate
legislation.

The final energy bill most likely will not include ANWR drilling, as the
Republican leadership is seeking to move the provision as part of a budget
resolution, which cannot be filibustered. Parties are working on a settlement
to the MTBE liability issue, which was included in last year's joint bill and
ultimately led to the death of the bill in the Senate. This year's Senate bill
bans MTBE within four years of the legislation's enactment, eliminates the 2%
oxygenate mandate in the Clean Air Act with 270 days of enactment and provides
the MTBE industry with up to $1-bil over four years to help ease the
transition to ethanol. The legislation also expands the Strategic Petroleum
Reserve to 1-bil bbl, from current capacity of 727-mil bbl, and requires the
Department of Energy to take into consideration oil costs when filling the
reserve.

The Senate bill also includes Congress' strongest statement to date on climate
change--a non-binding resolution expressing a view of the Senate that climate
change is a pressing national problem, and that the US should enact by the end
of the year a national program of mandatory, market-based limits and
incentives to curb greenhouse gas emissions. The bill requires an inventory of
all offshore Outer Continental Shelf reserves, including in areas currently
off limits. On the electricity front, the legislation repeals the Public
Utilities Holding Company Act and provides a federal backstop to site critical
transmission lines.

This story was originally published in Platts Natural Gas Alert
http://www.naturalgasalert.platts.com

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