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Energy Electric Utilities

Energy Newsletter

A Quarterly Review of Energy Policy and Activities in the State Legislatures

June 2005
Vol. 1, No. 2

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The Costs and Benefits of Clean Coal Technologies
Energy Emergency Exercise Tests State Preparedness
Oregon Tests Alternative Gasoline Tax Method
Transmission Financing Authorities
Washington Passes Progressive Renewable Energy Legislation
Energy Efficiency Standards for Appliances
Montana Passes Renewable Power Standard
State Hybrid Vehicle Incentives
Biodiesel Update

Recent NCSL Staff Activities

NCSL Annual Meeting is Fast Approaching

Upcoming Events

The Costs and Benefits of Clean Coal Technologies

As of early 2005, at least six states are considering a new kind of entity to encourage construction of new electricity transmission lines. Called a Transmission (or Infrastructure) Authority, this entity would have authority to do everything from encourage new transmission, to participate in financing of new transmission, and even to build new transmission lines. Motivation for these authorities includes economic development and the export of electricity. Only Wyoming has such legislation, but Arizona, Kansas, Montana, North Dakota, South Dakota and Utah are considering similar authorities. Kansas’ legislation has been sent to the governor for signature and is available at www.kslegislature.org/bills/2006/2263.pdf. Information about the Wyoming Infrastructure Authority is available at http://www.wyia.org.

Energy Emergency Exercise Tests State Preparedness

The U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability held an energy emergency exercise for midwestern states on June 6-7 in Indianapolis, Indiana. State legislators, public utility commissioners, energy office directors, emergency management officials, public utilities, and private sector representatives worked together throughout the event. The exercise simulated a real-world energy emergency and allowed attendees to test their state energy emergency plans, roles and responsibilities, and communication mechanisms at the state and regional levels. Kentucky Rep. Tanya Pullin, who participated in the event, said, "The exercise guided the thinking of the group from Kentucky and helped us to look at many possibilities. It even caused me to think about some potential legislative changes that may be necessary to make sure all the agencies and people who need authority in severe emergency situations have that authority." The plans to schedule future energy emergency exercises in other regions this year and next. For more information about this event or other activities with the states, contact Kate Burke or Christie Rewey at NCSL, (303) 364-7700.

Oregon Tests Alternative Gasoline Tax Method

Oregon is testing a new way to tax drivers—by the mile, rather than by the gallon of gasoline. State tax dollars for road repairs and highway projects are decreasing due to improved mileage from traditional and hybrid vehicles. In Oregon, a driver who drives 2,000 miles per month can spend $500 on gasoline. In a hybrid, the expenditure at the pump falls to $200, which is a significant reduction in taxes paid. With the rising popularity of hybrid vehicles and improved mileage in most other cars, Oregon, which saw a 103 percent hybrid growth rate from 2003-2004, began a "tax by the mile" pilot project this year. The nation overall saw an 81 percent jump in hybrid vehicles in the same period from 2003 to 2004.

In the Oregon test vehicle, a global positioning system (GPS) attached to the odometer tracks the number of miles driven. When the driver fills up at the gas station, the computer in the pump works with the car’s odometer to calculate the tax by the number of miles driven at 1.2 cents per mile. Oregon’s current state gasoline tax is 24 cents per gallon. A person who drives 10 miles will pay a tenth less than a driver who travels 100 miles. Opponents of the "tax by the mile" method argue privacy concerns and the potential for a disincentive to buy fuel-efficient vehicles. Opportunities with this system include the possibility of a higher fee charged during peak hours, or rush hour, for example, to discourage driving during these times. States such as California are watching Oregon’s project and hope that this type of taxation by the mile may offer a solution to freeway congestion. In March 2006, 280 cars will be equipped with the new system as a larger part of the pilot program.

Transmission Financing Authorities

State legislatures have begun to consider a new way to encourage building new transmission lines: transmission financing authorities. Six states considered legislation to create such authorities, and Kansas, North Dakota and South Dakota enacted legislation. South Dakota’s act was not accompanied by an appropriation this year. In general, states considered these authorities with the idea of encouraging export of power from their states. North Dakota, for example, specifically mentions its abundant lignite coal and its wind resources, while stressing that transmission constraints impede the export of wind and coal generated power from the state. These transmission authorities vary somewhat, but generally have the power of eminent domain and the ability to make grants or loans or to provide other kinds of financial support for building transmission. Legislation also specifies how these authorities will interact with the state’s public utility commission and with regional transmission organizations.

Washington Passes Progressive Renewable Energy Legislation

On May 6, Washington governor Christine Gregoire signed into law what is being touted as the most progressive renewable energy legislation in the country. The two bills—Senate Bill 5101 and Senate Bill 5111—worked their way through the Legislature at a steady clip in the early spring due to bipartisan support.

The first of the two bills—S.B. 5101—establishes a renewable energy "feed-in" production incentive. This incentive allows homeowners and small businesses with solar photovoltaics and wind power systems to earn a credit of 15 cents per kilowatt-hour (kWh) of electricity generated by their renewable energy systems-up to $2,000 annually. This is the first such application of such a policy approach in a U.S. state. Included in the legislation is an economic multiplier that increases the system owner’s credit if the project’s components are manufactured in Washington. This multiplier has the potential to raise the credit to as much as 54 cents per kWh and would be available for a fixed 10-year period beginning July 1, 2005.

The second of the two bills—S.B. 5111—provides a tax break for renewable energy businesses that currently reside in the state or choose to relocate there. Higher tax breaks will go to companies that locate in economically depressed areas. The legislation was designed to nurture new, high-tech manufacturing of renewable energy components in the state.

Washington’s approach represents what some are calling a paradigm shift for U.S. solar legislation; this approach has been overwhelmingly successful in Germany. Since enacting a national production incentive, Germany has become the world’s top consumer of solar panels.

Energy Efficiency Standards for Appliances

In April, Arizona passed a bill that requires energy efficiency standards for 13 products beginning in 2008. The list of appliances includes torchiere light fixtures, exit signs, commercial refrigerators and freezers, commercial clothes washers, large commercial air conditioning equipment, icemakers, spray nozzles used in commercial kitchens, low-voltage distribution transformers, metal-halide lamp fixtures, power supplies for electronic devices, unit heaters and traffic signals. Federal standards currently do not apply to these products. The New York Legislature is considering standards for these products as well as for furnace fans, reflector lamps, ceiling fans and their lights (none of which are covered by federal standards).

Similar legislation passed the Colorado legislature and was vetoed by the governor, who cited a preference for federal standards and concern about the possibility of higher prices and less product choice.

In 2004, Connecticut, Maryland and New Jersey passed energy efficiency standards for products similar to or the same as those listed above. California also updated its standards, which have been in effect since the 1970s.

Montana Passes Renewable Power Standard

At the end of April, Montana’s governor signed into law Senate Bill 415—The Montana Renewable Power Production and Rural Economic Development Act—bringing to 20 the national total of state renewable portfolio standards. The standard requirement is 15 percent of retail sales of electrical energy by 2015.

Montana took a unique approach, however, by including rural economic development in the title and as an integral part of the act. For many states, economic development might have been a motivating factor in passing a renewable portfolio standard, but that rationale was not explicitly contained in the bill language.

State Hybrid Vehicle Incentives

Hybrid electric vehicles such as the Toyota Prius and Ford Escape Hybrid offer a low-emission and fuel-efficient option for car buyers. States offer a number of incentives to help increase the number of hybrids on the road. A handful of states have laws that allow single-occupant hybrids access to high-occupancy vehicle (HOV) carpool lanes. States need an exemption from the federal government to give hybrids this access, however. Virginia has such an exemption, set to expire in 2006. Although Arizona, Colorado, California, Florida, Georgia and Utah have similar laws, they are awaiting federal approval to enact the incentives. Connecticut, Massachusetts, Minnesota and New York are considering similar action, while Georgia passed a resolution urging Congress to allow hybrids and alternative fuel vehicles in HOV lanes. In Virginia, the incentive may have worked too well–hybrids have proliferated and the HOV lanes also are becoming congested.

Biodiesel Update

Thirty-five states–Arkansas, Arizona, California,  Connecticut, Delaware, Florida, Hawaii, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, Montana, North Carolina, North Dakota, New Hampshire, New Jersey, Nevada, New York, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Virginia, Vermont and Washington–have at least considered bills this session that classify biodiesel as an alternative fuel, provide tax incentives for production or purchase of biodiesel, require fleet purchases of biodiesel vehicles, or set standards for a certain amount of biodiesel included in gasoline. Many of these bills are pending; bills in Arizona, Idaho and Indiana have been signed into law.

Recent NCSL Staff Activities
Energy Project staff have traveled to:

• Pennsylvania to offer testimony on climate change, an overview of the Kyoto Protocol and an update on current consensus vs. debate about climate change.
• Utah to offer testimony on domestic and international energy trends and state energy policy.
• South Dakota to offer perspectives on international energy trends.
• Oklahoma and Maryland to speak about wind energy policy.

In addition, Energy Project staff have participated in national meetings about electricity transmission policy, energy security, electric industry restructuring and renewable energy.

Staff are working on the following NCSL publications.  Look for them in the next few weeks:

• Staff are working on the following NCSL publications. Look for them in the next few weeks:
• State Renewable Portfolio Standards: A Review and Analysis
• Geothermal Energy: State Policy Options
• Energy and Air Policy
• Sample legislative language on regional collaboration in electricity transmission
• Is Your State Ready for an Energy Emergency?
• Tackling Energy Security
• Sample policy options on energy-related cost recovery issues and FOIA exemptions

As always, NCSL staff are available to work with you on these and other energy issues. We can answer your information requests or spend time in person meeting with your committee. Call us at (303) 364-7700. 

NCSL Annual Meeting is Fast Approaching

Bill Gates, Microsoft founder, will open this year’s NCSL Annual Meeting, "Strong States, Strong Nation," in Seattle, Washington. The meeting, scheduled for August 16-20, offers a range of noteworthy speakers and informative sessions on issues that affect the states. Specific to the Energy and Electric Utilities Committee are a number of pertinent topics, including the latest in electricity delivery technologies and restructuring, critical energy infrastructure protection, bioenergy and state incentives, and energy efficiency in public buildings. Scheduled for Thursday are two key energy-related concurrent sessions: 1) a session featuring aggressive renewable energy policies that states implemented recently, and 2) a natural gas supply and demand perspective and price outlook, including the future of liquefied natural gas. Registration deadline is July 15. Visit the NCSL Web site for additional logistical and schedule information at http://www.ncsl.org/annualmeeting.

Are you using NCSL’s Energy Program? We receive numerous phone calls and e-mails from legislators and staff asking for help to research energy policies. Are you contacting us? Our grants allow us to offer briefings to state committees and other legislative meetings. In the past few months we’ve talked about energy security in Utah, electricity regulation in Kansas and renewable energy in Oklahoma. Can we help your state? Are you on our contact list? We currently are updating our database of legislators and staff who focus on energy.

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