Comprehensive Federal Energy Legislation–the 2003 Conference Report

Background. 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 has been working on its newer version of the bill in 2003.

On July 31st, 2003 the Senate voted abruptly to substitute the text of its 2002 bill for the current version. This broke a procedural impasse by giving Democrats a nominal win on the bill's content, because they had been in the majority in 2002 and thus preferred the 2002 bill to the current version. However, the Republican conference chair, Senator Domenici, made it clear that he would use provisions from the 2003 Energy Committee-passed bill in drafting the conference bill. That proved to be the case, as the conference bill was largely drafted in closed sessions by the majority, and excludes many of the provisions of the 2002 Senate bill.

Efficiency Title. The conference draft included most of the efficiency title from the 2002 bill, based on consensus agreements. Key provisions include: (1) new standards to improve the efficiency of building transformers, torchiere lighting fixtures, exit signs, traffic lights, unit heaters, and compact fluorescent bulbs, and direction to DOE to set new efficiency standards on several other products; (2) a new program to encourage and assist industrial firms to make voluntary commitments to improve energy; (3) a new efficient public buildings program; (4) improvements to the federal energy management program and federal housing programs; and (5) directions on improving the federal Energy Guide appliance labeling program. The conference draft also included new standards language that adds unit heaters and compact fluorescent lamps to the legislation, and strikes a compromise on state pre-emption, largely preserving states' rights to set their own standards for product not covered by federal law.

Tax Title. The conference draft contained a blend of the House and Senate provisions on federal tax incentives for a variety of energy supply and energy efficiency technologies and practices. In the area of efficiency, the conference draft included efficient new cars, new and existing homes, commercial buildings, refrigerators, clothes washers, fuel cells and combined heat and power systems. However, it left out provisions that were in the 2002 Senate bill for efficient furnaces, heat pumps, central air conditioners and water heaters.

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 imposing new constraints on the federal agency that conducts CAFÉ rulemakings, and by extending the "dual-fuel loophole" that gives manufacturers CAFÉ credit for making vehicles than 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 conference draft 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 lacked 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 conference draft also left out a major oil savings provision in the 2003 Senate bill, which was Senator Landrieu's amendment that would have required the President to take steps that would save 1 million barrels of oil annually by the year 2013. This provision, like the missing electricity provisions, would have roughly doubled the energy savings estimate for the bill.

Congressional Action on the Conference Report. The conference committee voted out the bill on November 18, 2003, followed by a House vote to approve the bill on November 19. The conference report was debated in the Senate, but on November 21, a vote to end debate failed 57-40 (by Senate rules, 60 votes are needed to end debate on a bill). After trying unsuccessfully to find the additional few votes needed to bring the bill to a vote, the leadership postponed further consideration. In 2004, the bill was not brought back to the Senate floor as additional attempts to garner votes were unsuccessful.

Estimated Energy Savings. Overall, the conference bill saves less energy than the 2003 Senate bill, but more energy than the 2003 House bill. However, the bill saves less than one-quarter of the energy than ACEEE's estimates for a bill that contains robust efficiency provisions missing from the conference draft, including fuel economy standards and electricity efficiency provisions. In 2020, the conference draft would save about 3% of U.S. energy use, compared to about 12% for a bill with our recommended efficiency provisions.