Platts Inside Energy: Reid, Bingaman Eye Priorities for New Congress

By Jean Chemnick

The 111th Congress was sworn in last week with larger Democratic majorities on both sides of the Capitol, spurring Senate Majority Leader Harry Reid to announce his intention of passing legislation to combat global climate change and to slash the country’s use of oil, coal and other fossil fuels.

Reid, a Nevada Democrat, introduced a placeholder bill Tuesday that called for “legislation to improve the economy and the security of the United States by reducing the dependence of the United States on foreign and unsustainable energy sources and the risks of global warming.”

The so-called “Cleaner, Greener and Smarter America Act” (S. 5) will be amended in the coming weeks and months by legislation produced by the two Senate committees with jurisdiction over energy and environmental issues.

The Senate Energy and Natural Resources Committee heard testimony last week that will help inform legislation going forward, including its contribution to S. 5. Bingaman is working with the panel’s new ranking

Republican, Alaska Senator Lisa Murkowski, in the hopes of making the bill a bipartisan effort, according to committee spokesman Bill Wicker.

One issue that Bingaman has said he plans to consider this Congress is whether to give the Federal Energy Regulatory Commission more authority to site electric transmission lines to build new capacity to relieve pressure on the nation’s energy grid.

But Dianne Nielson, an energy expert who testified at the hearing on behalf of the Western Governors’ Association, urged lawmakers not to boost Washington’s authority to site power lines.

“I think there’s sufficient [federal] authority at this point; it becomes a matter of identifying the best locations,” Neilson said. Karen Harbert, executive vice president of the Institute for 21st Century Energy at the US Chamber of Commerce, disagreed.

Harbert, who formerly served as an assistant energy secretary in the Bush administration, pointed out that states often sue the Federal Energy Regulatory Commission over siting isues.

She proposed giving FERC greater authority to site such lines. Bingaman also asked the witnesses whether they would support restructuring the federal tax credit that oil refiners receive for blending ethanol and into their gasoline products. Some lawmakers say the so-called blender’s credit should be increased when oil prices drop — as they have in recent months — so that demand for ethanol does not plummet as well.

Bingaman noted that gasoline is currently less expensive than ethanol, which he said is “reducing demand for biofuels in a way that is causing some ethanol plants to shut down.”

Bingaman also wondered whether the federal government should raise the limit for blending ethanol into regular-grade gasoline, which currently stands at 10%. Raising the limit beyond that level would be a boon for ethanol companies and corn-based agribusinesses, but auto companies have warned that higher ethanol blends could harm car and truck engines.

The panel generally expressed support for tying ethanol subsidies to the cost of oil, as a way of keeping them competitive.

Harbert said that distributing ethanol for higher blends might prove to be a challenge. “A huge increase of biofuels — do we have the infrastructure there capable to deliver that?” she asked. “Congress should look at that.”

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