Natural Gas Price Reduction Act of 2005

On April 6, 2005, Senators Lamar Alexander (D-TN) and Tim Johnson (D-SD) introduced two bills:  the Natural Gas Price Reduction Act of 2005, S. 726, which was referred to the Senate Energy and Natural Resources Committee; and, the Tax Incentives for the Natural Gas Price Reduction Act of 2005, S. 727, which was referred to the Senate Finance Committee.  The 300-page legislation attempts to address four issues impacting natural gas prices: energy efficiency, fuel diversity, natural gas supply, and, natural gas infrastructure.

Summary of Key Energy Efficiency Provisions in the Bill

Reducing Residential and Commercial Demand for Natural Gas

Consumer education: $90 million is authorized per year for four years (2007 through 2010) to conduct a public education program focused on practical, actionable measures that consumers can undertake to reduce natural gas, oil and electricity demand (e.g., maintain/repair heating and cooling ducts and equipment, weatherization technologies, proper tire maintenance, energy smart purchases).

Appliance and equipment energy efficiency standards:

• Sets new efficiency standards for six products that were in the previous energy bill conference report (HR 6): exit signs, traffic signals, torchiere lighting fixtures, distribution transformers, compact fluorescent lamps, and commercial unit heaters. 
• Sets new efficiency standards for ten additional products: commercial refrigerators and freezers, commercial packaged air conditioners, residential ceiling fans, residential dehumidifiers, pre-rinse spray valves, pedestrian signals, residential gas and oil-fired furnaces and boilers, gas-fired commercial furnaces and boilers, digital television adapters, and mercury vapor ballasts.
• Directs DOE to set new efficiency standards on two additional products: vending machines, and battery chargers and external power supplies.

Reducing Industrial and Utility Demand for Natural Gas

Combined heat and power interconnection and rates: Terminates PURPA mandatory purchase requirements only when the generator has full access to competitive wholesale electricity markets, without affecting current contracts.  Bars higher rates for electric and natural gas customers with distributed generation.  Allows distributed generation to interconnect according to FERC rules or state rules.

Efficient dispatch: In choosing what power plants to use to meet electric demand, requires use of the most efficient natural gas-fired plants first.

State utility regulation: Requires states to consider requiring their electric utilities to provide net metering, time-based metering and rates, fuel diversity plans, and generation efficiency plans.

Research and development: Authorizes DOE RD&D programs on hydrogen and fuel cells, distributed generation, energy-efficient carbon sequestration, and other areas.

Reducing Oil Imports

Oil saving requirement: Requires the President to develop and implement oil-saving measures sufficient to reduce US oil demand by 1.75 million barrels a day from projected 2015 levels.

Tax Incentives (in S. 727)

Energy efficiency incentives: Provides tax incentives, based on the HR 6 conference report, for new homes, improvements to existing homes, commercial buildings, refrigerators and clothes washers, combined heat and power systems (modified up to 50 MW), and fuel cells.

Other Provisions of the Bill

In addition to the energy efficiency measures listed above, the bill includes a number of supply and infrastructure measures, including tax incentives, other incentives, reduced barriers to permitting, and R&D authorization for off-shore production of natural gas, LNG facilities, coal gasification plants, solar photovoltaic and solar heating equipment, gas methane hydrates, and biofuels and biomass.

Next steps

The Alliance to Save Energy will continue to monitor this legislation as the Senate considers its version of comprehensive energy legislation.

For a complete narrative summary of the bill and the text of the legislation, please see the website http://alexander.senate.gov/.  You may also contact the Alliance policy team at (202) 857-0666 or policyinfo@ase.org for more information.