Energy bill falls short, but still alive

For the second year in a row, big benefits to the propane industry didn’t quite make it through Congress.

But unlike 2002, when each house passed an energy bill but failed to reconcile the two versions, conferees in 2003 agreed on the Energy Policy Act, which provides tax benefits for the propane industry and some increased grant money.

While the House approved the conference report, opponents in the Senate blocked a vote in November, charging that the bill gives too many benefits to big business. The Senate could vote on the same bill early in 2004, or conferees could drop some provisions the objectors find offensive.

The bill does not include a provision pushed by the National Propane Gas Association to allow a tax credit for buyers of propane as automotive fuel. The Senate had earlier approved the provision but the House did not.

Some of the bill’s provisions are:

Tax benefits for vehicles

• Buyers of propane-powered vehicles could claim the entire clean-fuel vehicle deduction through 2006. Previous law phased it out after 2004.
• Taxpayers can deduct up to $150,000 per site for the cost of clean fuel refueling property, up from $100,000 in current law. Also, the act would expand the definition of clean fuel to include hydrogen produced from propane. The deduction lasts through 2008, except for hydrogen (2011).
• Buyers of alternative fuel vehicles could get tax credits of up to $40,000 depending on the cost of gasoline-powered equivalents, emissions, and size.

Credits for buildings

• Builders and homeowners would get a 20 percent, non-refundable credit on the price of energy efficiency materials (insulation, exterior windows, etc.), up to $2,000 per unit between the years 2004 and 2006. Homeowners could apply the credit against both the regular tax and alternative minimum tax.
• Manufacturers would get a credit of up to $100 for energy efficient washing machines and $150 for refrigerators built between 2004 and 2007.
• Builders of commercial properties could claim credits of up to $1.50 per square foot for energy efficient properties built by 2010.

Levels of direct spending

• Authorization of the Low Income Home Energy Assistance Program would get increased to $3.4 billion for each of the next three years. The Department of Health & Human Services would get a year to recommend a new formula for apportioning funds among states, considering average costs and usage of heating and air conditioning homes in different regions.Separately, the Senate Committee on Health, Education, Labor & Pensions approved the Poverty Reduction & Prevention Act, which would increase LIHEAP funding by the same amounts with unspecified funding for the four following years.

  It also would issue emergency funds if the number of heating or cooling days for a month was more than 100 above the 30-year average in a state or region, or if home energy costs increase by 20 percent above the five-year average for a given month.

  The National Energy Assistance Directors Association predicts the increase would raise the percentage of eligible households from 17 to 32. PRPA would also allow $600 million a year in emergency funds. Under EPA, Weatherization would get $325 million in 2004, $400 million in 2005 and $500 million in 2006.

  • Local agencies providing transportation to public schools could get grants under a new Green School Bus Pilot Program for using alternative fuel-powered buses. The program begins in 2005 with $45 million, grows to $65 million in 2006 and $90 million in 2007, and unspecified sums in 2008 and 2009.
  • The legislation creates a new Low Income Community Energy Efficiency Pilot Program with $20 million per year in 2003-05 for grants to local governments and non-profits to improve energy distribution and conservation in poverty areas.
  • Finally, the bill would provide unspecified grants to states through 2012 for the Energy Efficient Appliance Rebate Program to give consumers refunds for buying Energy Star appliances.

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  Briefly speaking

  RSPA pushes through incident reporting rule

  The Research & Special Programs Administration has issued final rules modifying the federal incident reporting requirements and the hazardous materials incident report form.

  The National Propane Gas Association had joined The Fertilizer Institute in opposing many aspects of the rule changes. NPGA had supported exempting “de minimis” releases to avoid nuisance reporting, but the Department of Transportation disagreed and made the rule apply to propane.

  NPGA also opposed another provision that requires companies to file a report in situations in which product retention systems are damaged but no propane is released. The new rule requires reports be filed when repairs to the damaged component are needed. NPGA plans to seek reconsideration of the provision, asking the DOT to require reporting only where immediate repair of to the product retention system is required. Details are in the Dec. 3 Federal Register.

  RSPA also proposed to formally incorporate certain widely-used exemptions to hazmat regulations into its rules. These include use of salvage cylinders and meters. Details are in the Dec. 4 Federal Register. RSPA is taking comments until Feb. 6.

  Propane prices rising

  The average residential propane price at the start of December rose 16.6 cents per gallon from a year earlier, including one-tenth of a cent in November. Wholesale prices dropped 7.9 cents over the year and 0.9 cents in November to 62.9 cents, according to the Energy Information Administration.

  Pipeline safety advisory issued

  The Office of Pipeline Safety issued an advisory bulletin to pipeline operators warning them to check new steel lines. Stray electrical currents can cause external corrosion. Details: Nov. 12 Federal Register.