Overview of EPAct2005 Joe Nipper Senior Vice President, Government Relations American Public Power Association Presented at APPA’s Workshop Overview of the Energy Policy Act of 2005 Thursday, November 10, 2005 Washington, D.C.

Energy Policy Act of 2005 Signed into law by President Bush on August 8, 2005 EPAct05 is the culmination of several years of Congressional consideration, dozens of hearings, and a wide variety of proposals Final Legislation was supported by all industry sectors; public power, co-ops, IOU’s, IPP’s, RTO’s, etc. Bill spans 18 titles, several hundred pages

Controversial Issues Not Included in the Final Bill Drilling in ANWR MTBE Liability Renewable portfolio standard Mandatory reductions of greenhouse gas emission Clean Air Act issues e.g. non-attainment areas

Organization of EPAct05 Title IEnergy Efficiency Title IIRenewable Energy Title IIIOil and Gas Title IVCoal Title VIndian Energy Title VINuclear Matters Title VIIVehicles and Fuels Title VIIIHydrogen Title IXResearch and Development

Organization of EPAct05 (Cont’d) Title XDOE Management Title XIPersonnel Training Title XIIElectricity Title XIIIEnergy Policy Tax Incentives Title XIVMiscellaneous Title XVEthanol and Motor Fuels Title XVIClimate Change Title XVIIIncentives for Innovative Technologies Title XVIIIStudies

Oil Industry Priorities Increase production Improve infrastructure Enhance conservation Develop new technologies Modernize regulation

Natural Gas Industry Priorities Infrastructure development –Reduce depreciation on distribution pipelines from 20 to 15 years Increasing Supplies –Additional royalties from Gulf of Mexico wells –“Expeditious Compliance” with NEPA requirements –New inventories of potential energy resources –Clarify state and federal roles in siting LNG facilities –Relieve regulatory burden and uncertainty regarding hydraulic fracturing Efficient use of energy through a range of tax credits Diversify the sources of energy used to generate electricity (clean coal, renewables, nuclear)

Nuclear Issues Extension of Price –Anderson Act liability indemnification Applications for new licenses to construct or operate are exempt from anti-trust review Next Generation Nuclear Plant Project

Provisions Important to the IOU’s Tax incentives (accelerated depreciation, production tax credit) PUHCA repeal Incentive transmission rates Repeal of PURPA Sec. 210 mandatory purchase requirements Limiting FERC regulation of themselves while increasing FERC regulation of public power

Provisions Important to the Co-ops Tax issues (CREBS, “85/15” limitations) Statutory exemption under section 201 (f) of the Federal Power Act Native load protection Exemption from refund authority

Useless, But Interesting, Factoids Bill spanned 3 House committee chairs – Bliley, Tauzin, and Barton Three Senate committee chairs – Murkowski, Bingaman, and Domenici Two presidents – Clinton and Bush

What Might Have Been Remember; July 11, 1996 H.R by Sen. Schaefer (R-CO) to mandate national retail completion by Dec. 15, 2000 (Also included a 4% RPS) H.R by Ed Markey (D-MA) also mandated retail competition “Every year of delay will cost millions of dollars in lost economic growth and customer savings” – Holly Propst, CoS to Rep. Schaefer at 1996 APPA Legal Seminar

Remember “There is no longer any question that there will be retail wheeling” –Senate Energy Committee Chair Frank Murkowski (R- AK) March 6, Sen. Dale Bumpers introduced comprehensive legislation that also included a national retail wheeling mandate

Remember The turning point (toward legislation focused solely on wholesale markets) came in 1998 with the Clinton Administration's comprehensive bill that included the “flexible mandate” encouraging states and “unregulated” utilities to consider retail access Sen. Murkowski subsequently adopted this approach

Remember October, 1999 H.R by Rep. Joe Barton (R-TX) First bill to be passed by either committee; opposed by APPA; died before it got to the House floor Included such issues as –bundled vs. unbundled transmission service; who has jurisdiction –Mandatory RTOs –Anti-municipal wholesale standard cost recovery rules for FERC –Interconnection standards Did not include a hard or “flexible” mandate for retail competition

Remember Senate passage of S. 517 on April 25, 2002 on a vote of 88 – 11, and after six weeks of floor debate, marks the turning point leading ultimately to the enactment of EPAct05