House-Senate conferees yesterday agreed on a bill creating a Department of Energy which gives power to set the price of natural gas to an independent commission rather than to the Secretary as President Carter wanted.
Meanwhile, House Minority Leader John J. Rhodes (R-Ariz.) told reporters he expects the House to pass the omnibus energy bill pretty much in the form that the President wants.
Last night, the Ad Hoc House Energy Committee completed its review of the 500-page bill drafted by five legislative committees. The panel will recommend several changes on the House floor to increase support for the bill and bring it closer to Carter's energy-saving goals.
The new Department of Energy, which will administer the national energy policy Congress now is shaping, will pull together most energy functions of the federal government into a Cabinet-level department with 20,000 employees and a budget of $10 billion.
It will include the Energy Research and Development Administration, Federal Energy Administration and the Federal Power Commission. Carter has said he will nominate as Secretary James R. Schlesinger, currently his chief energy adviser.
The major controversy was over whether the power to set wellhead price for the multibillion-dollar natural gas industry should be given to one person or lodged in an independent regulatory board insulated from political pressures.
The House bill gave full power to set the price of gas to an independent board within the department. The Senate bill also gave the board the power to set price, but gave the secretary input and gave the President a veto. The conferees gave the board total control over the price of natural gas.
The issue of whether to control or end federal price controls of natural gas is the most explosive issue in the energy bill. House Democrats on the ad hoc committee have agreed to an amendment which they believe assures House approval of the President's plan to continue controls but at a higher ceiling.
Gas that moves across state lines is now regulated, but gas consumed in the state where it is produced is not. This has produced a distorted, dual market of shortages in the consuming North and a glut of gas in producing states like Texas. The President's plan would eliminate this dual market by extending controls to all new gas, but would raise the present ceiling of $1.45 per thousand cubic feet to $1.75.
Gas producers want to end controls, arguing that this is the only way enough gas will be produced to meet needs.
The ad hoc committee adopted an amendment, 23 to 16, 2 to liberalize the definition of new gas eligible for the higher price. The administration estimated that this might increase the amount of gas getting the $1.75 price by 10 or 15 per cent. It agreed to the amendment because it was told this was needed to assure that deregulation didn't win on the house floor.
The administration bill defined new gas as gas from a well drilled at least 2 1/2 miles away from or 1,000 feet below an existing well. The amendment provides that if it can be proved that gas from a well within this area is from a new reservoir and not just tapping into an existing one it can be called new gas.
The amendment was sponsored by Texas Democrats Rep. Bob Eckhardt, who opposes deregulation, and Rep. Charles Wilson, who favors it. Wilson said he cosponsored the amendment because he had decided deregulation could not win in the House and felt producers should take something rather than lose everything. Deregulation was rejected by the House last year by a four-vote margin. He said it will be supported by Majority Leader Jim Wright (D-Tex.), who would otherwise support deregulation.
Yesterday, the committee voted 24 to 15 to recommend to the House a change in the bill which its sponsor, Rep. James C. Corman (D-Calif.) said could save up to 400,000 barrels of oil a day. It would repeal an exemption from the tax on industrial use of oil and gas for plants that could not convert to coal for environmental or other reasons. Under the amendment they would be taxed to encourage conservation but at a lower rate than plants that could convert.
The ad hoc committee also has recommended doubling the federal gasoline tax to 8 cents a gallon as a conservation measure and to provide revenue to encourage use of mass transit and other energy-saving programs.