Senate Democrats unveil energy strategy bill, offer to compromise

US Senate Democrats want to work with their Republican colleagues to pass a comprehensive energy bill this year, Senate Minority Leader Tom Daschle (D-SD) said Thursday as Democrats filed their own energy legislation. The latest bill would offer a tax credit to encourage construction of an Alaskan gas pipeline by 2009.
March 22, 2001
3 min read


By Maureen Lorenzetti
OGJ Online


WASHINGTON, DC, Mar. 22�US Senate Democrats want to work with their Republican colleagues to pass a comprehensive energy bill this year, Senate Minority Leader Tom Daschle (D-SD) said Thursday as Democrats filed their own energy legislation.

"We will work with our colleagues to improve the bill, and at the end of the day we are hopeful a comprehensive bill will be passed," Daschle said.

The Democratic legislative package does not yet have Republican cosponsors although there is significant interest by moderates, the plan's sponsor, Jeff Bingaman (D-NM), indicated.

The Democratic energy policy package is similar to the Republican bill in that it seeks to boost domestic production (OGJ Online, Feb. 23, 2001).

Unlike the Republican bill, it would allow a 25�/MMbtu production tax credit for gas produced and delivered to an Alaska gas pipeline, provided one was built before Jan. 1, 2009.

The Democrats� proposals are included in two bills. The Energy Security Tax and Policy Act of 2001 focuses exclusively on tax incentives aimed at increasing domestic supply and reducing demand.

The Bingaman plan offers a "counter-cyclical" tax credit for domestic production. Marginal well producers would get credits of $3/bbl for oil and 50�/Mcf for gas when the price of oil falls below $14/bbl and the price of gas falls below $1.56/Mcf. The credit is phased out between $14 and $17/bbl and $1.56 and $1.90/Mcf. Credits could be carried back 10 years.

For nonmarginal wells, a similar credit could be used during periods of "very" low oil prices. It would apply when crude falls below $11/bbl, phasing out when the price reaches $14.

Also, the bill would permit producers to expense their payments to hold a lease prior to initiation of production. It also allows expensing of geological and geophysical costs.

The bill also offers various tax credits for homeowners installing renewable energy technology. Utilities would get a 10% investment tax credit for clean coal technology projects.

The bill directs the Department of Interior to proceed with Lease Sale 181 in the Eastern Gulf of Mexico this year. The White House has signaled it supports the sale; Gov. Jeb Bush (R-Fla.), the president�s brother, opposes it (OGJ Online, Jan. 29, 2001).

To encourage the construction of new pipelines, Bingaman�s bill would allow them to be depreciated in 7 years.

The second Democratic bill, the "Comprehensive and Balanced Energy Policy Act of 2001," contains non-tax measures.

It has a controversial provision to place temporary price caps on wholesale transmission of electricity in the West.

It also would force automakers to improve fuel efficiency by requiring the Transportation and Energy departments to "implement policies to ensure petroleum use in the light vehicle sector is capped by 2008 at no more than 5% above the 2000 level."

Bingaman's bill is different from the Republican package in that it does not include a provision to open the coastal plain of the Arctic National Wildlife Refuge to drilling.

Democratic leaders said that their bills offer a more "balanced" approach to energy policy than the Republican measure, combining provisions designed both to boost supply and reduce demand.

Daschle accused the Bush administration of trying to "drill its way out" of an energy crisis. Democrats said opening ANWR "8 years down the road" would not solve today's problems.

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