The House has already approved its version of an energy bill, which includes $8 billion in tax breaks and incentives.

The Senate panel finished writing its energy legislation with the utility merger provision amid rapid consolidation in the industry, including this week's sale of PacifiCorp to MidAmerican Energy for $5.1 billion.

Republican lawmakers have long pushed to repeal the Public Utility Holding Company Act (PUHCA), enacted in 1935 to protect consumers by requiring utilities to limit their operations to a single area or region. They contend it is an outdated law that discouraged investment in the electricity sector.

Some Democrats on the Senate panel agreed to eliminating PUHCA only if FERC was given more authority to approve mergers to prevent more Enron-type corporate wrongdoing.

The legislative language approved by the committee would expand FERC's authority to review the impact of utility mergers on competition and consumer rates. It would also let FERC review a utility's acquisition of generating facilities in deals over $10 million.

The measure was added to a broader energy bill that the committee debated over five days and finally approved in a 21-to-1 vote. Democrat Ron Wyden from Oregon was the lone dissenter.

Separately, the committee added a provision to the energy bill requiring a federal inventory of oil and natural gas reserves in US offshore waters, including areas where energy exploration is now banned.

Opponents to the plan feared the inventory survey could eventually lead to drilling in closed areas, but supporters said the United States should have an accurate count of its energy sources in case drilling restrictions are eased.

The inventory language is expected to face more opposition when the energy bill is debated by the full Senate.

The chairman of the Senate Energy Committee, Pete Domenici of New Mexico, said Senate Republican leaders plan to bring up the energy bill for debate during the first half of June.

"We go further than we've gone before to diversify our energy supply and employ innovative technologies," said Domenici, who added the bill will cost about $13 billion.

Democrats supported the bill just as eagerly as Republicans.

"This bill pushes forward on developing and commercializing new technologies on the energy supply side that will be cleaner than what we now have in place," said Jeff Bingaman of New Mexico, the energy committee's top Democrat.

The House passed a much different energy bill last month, which would have to be reconciled with the Senate's version.

Unlike the Senate's bill, the House legislation would allow oil drilling in Alaska's Arctic National Wildlife Refuge and protect oil companies from certain lawsuits for making the water polluting MTBE gasoline additive.

President Bush has demanded that Congress send him a final energy package to sign into law before lawmakers leave for their summer vacations in August.

The Senate bill would also:

* Direct the president to reduce US oil demand by 1 million barrels a day by 2015.

* Increase the capacity of the US emergency oil reserve to 1 billion barrels, up from the current 700 million barrels.

* Impose reliability operating standards on utilities to protect the US electric grid from blackouts.

* Give FERC exclusive authority, not the states, for approving new liquefied natural gas import terminals.

* Double US ethanol production to 8 billion gallons a year by 2012.