Correction to This Article
The article about congressional consideration of energy legislation incorrectly said that an energy bill approved by the Senate Energy and Natural Resources committee would create a 30 billion-barrel strategic reserve for refined petroleum products. It would create a 30 million-barrel reserve for refined products.

Expansive Energy Bill Advances In Congress

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By Steven Mufson
Washington Post Staff Writer
Thursday, June 18, 2009

A Senate energy bill was voted out of committee yesterday, but not before losing the support of two Democrats and a dozen leading environmental organizations.

The measure would be the third energy bill in four years -- not counting the huge energy provisions in this year's economic stimulus bill. Like the others, it is rife with controversy over new offshore drilling plans near Florida, the sharing of federal offshore oil and gas royalties, and a mandate for renewable energy that alternative-energy executives and environmentalists say is too weak. It would require 15 percent of electricity to come from renewable sources by 2021, but would allow exemptions that would diminish that target.

The proposed bill would also create a new "clean energy" financing agency that would extend subsidized loans and loan guarantees to a variety of projects, including nuclear plants. While it would set tough energy-efficiency standards for new buildings, it would also ease restrictions on the federal government's use of petroleum from Canadian tar sands, whose energy-intensive production generates more greenhouse gases than conventional oil. The bill would also create a 30 billion-barrel strategic reserve for refined petroleum products; the current reserve contains only crude oil.

Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) said the bill would "help shift our country to cleaner sources of energy, and more secure sources as well." He won the support of the committee's ranking Republican, Sen. Lisa Murkowski (R-Alaska), who said she would press for additional nuclear-energy provisions on the Senate floor.

But a dozen environmental groups yesterday said they opposed it. In a joint letter to the committee, they called the renewable-electricity standard too lax because it allows noncompliance fees to go back to companies, exempts new nuclear plants and certain new coal plants from baseline calculations, and allows energy-efficiency savings to substitute for renewable energy.

The groups also said allowing offshore oil and gas drilling so close to the west coast of Florida would "put Florida's coastal economies and wildlife further at risk." The environmental group Friends of the Earth, one of the 12 signatories, separately said that a lack of oversight could turn the "clean energy deployment agency" into a "giant slush fund for nuclear and coal projects."

New nuclear plants are likely to get a boost long before the bill becomes law. The Energy Department is negotiating with four utilities over the details of an $18.5 billion award in loan guarantees provided by earlier legislation for the construction of new nuclear plants, government and industry sources said. The companies include UniStar Nuclear Energy, NRG Energy, Scana and Southern Co.

Nuclear-power advocates hope the loan guarantees will help launch a wave of nuclear plants with a new generation of technology; like all nuclear plants, they would not emit greenhouse gases. But foes of nuclear power argue that the power plants remain too expensive to build without federal assistance and that energy efficiency and renewable-energy resources offer better alternatives. New plants could cost anywhere from $6 billion to $12 billion, industry executives say.

All four companies plan to place new units at existing nuclear facilities, which should make regulatory approval and sitting approval easier. Two of the firms are power suppliers that sell electricity at unregulated prices; two are utilities that will be subject to regulation and will seek to recover costs from local ratepayers.

David Crane, chief executive of NRG, said the company was still negotiating terms with the Energy Department. "We still have a lot of wood to chop," he said. Stephanie Mueller, a spokeswoman for the Energy Department, said the department was doing due diligence with the firms, but added, "We haven't made any final decisions for the awarding of loan guarantees, and we haven't eliminated any applicants."

Two of the companies, Scana and Southern, plan to use designs by Westinghouse, whose nuclear unit is now part of Toshiba. NRG is also planning to use a Toshiba design based on a GE-Hitachi model. UniStar, a joint venture of Constellation Energy and Electricité de France, will use a design by the French firm Areva that it hopes can become a standard for future plants. It plans to add it to the Calvert Cliffs, Md., site where Constellation already has other nuclear units.

To stretch federal dollars across more proposed plants, the Energy Department has been lobbying the Japanese government to extend export credits and loan guarantees to the plants using Toshiba designs and to persuade the French export credit agency, Coface, to help back the Areva design at Calvert Cliffs. Those agencies usually help promote exports to poor or developing countries, not to aid a project in the world's richest economy.

The Energy Department might also stretch its loan guarantees by not guaranteeing the entire NRG project, 40 percent of which is owned by the city of San Antonio, which has a high credit rating. NRG wants to build two new units for a total of $10 billion.

Seventeen companies applied for $122 billion of federal loan guarantees for 21 proposed reactors. The $18.5 billion chunk of loan guarantees for nuclear power was part of energy legislation adopted during the Bush administration.


© 2009 The Washington Post Company

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