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Senate passes energy bill, House talks loom

Posted on: Tuesday, 28 June 2005, 18:16 CDT

By Chris Baltimore

WASHINGTON (Reuters) - The U.S. Senate on Tuesdayoverwhelmingly passed a wide-ranging energy bill that doublesuse of corn-blended ethanol, shores up electricity gridreliability and offers $16 billion in tax breaks and incentivesto boost domestic production.

The 1,250-page bill, which passed 85-12, still must bereconciled with an $8 billion energy package passed by theHouse of Representatives in April before a final version issent to President Bush.

Even as industry leaders and the White House offered kudos,knotty problems like the bill's pricetag and lawsuit protectionfor makers of a water-polluting fuel additive must be solvedbefore Congress can deliver a bill for Bush to sign into law.

"I urge the House and Senate to resolve their differencesquickly and get a good bill to my desk before the Augustrecess," Bush said in a statement.

As U.S. crude oil prices hit record highs above $60 earlierthis week, U.S. Energy Secretary Sam Bodman said the bill woulddo little in the near term to ease the pain for consumers.

"This is the first step on what will be a long road" towardmore U.S. domestic energy supplies, Bodman said.

The White House has called for $6.7 billion in taxincentives over a decade, and criticized incentives in theHouse bill for providing tax breaks for long-establishedtechniques for oil and gas production.

The Senate bill extends billions of dollars in taxincentives to build new nuclear and cleaner coal-fired plants,as well as energy from solar, wind and other renewable sources.

It also encourages electric grid investment and sets higherreliability standards for utilities in a bid to avoid a repeatof the 2003 blackout that left 50 million people in the dark.

In a boon to Midwest farmers, the bill requires refiners todouble use of corn-blended ethanol in gasoline to 8 billiongallons by 2012, versus 5 billion gallons in the House version.

Missing from the Senate plan are several contentious issuesapproved by the House.

Chief among them are a ban on product-defect lawsuitsagainst makers of a water-polluting fuel additive called MTBEand allowing oil and gas drilling in Alaska's Arctic NationalWildlife Refuge, which is a top White House priority.

House-Senate negotiations could be easier if congressionalleaders place the lawsuit ban in a highway funding bill thatCongress could consider this week. House Majority Leader TomDeLay left the door open on Tuesday for that approach.

"We'll look at what the solution is. When we figure outwhere to put it, that's where we'll put it," DeLay toldreporters.

Although Energy Committee Chairman Joe Barton has declinedto comment, Democratic aides say Barton was eyeing the highwaybill as the home for the MTBE provision.

Formally named methyl tertiary butyl ether, MTBE is a fueladditive like ethanol. For years, MTBE defenders have demandedliability protection for MTBE as the price for larger use ofethanol, a politically popular fuel.

The Senate bill doesn't give MTBE makers lawsuitprotection, but gives them $1 billion in transition assistanceto make other fuel additives.

U.S. refiners began adding MTBE to gasoline in 1979 as ananti-knock agent that replaced lead, but MTBE has seeped intowater supplies in all 50 states through leaky storage tanks,rendering the water undrinkable.

Source: REUTERS

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