The Renewable Energy Resources

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The Renewable Energy Resources Committee American
Bar Association National Teleconference October
19, 2005
The Energy Policy Act of 2005 A Host of
Sweeping Measures
Edna Sussman Hoguet Newman Regal, LLP New
York, NY 10016 Tel [phone] Esussman_at_hnrlaw.c
om
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Background of the Energy Bill

• Sweeping federal energy legislation following
  four years of debate
• 1725 page final bill which touches on virtually
  every energy source and every aspect of energy
  production, distribution, and use
• 14.5 Billion in tax incentives
• Authorizes billions for R D across technologies
• Mandated future rule making, regulations,
  reports, plans, and programs by FERC and other
  federal agencies, offices and committees will
  define many areas addressed
• A massive Act a few highlights

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Authorization versus Appropriation

• The Energy Act authorization of billions of
  dollars in expenditures is no guarantee that the
  appropriations will be made at those levels.
  Authorizations are intended as guides for future
  congresses as they make budget decisions one year
  at a time.
• Tax measures and certain direct spending programs
  are guaranteed funding.
• Next step is lobbying for appropriations and
  extensions of tax benefits

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Renewable Energy

• Extends production tax credit for facilities put
  into operation by December 2007 for the
  production of Wind, Closed and open loop biomass,
  Geothermal, Landfill gas, Trash combustion, Small
  irrigation
• Hydropower -Tax credits for incremental
  production, expedited permitting, incentive
  subsidies for new facilities and increased
  efficiency
• Solar - investment tax credit increased 10 to 30
  percent for 2 years
• Renewable fuels 7.5 billion gallons in renewable
  fuel to be blended into gasoline supply by 2012
• Provides for clean renewable energy bonds
• Directs national assessment of renewable
  resources
• Authorizes RD

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Structural and jurisdictional changes

• Repeal Of PUHCA ( Public Utility Holding Company
  Act of 1935)
• Amendment of PURPA (Pubic Utility Regulatory
  Policies Act of 1978)
• FERC exclusive jurisdiction over LNG siting
  onshore or in State waters
• Creation of the Electric Reliability Organization
  under FERC oversight
• FERC increased role in transmission siting
  eminent domain authority granted

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FERC chairman statement

• The Act establishes an express prohibition of
  market manipulation, and it authorizes the
  Commission to define that term by rule or order.
  It gives us new tools to prevent the accumulation
  and exercise of generation market power by
  granting us authority to review acquisitions and
  transfers of generation facilities, something we
  did not have previously. It gave us significant
  penalty authority for the first time. It provided
  for enforcement of reliability rules. It also
  gave us authority to issue rules and orders to
  assure price transparency."The new law also
  shows a strong commitment to a robust energy
  infrastructure. It has provisions regarding LNG
  siting, clarifying our exclusive jurisdiction to
  authorize LNG import facilities. It has new
  language, including federal backstop provisions
  on transmission siting. It has provisions on
  transmission pricing reform, something the
  Commission has been pursuing independently for
  2-1/2 years. It has provisions regarding gas
  pipelines, to provide for judicial review of
  state decisions and development of a consolidated
  record."So to me, with the broadest strokes,
  what the bill does is to give us authorities we
  need to prevent unjust and unreasonable rates in
  wholesale power sales, to prevent undue
  discrimination or preference in wholesale power
  sales and transmission service, and to encourage
  the development of a stronger energy
  infrastructure.
• Chairman Joseph T. Kelliher's statement on EPAct
  2005

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Energy Efficiency

• Billions for efficiency and conservation programs
• Introduces energy efficiency standards for 15 new
  products and amplifies Energy Star
• Tax credits for manufacturers who produce certain
  highly efficient appliances
• Authorizes various grants to states for energy
  efficiency
• Effective 2007 extends Daylight Savings Time
  will begin the second Sunday in March (instead of
  the first Sunday in April) and continue through
  the first Sunday in November ( instead of the
  last Sunday in October)
• Establishes public education program
• Authorizes RD

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Green Buildings

• Tax credits for water heaters, heat pumps, air
  conditioners, furnaces and other equipment that
  reach designated efficiency levels and for energy
  efficiency improvements
• Tax credits up to 2,000 for energy efficient
  homes if they achieve savings of 50 per cent or
  more over the 2003 international energy
  conservation code
• Tax deductions for energy efficient commercial
  building property placed in service of up to
  1.80 per square foot that reduce consumption by
  50 compared to ASHRAE standards
• 30 tax credit for residential solar up to 2,000
• Tax credit of 10 percent of the amount paid or
  incurred by the taxpayer for qualified energy
  efficiency improvements to a home up to 500
  lifetime

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Distributed Generation

• Utilities to provide net metering interconnection
  on request
• Utilities to make net metering available
• Utilities to offer smart (time based) metering
• States given deadlines to study standards and
  implementation issues Results?

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Climate Change

• Calls for the establishment of a Committee on
  Climate Change to develop a national strategy.
• Support for demonstration projects
• Calls for report identifying the 25 largest GHG
  emitting developing countries and provide
  assistance.
• Following rejection of a plan for carbon emitting
  reduction credits, a non- binding sense of the
  Senate resolution was passed unanimously stating
  that there was a growing consensus that human
  activity is a substantial cause of the
  accumulation of GHG and mandatory steps to slow
  or stop growth are required. Senate hearings
  have commenced on mandatory climate change
  legislation.

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Clean Coal and Gasification

• Tax incentives to encourage construction of clean
  coal facilities and gasification units
• Significant sums established for coal projects
• Loan guarantees
• Establishes a Clean Air Coal Program

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Nuclear

• Extension of the Price Anderson Act
• Production tax credit for new nuclear facilities
• Loan guarantees
• Standby support for delays in commencement of
  operations
• Decommissioning fund contributions tax treatment
  amended
• Construction of a prototype nuclear project
• New nuclear plants not subject to antitrust laws

13
Hydrogen

• Calls for a coordinated plan for hydrogen and
  fuel cell programs
• Significant RD and demonstration program
• Support for development of solar, wind and
  nuclear technologies for producing hydrogen

14
Oil Gas

• Financial incentives for expanding and developing
  refineries
• Designations to be made of oil, gas and hydrogen
  pipeline corridors
• Various provisions for the development of oil and
  gas on federal lands ( 20 of the US land mass)

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Preventing Market Manipulation

• FERC authorized to prohibit use of manipulative
  and deceptive devices in natural gas and electric
  markets
• Price and availability transparency provisions
• FTC may issue rules to protect consumers
• Expanded penalties, civil and criminal

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Notable Omissions from the Act

• MBTE (Methyl Tertiary butyl ether)
• ANWR ( Arctic National Wildlife Refuge)
• CAFÉ (Corporate Average Fuel Economy) Standards
  for vehicles
• Mandatory Green House Gases reduction program
• National renewable energy credit trading system

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Federal Government Operations

• Increased use of renewable energy set at 3 in
  2007 to 7.5 by 2013 if economically and
  technically feasible
• Goal to install solar systems in 20,000 federal
  buildings by 2010 target at least 150 MW solar
  cumulative acquired during 5 years
• Seeks to have 10,000 MW renewable on public lands
  in 10 years and amendments to facilitate that
  goal
• Directs federal energy conservation management
  plan consumption to be reduced per sq. ft. by
  20 by 2015
• Buildings to be metered to provide data on hourly
  use
• If life cycle cost effective justified- new
  buildings to achieve energy consumption 30 below
  ASHRAE

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• Edna Sussman
• Hoguet Newman Regal, LLP
• 10 East 40th Street
• New York, New York 10016
• Tel [phone]
• E-mail esussman_at_hnrlaw.com