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Energy Bill Raises Fears About Pollution, Fraud

The measure includes $85 billion in subsidies and tax breaks for many forms of energy, including wind power.
The measure includes $85 billion in subsidies and tax breaks for many forms of energy, including wind power. (By Tim Roske -- Associated Press)

The bill's most far-reaching provision may be the repeal of the Public Utility Holding Company Act of 1935, which has blocked the owners of utilities from owning other companies and has prevented mergers in the electricity industry. Utility officials and other proponents of repeal say it will attract capital, helping utilities build transmission lines and generating plants that will prevent blackouts.

Consumer advocates warn that the repeal will trigger a flurry of mergers and acquisitions by banks, oil firms and even foreign countries, leading to increased rates and Enron-style frauds. Supporters point out that the electricity industry will still be regulated by a slew of state and federal agencies. But both sides agree the obscure provision will transform the industry, thrusting as much as $1 trillion in utility assets into the global marketplace.

"This will be one of the biggest economic changes in the country in 70 years," said Lynn Hargis of the liberal consumer group Public Citizen.

The bill's biggest winner was probably the nuclear industry, which received billions of dollars in subsidies and tax breaks covering almost every facet of operations. There were subsidies for research into new reactor designs, "fusion energy," small-particle accelerators and reprocessing nuclear waste, which would reverse current U.S. policy. Rep. Ralph Hall (R-Tex.) even inserted a $250,000 provision for research into using radiation to refine oil.

The bill also included $2 billion for "risk insurance" in case new nuclear plants run into construction and licensing delays. And nuclear utilities will be eligible for taxpayer-backed loan guarantees of as much as 80 percent the cost of their plants.

There has not been a new U.S. nuclear plant in decades, but the industry's supporters say that jump-starting construction will help reduce greenhouse-gas emissions. John Kane of the Nuclear Energy Institute said the federal subsidies for his industry are "simply an effort to get over that first hurdle."

The bill passed the Senate, 74 to 26. All Maryland and Virginia senators voted for the bill yesterday, except Paul S. Sarbanes (D-Md.). In the House on Thursday, the majority of area representatives approved the bill, which passed 275 to 156 . Voting against it were Reps. Roscoe G. Bartlett (R-Md.), Benjamin L. Cardin (D-Md.), Elijah E. Cummings (D-Md.), James P. Moran Jr. (D-Va.) and Chris Van Hollen (D-Md.).

During the debate over the bill's numerous subsidies, taxpayer groups questioned why thriving energy companies need federal aid to produce energy. But the bill's defenders say it is not realistic to expect newer and cleaner technologies to succeed their own. "They need a jump-start," said Tom Kuhn, president of the Edison Electric Institute.

Sometimes, they need more than one push. In the 1990s, then-Sen. Frank H. Murkowski (R-Alaska) helped persuade Congress to spend $117 million on an "clean coal" plant in Healy, Alaska, but the factory was quickly mothballed. A potential buyer recently declared it "fatally flawed by faulty design and unproven experimental technology." Now Murkowski's daughter, Sen. Lisa Murkowski (R-Alaska), has helped secure an additional $80 million in loan guarantees to convert the "clean coal" plant into something that works.


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