Partner, Duncan, Weinberg, Genzer & Pembroke, P.C.
Excerpts from a speech given at the National Association of
Energy Service Companies' Annual Conference, Dallas, Texas, November
“The Potential Impact of the Mid-Term Elections on U.S. Energy
While there has been a changeover in terms of party control of
the House and Senate, energy policy shifts are expected to be
incremental. Overall, what we are seeing is a smaller and more
conservative Republican conference and a larger and more moderate
House Speaker Elect Nancy Pelosi has indicated that energy policy is
on her short list of items to be taken up within the first 100
hours. She is talking about a proposed expansion in alternative
energy investment and commitment but she and her team are still
formulating what that means.
Democrats will likely want to repeal the oil and natural gas tax
incentives contained in the Energy Policy Act of 2005 and redeploy
those funds to pay for more alternative energy research and
deployment programs. Among the items to be considered include
expansion of the renewable fuels standard from 7.5 billion gallons
to 15 billion gallons and acceleration of the standard to 2010; and
extension of the renewable energy and energy efficiency tax credits
from the present expiration at the end of 2007 to a ten year period.
Moreover, we hope that a long term extension of these tax credits
would also provide the impetus for the IRS to clarify its guidance
with regard to the Commercial Buildings Tax Deduction for the
definition of an “eligible entity” and how energy efficiency work
done in governmental buildings is allocated for tax purposes.
It is expected that Senator Bingaman, the incoming Chair of the
Senate Energy Committee, will push his renewable portfolio standard
on a national basis in order to achieve a 10% renewable energy usage
level by 2020. However, it is unclear whether he will have the votes
on this. Senator Bingaman is also likely to be more aggressive in
pushing certain energy efficiency programs, such as incentives for
building code improvements.
The 2002 Farm Bill will be rewritten this year and that bill
includes an energy title which has some interest to this group.
Section 9006 provides grants and loans for energy efficiency and
renewable energy measures to be utilized by farmers, ranchers and
rural small businesses. Either in the context of the Farm Bill or
through a separate energy bill, it is expected that there will be an
effort to expand the use and production of cellulosic ethanol and
Among the individual bills likely to be considered are the
Bi-Partisan Fuel Choices for American Security Act of 2005, focused
on the transportation sector. There may be a move to pass price
gouging legislation, although it is not clear how that is being
defined. Pipeline Safety legislation is likely to move next year.
Representative Steny Hoyer, in conjunction with co-sponsors Dingell,
Udall and Oberstar have introduced a bill call the Progress Act
which calls for, among other things, the establishment of a National
Energy Security Commission.
Senator Cantwell has introduced a bill to mandate expanded use of
vehicles employing alternative fuels and the installation of
alternative fuel pumps, establish a tax credit for residential
energy costs for the poor, extend renewable and energy efficiency
incentives, and provide bonding authority for state and local
governments to establish greenhouse gas emission reduction programs
and fund oil consumption reduction activities. Incoming Chair of the
Senate Environment and Public Works Committee, Barbara Boxer,
supports mandatory emissions reduction programs and is expected to
focus on global warming issues. She is likely to face pushback
especially from Senator Inhofe of Oklahoma, soon-to-be ranking
member of the Environment Committee. In addition, Senator Norm
Coleman recently introduced a bill to prevent states such as
California and the Northeast (through the Regional Greenhouse Gas
Initiative) from regulating carbon emissions and other greenhouse
Also expected to oppose a far reaching climate change bill is
incoming House Energy and Commerce Committee Chairman John Dingell.
Congressman Dingell is also expected to make it difficult for
passage of an expanded corporate average fuel economy bill. I do
expect that Congressman Dingell will reintroduce his legendary
ferocious oversight of programs like the Administration's slow
effort to implement appliance energy efficiency standards. I also
expect aggressive effort in other areas like oversight of the
management of FEMP, which may be ripe for oversight activity in
either the House or Senate.
Individual members who have had an interest in energy efficiency and
ESCO issues may be in new positions to help provide leadership. For
example, Jack Reed of Rhode Island has taken a very active interest
in promoting sound energy efficiency policies for public housing and
he is in line to get on the Senate Appropriations Committee. The new
senator from Minnesota, Amy Klobuchar, has an interest in pushing
for innovative energy policies and Jon Tester, the new senator from
Montana got into politics originally because of the failed
electricity restructuring efforts in his state.
However, even if Congress does not act expeditiously on these
alternative energy and energy efficiency issues, I think you will
continue to see expanded efforts by the states to move forward to
implement programs and mandates in this area. There has been a
strong movement in recent years for state regulators and legislators
to move the policy agenda in this area. The implementation of the
Western Governors' Association Clean and Diversified Energy Action
Plan, the Regional Greenhouse Gas Initiative, the EPA/DOE Energy
Action Plan and the various EPA programs and partnerships all
provide an opportunity for the industry outside of federal
I think there are three critical issues that may determine what
happens in the next Congress and in the general formulation of
energy policy direction. One is the apparent decision by Russia to
use oil and gas production as a political weapon. This policy has
already forced a government change in Ukraine and the squeeze is
being applied to the Baltics, Hungary, Georgia, Poland and other
former Soviet republics and satellites. I think that the pressure on
the European Union to increase energy efficiency and renewable
investment will be enormous. The second issue will be the growing
energy needs of China and India and how those needs are satisfied.
Finally, I think that the type and magnitude of energy pricing
volatility over the next two years will be critical to world action.