Energy plan promises lots of goodies

The plan for a new national energy policy that passed the House before the August congressional recess provides a series of tax breaks, increased assistance for low-income households, mandates on government and grant programs. It combines the works of four House committees with various jurisdictions over energy policy.

In the tax category, the SAFE Act of 2001 would create a series of tax benefits for conserving and developing energy. An Alternative Motor Vehicle Credit would range from $4,000 to $40,000 for buying vehicles powered by propane, depending on the size of the vehicle.

The bill would reduce the recovery period for natural gas gathering lines to seven years, clarifying ambiguity that has led to litigation over current law that divides it into two classes depending on whether the use is for transportation or discovery. The bill would also treat natural gas distribution lines as 10-year property, down from 20 years in current law. The House hopes the change will encourage development.

Manufacturers of washing machines could get an Energy Efficient Appliance Credit. The credit would amount to $50 per washer with a MEF of 1.26 up to 1.42 and $100 for machines with an MEF of 1.42 or greater (1.5 or greater after 2004). No manufacturer could claim a lifetime credit above $30 million for each size.

The bill would create several deductions for improving building energy efficiency. Homeowners could get a 20 percent tax credit of up to $2,000 for improving energy efficiency of their dwellings, and builders could get credits for adding energy-saving measures to new homes. Taxpayers could take the credits for the costs of insulation, windows, skylights and metal roofs designed to affect heat loss.

Owners of commercial buildings could also get a credit for air control and water heating efficiency more than 50 percent more efficient than a reference building meeting Standard 90.1-1999 of the American Society of Heating, Refrigerating & Air Conditioning Engineers.

Consumers could take a $30 credit for installing energy management devices allowing them to read their energy use daily and thus know how much they are using at any given hour. That could help consumers devise ways to reduce energy costs, say by washing laundry at off-peak hours. They could depreciate the costs of such devices in three years.

The economically disadvantaged would also get some help. The legislation would authorize $250 million in 2002, $325 million in 2003, $400 million in 2004 and $500 million in 2005 for the Weatherization Assistance Program. Another $3.4 billion a year would go for the Low-Income Home Energy Assistance Program.

Despite jacking up LIHEAP authorization, the bill would also require the General Accounting Office to study whether LIHEAP and other energy assistance discourages dwellers from investing in energy conservation.

It also requires the Department of Energy and Environmental Protection Agency to study whether to extend the Energy Star program to residential water heaters, boilers and other products.

DOE would get $5 million in 2002 and 2003 to develop a public education campaign on the benefits of regular maintenance of climate control systems. Federal offices would have to use Energy Star products when available.

Also, federal agencies could buy heat pumps and air conditioners only if they meet tough efficiency standards.

As an inducement to get people to use alternative auto fuel, the bill would allow driver-only vehicles in high occupancy vehicle lanes if they drove propane-powered vehicles.

It would create a pipeline integrity project jointly managed by the departments of Transportation and Energy with the Federal Energy Regulatory Commission. The project would examine improving inspection methods. The project would get nine months to develop a five-year plan and $3 million – from user fees – to do it.

The bill would authorize a one-time $200 million pot for grants to develop alternative fuel vehicles for governments to transport people and things. Up to 15 state and local agencies could get grants to buy propane and other alternative-fueled cars, trucks, buses and motorcycles for transportation, law enforcement, deliveries, etc.

Finally, a new grant program at the Department of Energy would help school systems buy buses that run on alternative fuels, including propane. The plan could get $40 million in 2002, $50 million in 2003, $60 million in 2004, $70 million in 2005 and $80 million in 2006.

IN BRIEF

• Tax breaks for auto fuel
  The Senate spent the summer conducting hearings and its committees will probably take up energy legislation this fall. It did get some prodding to include tax benefits.
  Tax credits are the way to go to boost the use of propane as an auto fuel, says the Alliance of Automobile Manufacturers in Senate testimony. Greg Dana, alliance vice president for environmental affairs, endorsed the provisions in the National Energy Security Act and the CLEAR Act that would provide tax credits, including ones to consumers for buying alternative vehicle cars and to distributors for selling alternative fuels.
  Tax credits would help change the infrastructure that has kept the auto industry focused on gasoline and diesel vehicles for a century, Dana said. “These advanced technology vehicles are more expensive than their gasoline counterparts
  during early market introduction.” And while tax cuts won’t cover all the added costs, “they will help bridge the gap toward winning broad acceptance among the public leading to greater volume and sales figures…”
  So far, more than 1 million vehicles representing more than 25 models use alternative vehicles.
• More energy assistance
  Help is on the way for more households suffering from high energy bills. President George W. Bush signed a supplemental spending bill with $300 million in additional money this year for LIHEAP.
  It says that states with the most critical needs get half the money. The Administration for Children & Families could give the funds to states with energy price spikes, supply disruptions, weather emergencies or high unemployment.
  ACF must give the other half based on the block grant formula, so each state will get a share. ACF gets the money immediately, but states can take as long as they need to spend it.
• Hazmat transportation study
  The Senate added a measure to the Department of Transportation bill requiring a study of hazards and risks of hazmat transportation. The study, due six months after enactment of the bill, would have to cover the adequacy of federal oversight, possible infrastructure improvements, the ability of all governments to respond to emergencies, and the availability of public information about shipments.
• Gas pipeline damage
  The Gas Technology Institute will undertake a two-year research program on mechanical pipeline damage. The Research & Special Programs Administration awarded the cooperative agreement to study the cause of many accidents. GTI will examine magnetic flux leakage as a way to assess metal loss, mechanical damage and cracks. The researchers plan a public meeting on their status Sept. 27 in Atlanta.
• Appliance energy data
  Appliance manufacturers won’t have to change their energy consumption disclosures. The Federal Trade Commission ruled that makers of water heaters, furnaces, boilers, washing machines, pool heaters, etc.can continue with the
  same energy guide listings that compare energy efficiency with other models.
  FTC determined, based on data supplied in the last year, that circumstances (changes in design, new models, dropped models) haven’t changed enough in the last year to warrant changing the rule.
• Engleman appointment
  The Senate Commerce, Science & Transportation Committee has approved Ellen Engleman as administrator of the Research & Special Programs Administration, but her nomination is being stalled in the Senate.
• Hazmat comments sought
  RSPA has extended the public comment period on hazmat loading, unloading and storage until Nov. 30
  The federal agency is trying to clear up confusion about whether the hazmat regulations apply to particular operations and activities related to the transportation of hazardous materials in commerce.
  The agency also announced it will take oral testimony at two public meetings: Sept. 14 in Washington, DC; and Oct. 30 in Diamond Bar, CA.