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NEPP
・ Increases funding for energy efficiency programs, encouraging the development of fuel-efficient vehicles, creating tax credits to encourage consumer conservation, and expanding DOE conservation programs
・ Expedites permitting for infrastructure improvements, expands research on reliable energy transmission, and removes regulatory barriers
・ Expands the use of alternative and renewable energy such as wind, solar, biomass, and geothermal energy and provides for the safe expansion of cheap, clean, and safe nuclear energy
・ Increases funding for clean coal research
・ Directs DOE to undertake a review of existing energy efficiency and alternative and renewable energy research and development programs to assure that future program budget allocations are performance-based and modeled as public-private partnerships
・ Provides $285 million for energy efficiency and renewable energy research and development
・ Increases the industry cost share beyond the current average 50-percent share for some DOE programs, especially as research and development projects move closer to commercialization
・ Enacts a new tax credit for investments in combined heat and power systems or shortens the depreciation life for combined heat and power projects
・ Provides temporary income tax credits for the purchase of new hybrid and fuel cell vehicles, which would be available for all qualifying light vehicles, including cars, minivans, sport utility vehicles, and light trucks
・ Proposes pipeline safety legislation that would significantly strengthen the enforcement of pipeline safety laws
・ Directs the Secretaries of Energy and State to coordinate with the Secretary of the Interior and the FERC to work closely with Canada, the State of Alaska, Congress, and other interested parties to expedite the construction of a pipeline to deliver natural gas to the lower 48 States, including proposing to Congress any modifications to the Alaska Natural Gas Transportation Act of 1976 that may be necessary
・ Proposes the development of legislation to implement electricity restructuring that promotes competition, protects consumers, enhances reliability, improves efficiency, promotes renewable energy, repeals the Public Utility Holding Company Act, and reforms the Public Utility Pegulatory Policies Act
・ Proposes the development of legislation to grantauthority to obtain rights-of-way for electricity transmission lines only when absolutely necessary, with the goal of creating a reliable national transmission grid
・ Provides several tax incentives to help increase the contribution that alternative and renewable energy makes to the Nation's energy supply and extends the present 1.7 cents per kilowatthour tax credit for electricity produced from wind
・ Expands tax credits for electricity produced using renewable technology, such as biomass; extends the present 1.7 cents per kilowatt hour tax credit for electricity produced from biomass; expands eligible biomass sources to include forest-related sources, agricultural sources, and other specified sources (for existing biomass facilities, the credit for electricity produced from the new sources is 1.0 cent per kilowatthour for 3 years of production, 2002-2004); and proposes a tax credit for electricity produced from co-firing biomass from new sources of 0.5 cent per kilowatthour for 3 years of production, 2002-2004
・ Proposes a new 15-percent tax credit for individuals who purchase photovoltaic equipment or solar water heating equipment for use in an individual residence, up to a maximum credit of $2,000 for each type of equipment, which would be available for 2002-2007 for photovoltaic equipment and 2002-2005 for solar water heating equipment
・ Proposes to extend the excise tax exemption for gasohol (ethanol mixed with motor fuels) and the income tax credit for ethanol used as fuel beyond 2007, when they are scheduled to expire
・ Proposes to encourage an alternative source of energy near population centers by providing tax credits for energy produced from landfill gas, which would be available for energy produced from methane from regulated landfills that are required by the EPA to collect and flare methane and for unregulated landfills
・ Supports reauthorization of the Hydrogen Energy Act
・ Supports legislative or administrative reform of the hydropower licensing process to make the hydropower licensing process more clear and efficient, while preserving environmental goals
・ Proposes that Congress authorize exploration and, if resources are discovered, development of the 1002 Area of ANWR; and that any legislation should require the use of the best available technology and should require that activities will result in no significant adverse impact to the surrounding environment
・ Urges Congress to pass legislation to use an estimated $1.2 billion of bid bonuses from leasing of ANWR for additional funding of research on alternative and renewable energy resources, including wind, solar, geothermal, and biomass
・ Allows taxpayers (other than regulated utilities) to make deductible contributions to a nuclear decommissioning fund and permits nuclear decommissioning funds to accumulate the full amount needed for decommissioning
・ Reauthorizes the Price-Anderson Act
・ Directs the EPA Administrator to work with Congress to propose legislation that would establish a flexible, market-based program to significantly reduce emissions of sulfur dioxide, nitrogen oxides, and mercury from electric power plants generators; propose mandatory reduction targets for emissions of sulfur dioxide, nitrogen oxides, and mercury; phase in the reductions over a reasonable period of time, similar to the successful acid rain reduction program established by CAAA90; provide regulatory certainty to encourage utilities to install newer, cleaner, more efficient systems; and provide market-based incentives, such as emissions trading credits, to help achieve the required results
・ Directs the Secretary of the Interior to work with Congress to create a Royalties Conservation Fund that would earmark royalties from new oil and gas production in ANWR to fund land conservation efforts and would be used to eliminate the maintenance and improvements backlog on Federal lands
・ Requests a fiscal year 2002 budget of $1.7 billion for the Low-Income Home Energy Assistance Program (LIHEAP), which would be an increase of $300 million from last year's non-emergency appropriation
・ Proposes $1.2 billion in additional funding for the weatherization program over 10 years, roughly double the current level of spending.
Renewal of the Price-Anderson Act
The Price-Anderson Act, first passed in 1957 as an amendment to the Atomic Energy Act of 1954 and renewed three times since, will expire on August 1,2002. The Act provides for payment of public liability claims in the event of a nuclear incident. Several bills have been introduced in the Senate to provide a 10-year extension to the Price-Anderson Act, including S. 388, the National Energy Security Act of 2001; S.472, Nuclear Energy Electricity Supply Assurance Act of 2001; and S.597, the Comprehensive and Balanced Energy Policy Act of 2001.
The goals of the Price-Anderson Act were to ensure that adequate funds would be available to the public to satisfy liability claims in the event of a nuclear accident and to permit private sector participation in nuclear energy by removing the threat of potentially enormous liability. Each nuclear reactor is required to be covered by the maximum liability insurance available from private insurers (currently $200 million). In addition, for each reactor, payment of up to $88 million into a supplemental insurance pool may be required if it is needed to cover damages in excess of the insurance coverage. Today, the total protection available in the event of a nuclear accident is over $9 billion. The Price-Anderson Act covers all currently licensed reactors throughout their lifetimes; however, new units will not be covered after August 1, 2002, unless Congress approves a renewal of the Act.
Analysis of North American Natural Gas Markets
On April 25, 2001, the Secretary of Energy, Spencer Abraham, asked EIA to conduct two studies of the North American natural gas market due to public concern about "tight supplies, volatile prices, and regional price disparities" during the winter of 2000-2001. The first study. U.S. Natural Gas Markets: Recent Trends and Prospects for the Future, released in May 2001 [10], eXamined the causes for high natural gas prices in the 2000-2001 winter, based on data available in the spring of 2001 and the prospects for the future as forecast in EIA's April 2001 Short-Term Energy Outlook. The study concluded that the high natural gas prices were caused by higher than normal demand; low natural gas prices in prior years, which resulted in a scarcity. of wellhead gas production capacity relative to the high demand; a low level of working gas in storage at the beginning of the winter; and regional constraints on natural gas transmission.
The second study, U.S. Natural Gas Markets: Mid-Term Prospects for Natural Gas Supply, released in December 2001 [11] , updated the first analysis using more recent market data and provided a more detailed examination of the future prospects for U.S. natural gas markets. Four topics were specifically requested for consideration in the second study: the impact of drilling on wellhead gas supply, the potential for future imports of liquefied natural gas (LNG), the impact of removing access limitations to Federal lands and offshore areas on future natural gas supply, and improvements in data collection that would support a better understanding of natural gas markets.
Natural gas prices have declined since the winter of 2000-2001 due to lower demand and an increase in new wellhead supplies stimulated by the earlier high prices. The price reductions and reeord storage additions during 2001 indicate that the U.S. natural gas market has the self-correcting mechanisms associated with well-functioning markets, which bodes well for the market outlook, as domestic resources are expected to be substantial. The potential for foreign supplies is limited by U.S. capacity to import them. U.S. import capacity is expandable, given favorable economics.
Short-term price cycles are likely to be inevitable in a competitive market. When the industry operates at close to full capacity, small changes in supply and/or demand can cause significant market pressures that result in substantial price changes. The market experience in 2000-2001 shows that natural gas prices are vulnerable to short-term fluctuations in market conditions.
Large and unpredictable swings in natural gas prices impose considerable risk on investments in natural gas supply and consumption. An unpredictable price environment would shift the mix of natural gas supply investments away from long-term investments, such as LNG terminals and the Alaskan pipeline, toward short-term investments, such as conventional onshore drilling for natural gas. Such price behavior could also favor coal-fired facilities over natural-gas-fired facilities.
The construction of new LNG terminals and increased access to restricted areas would make more natural gas supply available, which could moderate future price increases. Increased access to Federal lands would increase the exploitable resource base in the Rocky Mountains by 29 trillion cubic feet and reduce the costs and development time for exploiting an additional 59 trillion cubic feet of Rocky Mountain resources. In the Outer Continental Shelf region, increased access would expand exploitable offshore resources by 58 trillion cubic feet. Under a high natural gas demand scenario, such as meeting a carbon dioxide emissions target, increased access to restricted areas is projected to increase domestic production in 2020 by about 1.1 trillion cubic feet over the reference case projection, while reducing well head natural gas prices by 15 cents per thousand cubic feet. When reference case assumptions are combined with alternative LNG costs in the cases with carbon dioxide emissions limits, LNG is projected to provide an incremental 0.9 trillion cubic feet of natural gas supply in 2020 at an average price that is 9 cents per thousand cubic feet lower than projected in the reference case.
With respect to natural gas data collection, EIA faces a number of challenges with regard to both the scope and quality of current natural gas data series. The collection of natural gas production and wellhead price data involves a challenge of timeliness, because monthly data submitted by the States and by the Minerals Management Service of the U.S. Department of Interior undergo numerous revisions before being finalized by the reporting agencies. The collection of natural gas consumption and end-use price data involves the challenge of completeness, because the restructuring of the natural gas industry, which began in the mid-1980s, expanded the number of market participants and changed business practices so that the current respondents sometimes do not know either the final use of the natural gas or its burnertip price. Efforts to correct these data inadequacies, which are crucial to serving the public need for timely, accurate, and complete natural gas data, are underway.
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