US: December 10, 2007


WASHINGTON - A sweeping energy bill that would boost fuel mileage for cars stalled in the US Senate on Friday as Republicans objected to new taxes and regulations on industry, but an aide said Democrats would modify the bill.


The House of Representatives on Thursday passed an energy bill that would boost vehicle fuel economy requirements by 40 percent by 2020, raise ethanol use by five-fold by 2022 and impose US$13 billion in new taxes on big energy companies.

But the Energy Independence and Security Act, an amalgam of energy priorities driven by House Speaker Nancy Pelosi, failed a key procedural hurdle in the Senate that would have allowed a fast vote.

Majority Leader Harry Reid has agreed to modify the US$21 billion tax package and drop a plan to require utilities to get 15 percent of their power from renewable sources like wind and solar by 2020, a Democratic Senate aide said.

Reid plans to bring the redrafted bill up for a vote next week, the aide said, speaking on condition of anonymity.

Reid's attempt on Friday to limit debate on the House-passed measure fell seven votes short of the 60 votes needed to move to quick consideration of the bill.

Without that key agreement, Republicans could drag out debate on the House energy bill indefinitely. Democrats now have little choice but to change the bill in an attempt to gain more Republican votes.

"While she can muscle bills through the House on a party-line vote, it doesn't work that way over here," Senate Minority Leader Mitch McConnell said, referring to Pelosi.

Senate Republicans and the Bush administration say they will block a final bill if it includes a US$21 billion tax package, financed mostly by revoking US$13 billion in tax incentives for big oil and gas producers like Exxon Mobil Corp and ConocoPhillips.

Both groups also object to a requirement for utilities to get 15 percent of their power from renewable sources like wind and solar by 2020 - that they say will raise electricity bills for customers in the Southeast in Midwest, which lack plentiful wind and solar resources.

Democrats in the House have "chosen to add the twin millstones of utility rate hikes and massive tax increases," McConnell said. "The end result is the House passed a bill but it won't become law."

Reid said that with crude oil prices near US$90 a barrel and gasoline prices at the pump around US$3 a gallon, "the time to act is now."

The centerpiece of the bill - hiking the Corporate Average Fuel Economy standards to 35 miles per gallon (15 km per liter) by 2020, would save American families up to US$1,000 per year at the pump, totaling US$22 billion in savings in 2020, Reid said. (Reporting by Chris Baltimore; Editing by David Gregorio)


Story by Chris Baltimore


REUTERS NEWS SERVICE