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Energy Policy Act of 2005

The Energy Policy Act of 2005 (Pub.L. 109-58) is a statute that was passed by the United States Congress on July 29, 2005 and signed into law on August 8 2005 at Sandia National Laboratories in Albuquerque, New Mexico. The Act, described by proponents as an attempt to combat growing energy problems, provides tax incentives and loan guarantees for energy production of various types.


Contents

Provisions

The Act was intended to establish a comprehensive, long-range energy policy. It provides incentives for traditional energy production as well as newer, more efficient energy technologies, and conservation. More than 1,700 pages long, the Act has hundreds of provisions. Major items include the following:

  • Extends the Price-Anderson Nuclear Industries Indemnity Act through 2025;
  • Authorizes cost-overrun support of up to $2 billion total for up to six new nuclear power plants;
  • Authorizes a production tax credit of up to $125 million total per year, consistent with renewables;
  • Authorizes $1.25 billion for the Department of Energy to build a nuclear reactor to generate both electricity and hydrogen;
  • Allows nuclear plant employees and certain contractors to carry firearms;
  • Prohibits the sale, export or transfer of nuclear materials and "sensitive nuclear technology" to any state sponsor of terrorist activities;
  • Updates tax treatment of decommissioning funds;
  • A provision for the Department of Energy to report in one year on how to dispose of high-level nuclear waste;

In Congressional bills an "authorization" of a discretionary program is a permission to spend money, while an "appropriation" is the actual decision to spend it; none of the authorizations above will mean anything if the money is never appropriated.

Provisions in the original bill that were not in the act

Tax breaks by subject area

Congressional Budget Office (CBO) cost estimate

The Congressional Budget Office review of the conference version of the bill estimated the Act will increase direct spending by $1.6 billion, and reduce revenue by $12.3 billion between 2006 and 2015. The CBO noted that the bill could have additional effects on discretionary spending, but did not attempt to estimate those effects.

Change to daylight saving time

The bill amends the Uniform Time Act of 1966 by changing the start and end dates of daylight saving time starting in 2007. Clocks will be set ahead one hour on the second Sunday of March instead of the current first Sunday of April. Clocks will be set back one hour on the first Sunday in November, rather than the last Sunday of October. This will affect accuracy of electronic clocks that had pre-programmed dates for adjusting to daylight saving time. The date for the end of daylight saving time has the effect of increasing evening light on Halloween (October 31).

Commercial Building Deduction

The Act contains provisions for commercial buildings that make improvements to their energy systems.

Energy improvements completed in 2006 and 2007 are eligible for tax deductions of as much as $1.80 per square foot.

The incentives focus on improvements to lighting, HVAC and building envelope.

Improvements are compared to a baseline of ASHRAE 2001 standards.

Many buildings are eligible for tax deductions for improvements completed or planned within the normal course of business, and can thus "free ride" for the new incentives.

Achievement of these benefits requires cooperation between the facilities/energy division of a business and its tax department. A tax advisor with engineers on staff may serve as a bridge between these two historically separate business divisions.

For municipal buildings, benefits are passed through to the primary designers/architects in an attempt to encourage innovative municipal design.

These benefits emanate from the Department of Energy's desire to make all buildings "zero energy" within 20 years.

Energy Management

The commercial building tax deductions can be used to improve the payback period of a prospective energy improvement investment.

Often times the deductions are combined with participation in demand response programs where buildings agree to curtail usage at peak times for a premium.

Criticisms

Legislative history

The Act was voted on and passed twice by the Senate, once prior to conference committee, and once after. In both cases, there were numerous senators who voted against the bill. Below is a list of only those states that did not have both senators voting for the bill. All other senators voted Yes. To understand some of the reasons that the senators voted the way they did.

Analysis

"No" votes came from the northeast states of Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont. In the southwest, senators from Arizona, California, and Nevada voted against the bill. In the northwest, senators from both Oregon and Washington voted against. Both senators from Florida opposed the bill.

Both senators from Connecticut changed their votes from Not Voting, to No.

Of all sixteen states with at least one senator that voted no, only one of these had anyone on the conference committee. Not only was senator Ron Wyden the only senator from these states on the conference committee, he was also the only senator on the conference committee to vote against the bills final passage.

Senator Wyden's Objections

Senator Ron Wyden (D-Oregon) spoke in opposition to the bill including references to the occupation of Iraq and serious flaws in the policy of the energy bill.[8]

"Our dependence on foreign oil will not be reduced as a result of this legislation. As a result, we have not reduced the prospect of going to war once again in the Persian Gulf in the next decade."

The Senator referred to the relationship between the energy bill and fighters in terrorism.

"the Senate is about to pass a pre-9/11 energy policy. After 9/11, it became clear that energy policy was a national security issue and that reducing our dependence on foreign oil had to be a national security priority. That hasn't been done."
"So today Americans continue to pay what I call a terror tax--the price we pay in insecurity for our dependence on foreign oil. I call it a terror tax because when each of us pulls up to the corner gasoline station and pays $2.40 a gallon, or so, for gasoline, a portion of that money goes to foreign governments that in turn send it out the back door to Islamist extremists who use the money to perpetuate hate and terrorist acts."

"This legislation does virtually nothing to reduce our dependence on foreign oil."

Wyden offered an amendment during the conference committee to increase the automobile efficiency standards by 1 mile per gallon for 5 years in a row, offering that this would decrease demand for foreign oil. This amendment was not accepted despite evidence that this was easily in reach of the industry.

Referring to unnecessary subsidies, Wyden quotes the President as saying, "when oil is trading at upwards of $55 a barrel, the oil companies are not in need of any more incentives."

The senator concluded by saying:

"the most patriotic thing this Congress could have done in the summer of 2005 was to write an energy bill that did three specific things: reduce our dependence on foreign oil, lower gasoline prices for working families and businesses, and end the energy subsidy smorgasbord that has offered these heaping helpings of taxpayer dollars to the energy industry for decades."
"I am sad to say, as one who was involved in this from the outset as a member of the committee and the conference committee, that the final product does not accomplish any of those three things. It doesn't reduce our dependence on foreign oil. Nobody has to take my word for it. That has been on the front pages of the papers all this week. It doesn't lower gasoline prices. And, again, you don't have to take my word for it. The President has already stated that. It doesn't end the subsidy buffet for the big energy interests, and you won't have to take my word for that either. You are going to hear those special interests breaking out the champagne bottles all over town in the next few days."

Wyden was the only member of the conference committee to vote against the bill.

Senator Clinton's Objections

Senator Hillary Clinton's vote was notable because it changed from Yes on the first vote, to No on the final vote.[9]

In the Congressional Record, she points out various failing of the bill, and repeatly mentions that the bill will do nothing to reduce dependency on foreign oil.

She said "I oppose the bill for two reasons. First, it contains a number of highly objectionable provisions. Second, it simply ignores several of our most pressing energy challenges, such as our dependence on foreign oil."

The Senator cited problems in the bill including:

Senator Clinton objected to the following items being removed in conference committee or omitted from the bill:

Senator Clinton concluded by saying,

"I see a major missed opportunity. By the President's own admission, this bill won't do anything to reduce gasoline prices, but we know for a fact that it will give billions in tax breaks to companies like Exxon Mobil. It doesn't do nearly enough to push the development and commercialization of clean, next-generation energy technologies, but it gives huge tax breaks to nuclear power, a technology that has been with us for 50 years. And given what we now know about the looming threat of climate change, it makes no sense to make energy policy without integrating a cost-effective strategy to reduce greenhouse gas emissions. But that is exactly what this bill does."

Preliminary Senate Vote

June 28, 2005, 10:00 AM Yeas - 85, Nays - 12

Conference Committee

The conference committee, including 14 senators and 51 house members. The senators on the committee were: Republicans Domenici, Craig, Thomas, Alexander, Murkowski, Burr, Grassley and Democrats Bingaman, Akaka, Dorgan, Wyden, Johnson, and Bacus.

Final Senate Vote

July 29, 2005, 12:50 PM[10] Yeas - 74, Nays - 26

Legislative History

Stage House of Representatives Senate
Initial Debate
Introduction April 18, 2005 June 9
Committed April 18 June 14
Committee Name(s) Energy and Commerce
Education and the Workforce
Financial Services
Agriculture
Resources
Science
Ways and Means
Transportation and Infrastructure
Committee Stage April 18 to 19
Committee Report April 19
Floor Debate April 19 to 21 June 14 to 23

Cloture invoked June 23, [11]

Passage April 21, [12] June 28, [13]
Conference Stage
Conference Demanded/Accepted July 13 July 1
Conference Meetings July 14 to 24
Report Filed July 27
Final Passage
Final Debate July 28 July 28 to 29
Budget Act waived, July 29, [14]
Concurrence and Passage July 28, [15] July 29, [16]
Presented to President August 4
Signed August 8

See also

References

  1. ^ http://en.mediaopedia.org/2006/12/ir-2006-184-1-billion-in-tax-credits.html
  2. ^ nei.org, nei.org
  3. ^ Detailed 2005 breakdown nei.org - PDF, 29kB)
  4. ^ Washington Post
  5. ^ MSNBC
  6. ^ Executive Order 13149, at the U.S. Dept. of Energy, April 21, 2000
  7. ^ nationalcenter.org
  8. ^ Senate Record
  9. ^ Congressional Record
  10. ^ Votes from all Senators
  11. ^ 92-4 senate.gov
  12. ^ 249-183 clerk.house.gov
  13. ^ 85-12 senate.gov
  14. ^ 71-29 senate.gov
  15. ^ 275-156 clerk.house.gov
  16. ^ 74-26 senate.gov

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2005 in law | United States federal energy legislation | United States federal taxation legislation

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