NARROW VICTORY FOR STATES IN HOUSE FLOOR DEBATE.  During floor consideration of the FY 2007 Energy and Water Development Appropriations Act (H.R.

5427) the House passed an amendment to reinstate funding for the state energy grant program.  Rep. Rosa DeLauro (D-CT) offered the amendment, which overturned the recommendation of the Appropriations Committee to eliminate the program.  By a 217-204 vote the House restored $25 million in funding for the program.  This level falls well below the President’s request of $49.5 million and the $36 million enacted in FY 2006.  Members debated the necessity of the funding in support of state energy efficiency and renewable energy programs.  Opponents of the program argued that 57 percent of the program goes towards administrative costs and state success could not be tied directly to the grant program.  The House passed the Energy and Water spending bill on a 404-20 vote on May 24^th.  The debate now moves to the Senate where there is currently no clear timetable for consideration of appropriations measures.

ACTION PLAN FOR WIND POWER – The Energy Department has announced, in collaboration with the wind industry, the intent to create an action plan for increasing the level of US’s electricity generation produced from wind power to 20%.  The plan will require input from policymakers, environmentalists, investors, utilities, and others, and will be unveiled in Los Angeles next year at the WINDPOWER 2007 conference.  According to industry officials, some of the challenges facing the industry are the lack of a long-term federal tax policy and the cost of raw materials. 

AS LONG AS IT ENDS IN A 6 – On June 6, Energy Secretary Samuel Bodman proclaimed that the market, not mandates, will drive the nuclear energy industry, and the Energy Department will attempt to encourage that initiative by providing the new nuclear power plant financial incentives promised in last year’s Energy Policy Act.  The department has already published an interim rule, and the final rule is expected in August.  Included in the financial incentives is a risk insurance program for construction delay costs of $2 billion, available to the first six new nuclear plant builders.  Bodman stated, “[W]e don’t need six new plants.  We need 16, 26, 56 new nuclear plants.”  Still nothing has been decided with respect to EPACT 2005 on nuclear waste.

OIL AND WATER DO NOT MIX – The Energy and Resources Subcommittee of the House Government Reform Committee recently held a hearing seeking a sense of whether the fuel industry is ready for hurricane season.  With energy prices already causing commotion on the Hill and around the country, another strong storm in the Gulf, where 30% of the nation’s oil and 21% of the nation’s natural gas is produced, could be devastating for energy prices.  The area has yet to fully recover from last year’s destruction with 21% of the oil production and 13% of the natural-gas production still offline.  The most damage occurred to jack-up rigs and mobile drilling units.  The Minerals and Management Service (MMS) reports that fortifications to the jack-up structures are mostly done.  Floating structures, however, are only a third complete.  The industry is also installing backup communication systems and working out contracts with helicopter and tug services pre-hurricanes.  Also at risk are the sea floor pipelines.  Experts predict the hurricane season will see 16 tropical storms, four to six of those reaching Category 3 status or higher.

OLD HOUSE, OLD PIPES – Look for the possibility of legislative action on investments into the country’s pipeline infrastructure in the future.  Although no legislation is currently pending, lawmakers are showing an increased interest in this topic. Energy infrastructure investment incentives are showcased in a number of  broader energy policy measures, such as Senator Craig Thomas’s (R-WY) energy bill, S 2755, which includes tax incentives that would encourage investment in new pipeline capacity.  Senator Conrad Burns (R-MT) has expressed interest in similar policy stemming from his concern over the loss of funds to Western US refiners and, in turn, to the states.  According to Senator Burns, outdated pipelines are effecting the ability of refineries in the west to get their product to market, there by impacting the price of oil in the region without offsetting the price of gasoline at the pumps.  Lawmakers believe that updating the national pipeline infrastructure will correct the “lose-lose situation” and in turn benefit industry and consumers alike.  The pipeline infrastructure conversation may play into the domestic refinery capacity conversation, a source of much legislative action on Capitol Hill, as investments in one may spur expansion of the other.  Expect Congress to continue the debate on how to best encourage development and bring down the high cost of energy. 

REFINED REFINERY BILL FACES UNCERTAIN FATE.  The House of Representatives has once again acted on legislation aimed at streamlining the permitting process for new and expanded refineries.   The legislation, H.R. 5254 (New Hampshire Representative Charles Bass), would establish a new federal coordinator position to oversee establishment of a timeline for consideration of permits sought for domestic refinery construction or expansion.  The bill also authorizes the President to designate three closed military bases as sites for new refinery construction. The legislation passed the House of Representatives on June 7, 2006 on a 238-179 vote.  As previously reported, House leadership was forced to bring the bill forward for floor consideration a second time when it failed to receive the two-thirds majority needed to pass legislation on the suspension calendar.  Last year, the Senate Environment and Public Works Committee deadlocked on legislation intended to expedite the permitting process without undercutting state authority. A Senate Republican task force continues to study energy policy options it might want to advance this year while lead Senate Democrats have not embraced refinery permitting as one of their ingredients for enhanced energy independence.

UP AT BAT – Majority Leader John Boehner (R-OH) has declared the last week of June “Energy Week.”  The House will be considering a cross-cutting array of energy legislation that may include alternative and renewable energy production, “boutique fuels,” new energy technologies, and off-shore drilling.  In the Senate, the Republicans are working on energy legislation that could include measures regarding gasoline price-gouging.