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The Energy Policy Act of 2005: Too Little, Too Late??

The Energy Policy Act of 2005: Too Little, Too Late??. Southeastern Energy Society Meeting, September 19, 2005 Arthur Corbin, President & CEO Municipal Gas Authority of Georgia. Presentation Outline. Bias/Perspective Municipal Gas Authority of Georgia

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The Energy Policy Act of 2005: Too Little, Too Late??

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  1. The Energy Policy Act of 2005:Too Little, Too Late?? Southeastern Energy Society Meeting, September 19, 2005 Arthur Corbin, President & CEO Municipal Gas Authority of Georgia

  2. Presentation Outline • Bias/Perspective • Municipal Gas Authority of Georgia • Elements of the Energy Policy Act of 2005 • Where the Bill falls short • Where we go from here

  3. Gas Authority Overview • Established in 1987 by Georgia Law • Non-Profit, Joint Action Agency • Broad powers to provide full requirements gas supply to municipal distribution systems • Members elect to contract with Gas Authority • Governed by nine (9) member Board of Directors elected by the membership

  4. Gas Authority Overview 1988 2005 Total Members 61 77 Total Annual Volume (MMBtu) 24,121,000 68,500,000 Total Members’ Retail Customers 131,804 229,000 Total Assets ($000) $5,544 $550,000 Total Revenues ($000) $23,961 $350,000 Credit Ratings: Moody’s A1 Fitch IBCA A+ Standard & Poors A

  5. Energy Policy Act of 2005 • Signed into law by the President on August 8th • First major energy legislation passed by Congress in 13 years • Since the original Energy Policy Act of 1992 • Over 1,700 pages of complex legislation • 18 separate titles

  6. Energy Policy Act of 2005 • Title I – Energy Efficiency (139) • Extends Daylight Savings Time by a month • Increases LIHEAP authorization to $5.1 billion • Title II – Renewable Energy (103) • Competitive geothermal leasing program • Title III – Oil and Gas (more on this later; 209) • Title IV – Coal (71) • Clean coal power initiative • Title V – Indian Energy (81) • Streamlines development and permitting of Tribal projects • Title VI – Nuclear Matters (111) • Construction of nuclear reactor at DOE Idaho National Laboratory generating both power and hydrogen

  7. Energy Policy Act of 2005 • Title VII – Fuels and Vehicles (91) • National Highway Traffic Safety Administration explores improvements in corporate automobile fuel efficiency standards considering safety, jobs and economy • Title VIII – Hydrogen (37) • Hydrogen research program for hydrogen cars • Title IX – Research and Development (219) • Methane hydrate R&D program and $150 MM for program over 5 years • R&D program for ultra-deepwater and other unconventional natural gas • Title X – Department of Energy Management (34) • Secretary of Energy to report to Congress the feasibility of promoting collaboration on energy projects between colleges and universities

  8. Energy Policy Act of 2005 • Title XI – Personnel and Training (12) • Secretary of Energy to report to Congress current trends in energy workforce and provide recommendations to meet future energy labor requirements • Title XII – Electricity (140) • Repeals Public Utility Holding Company Act (PUHCA) • Reliability rules for transmission grid, some open access and no FERC standard market design • Title XIII – Energy Policy Tax Incentives (241) • Includes language that addresses use of tax-exempt financing of natural gas supply prepayments • Title XIV – Miscellaneous (18) • Establishes Commission of North American Energy Freedom to provide recommendations to secure North American energy independence by 2025

  9. Energy Policy Act of 2005 • Title XV – Ethanol and Motor Fuels (135) • Fuel manufacturers to use 7.5 billion gallons of ethanol in gasoline by 2012 • Title XVI – Climate Change (24) • Climate technology program directing Secretary of Energy to lead inter-agency process to develop and implement national climate technology strategy • Title XVII – Incentives for Innovative Technologies (17) • Federal loan guarantee program for innovative technologies • Title XVIII – Studies (63) • Secretary of Energy with National Academy of Sciences study federal energy efficiency standards to determine if they result in total energy efficiency • Secretary of Energy report to Congress on natural gas supplies and demand

  10. Title III – Oil and Gas • FERC authority to set rules to protect price transparency in natural gas and transportation markets • Inventory outer continental self (OCS) oil and natural gas resources • FERC, when appropriate, allow market-based rates for new gas storage facilities • Increased penalties for violations of Natural Gas Policy Act (NGPA) and Natural Gas Act (NGA) • FERC given exclusive authority to approve or deny new or expanded LNG terminal (Amends NGA ) • FERC designated lead agency for environmental compliance in LNG proceedings (Amends NGA ) • Any “manipulative or deceptive device or contrivance” in sale of interstate transportation is illegal (Amends NGA )

  11. Title III – Oil and Gas • Secretary of Interior to convene 3 forums on LNG in areas where LNG facilities under consideration • Individuals engaged in manipulative practices barred from officer or director, or purchasing or selling gas or transportation • Reduce royalty rate on marginal oil and gas production • Royalty incentives for ultra deep gas wells in Gulf of Mexico shallow waters • Royalty relief for deepwater production and criteria for royalty suspension • Royalty relief for gas produced from methane hydrates • Royalty incentives for enhanced oil and gas recovery using CO2 • Review federal onshore oil and gas leasing practices • Secretaries of Interior and Agriculture to develop “utility corridors” for transportation of oil, gas and electricity

  12. Where the Bill falls short • Bill didn’t go far enough to correct the imbalance in energy and environmental policies • Encourage use of clean burning natural gas • Discourage development of domestic resource base • Greater emphasis on imported LNG over access and development of domestic resource base • Lessons from oil? • Natural Gas Cartel • Strategic Natural Gas Storage Reserve? • Supply initiatives critical to address ultra-high natural gas prices • Consumers can’t wait another 13 years for Congress to adjust policies to return natural gas prices to affordable levels

  13. Natural Gas Prices

  14. Natural Gas Prices

  15. Where we go from here • Stand-alone Natural Gas Bill to provide consumers relief from high prices • Access to domestic resource base • Open federal lands to environmentally responsible development (horizontal drilling, small foot print) • Give states incentive to open areas off their coasts by participating in federal royalties and imposing surcharges for R&D on states that prevent access • Differentiate between oil and natural gas leasing (gas only leases) • Develop Strategic Gas Storage Reserve from excess royalty and tax revenues • Require large natural gas users to be dual-fuel capable • Fund LIHEAP at new $5.1 billion authorization level • Enhance market transparency through improved, timely supply and demand data available to all and large OTC market positions report to regulators • Monitor futures and OTC markets and, where appropriate, establish rules to eliminate undue volatility

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