Comprehensive Federal Energy Legislation—the 2005 Final Bill
Background and Calendar. Congress undertook omnibus energy
legislation beginning in 2001, following issuance of the President's
National Energy Policy report. The House of Representatives passed
comprehensive energy legislation in August 2001 and, after an inconclusive
conference in 2002, voted out a similar bill in April 2003. The
Senate passed a bill in April 2002 and re-voted the same bill in
2003. The 2003 conference report failed to win passage in the Senate.
The 109th Congress took up the energy bill again in 2005, with
a House version passing in April and a Senate version passing in
June. A conference committee met in July and with remarkable speed
sent a conference report to the floor the last week of July. The
Senate and House both approved the bill with substantial majorities
that same week, and the President signed the bill on August 8.
Efficiency Title. The final bill includes most of the efficiency
title from the 2003 bill, plus several new provisions—primarily
more equipment efficiency standards, based on consensus agreements.
Key provisions include:
Equipment
efficiency standards
- Sets consensus
equipment efficiency standards on 16 products—exit signs,
traffic lights, building transformers, torchiere lighting fixtures,
compact fluorescent lamps, commercial unit heaters, residential
dehumidifiers, commercial refrigerators and freezers, large commercial
air conditioners, commercial ice makers, commercial clothes washers,
pedestrian signals, mercury vapor lamp ballasts, fluorescent lamp
ballasts, pre-rinse spray valves (used in restaurants), and residential
ceiling fan light kits.
- Calls for
the U.S. Department of Energy (DOE) to set efficiency standards
via a rulemaking on three products—external power supplies,
battery chargers, and refrigerated beverage vending machines.
- Requires
DOE to regularly report to Congress when efficiency standard rulemakings
are behind schedule, including steps being taken to get back onto
schedule.
Other
provisions
- CHP—directs
states to consider adopting model interconnection standards.
- Public
awareness campaign—authorizes a major campaign on how to
save energy and the benefits of doing so.
- Appliance
labeling—directs the Federal Trade Commission to review and
revise the Energy Guide labeling program to make it more
effective.
- Energy
efficiency resource standards—authorizes a pilot program
with states and calls for a study with the National Association
of Regulatory Utility Commissioners on state and regional policies
to promote energy efficiency.
- Industrial
voluntary commitments—directs DOE to set up a program to
encourage and recognize industrial facilities that make voluntary
commitments to improve energy intensity.
- Building
energy codes—expands an existing technical assistance program
to states to include a component on code implementation.
- Research
and development—authorizes continued and new programs in
many different sectors.
- Federal
facilities—updates savings goals for federal facilities and
authorizes a variety of new and continued activities to achieve
these goals. Extends authorization of Energy Savings Performance
Contracts for 10 years.
- High performance
public buildings—authorizes a grant program to states to
assist local government in improving the efficiency of their buildings.
- Appliance
rebates—authorizes a program to co-fund appliance rebate
programs established by states.
- Air conditioner
maintenance education—directs DOE to conduct an education
campaign on the benefits of properly conducted maintenance.
- Public
housing—continues and improves a variety of programs to reduce
energy use in public housing.
- Real time
pricing—directs state utility commissions to consider establishing
real-time pricing programs in their states.
- Daylight
savings time—extends daylight savings time by one month (one
week in the spring, three weeks in the fall).
Tax Title. The final bill contains a blend of the House
and Senate provisions on federal tax incentives for a variety of
energy supply and energy efficiency technologies and practices.
Total efficiency-related tax incentives totaled about $2.3 billion
in the final bill, down from about $5.5 billion in the Senate bill.
The final bill includes incentives for:
- High-efficiency
vehicles, either hybrid or diesel, with credits on a sliding scale
based on efficiency; maximum credit for light-duty vehicles expected
to be about $3,400 for Prius-level performance.
- New homes,
with $2,000 for builders making homes using 50% less energy than
the International Energy Conservation Code (IECC) and $1,000 for
manufactured homes meeting ENERGY STAR® criteria.
- Existing
homes, with 10% of cost up to a $500 limit for:
- Insulation
and envelope improvements meeting IECC specifications
- Windows
meeting IECC specifications, with a cap of $200 per homeowner
- Central
air conditioners or heat pumps meeting 2006 Consortium for
Energy Efficiency specifications (expected to be 15 SEER and
13 EER), capped at $300
- Furnaces
and boilers with Annual Fuel Utilization Efficiency of 95
or better, capped at $150
- Water
heaters with Energy Factor of .80 or better, capped at $300
- Heat
pump water heaters with an Energy Factor of 2.0 or better,
capped at $300
- Ground
source heat pumps meeting specified performance levels, capped
at $300
- Commercial
buildings, with a $1.80 per square foot deduction for buildings
exceeding ASHRAE 90.1-2001 standards by 50% or more, with prorated
deductions available for individual systems.
- Manufacturer
credits for high-efficiency appliances (including refrigerators,
clothes washers, and dishwashers) of up to $175, with a per-manufacturer
cap of $75 million over the credit period.
Vehicle Fuel Economy. Neither the House nor the Senate
elected to take any significant action regarding passenger vehicle
fuel economy. However, the conference report marginally weakened
the existing CAFÉ situation by (1) imposing new constraints on the
federal agency that conducts CAFÉ rulemakings and (2) extending
the "dual-fuel loophole" that gives manufacturers CAFÉ credit for
making vehicles that can burn an alcohol fuel, even if the vehicle
never uses such fuel. ACEEE analysis indicates that full use of
this loophole could erode actual fuel economy of the U.S. fleet
by up to 5%.
Electricity Title. In the electricity title, the final
bill contains new Public Utilities Regulatory Practices Act (PURPA)
compromise language that sustains the ability of combined heat and
power facilities and other non-utility power generators to sell
power into utility grids. However, the electricity title lacks any
other meaningful efficiency provisions, such as a public benefits
fund or an efficiency performance standard for utilities. Such provisions
could have more than doubled the bill's estimated energy savings.
Oil Savings. The final bill also leaves out a major oil
savings provision in the Senate bill, which would have required
the President to take steps that would save one million barrels
of oil annually by the year 2013. This provision would have increased
the oil savings estimate for the final bill almost tenfold.
Estimated Energy Savings. Overall, the conference bill
will save only about half the energy that the Senate bill would
have saved and only about one-tenth the oil savings of the Senate
bill. However, ACEEE estimates that the bill saves less than one-quarter
of the energy relative to ACEEE's earlier recommendations, which
included robust efficiency provisions missing from the final bill
(e.g., fuel economy standards and electricity efficiency provisions).
The bill will save about 2% of U.S. energy use in 2020, compared
to about 10% for a bill with our recommended efficiency provisions.
Visit http://www.aceee.org/press/0507confbill.htm
for ACEEE's comments on and a summary of savings estimates of the
final bill. A more detailed estimate of energy savings is found
at http://www.aceee.org/energy/legsttus.htm.
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