Citing the disruptive effect of the active hurricane season on the domestic energy markets, the ranking Democrat on the Senate Energy and Natural Resources Committee has urged the heads of the departments of energy, interior and treasury to take immediate steps to head off a natural gas supply and price crisis this winter.

“I suggest that the Department of Energy (DOE) prepare and implement an action plan to address this looming natural gas price crisis as soon as possible,” wrote Sen. Jeff Bingaman (D-NM) in a letter to Energy Secretary Sam Bodman. Because oil and natural gas production are not central to DOE’s mission, “the lead component of DOE’s action plan should be on reducing demand for natural gas through energy efficiency and conservation,” he said.

“I recommend that your staff consult with efficiency experts and state energy offices to learn about successful state initiatives to reduce energy demand that could be replicated on a national level.” He cited California’s successful conservation campaign to reduce peak electricity demand during the summer of 2001 as an example. He noted that a major part of California’s campaign was a $20 million public outreach program.

The recently enacted energy bill authorizes $90 million a year for DOE to implement a similar public education campaign. “I urge you to initiate a public outreach program targeted at natural gas this fall.”

The energy bill also “includes new energy efficiency programs that could alleviate the burden of high natural gas prices on consumers if implemented this fall. These include rebates for energy-efficient appliances, tax incentives for home energy improvements, and assistance to states to implement and enforce energy-efficient building codes,” Bingaman said.

“Existing programs such as Weatherization and state energy programs can also play an important role. Additional funding for these new and existing programs could be included in the pending energy and water appropriations legislation or in an emergency supplemental. I think it is crucial for the administration to include such funds in future emergency supplemental requests.”

Bingaman called on DOE to “bring together representatives of the major natural gas users (electric utilities, industrial users, residential and commercial consumers) to solicit their proposals for reducing natural gas demand and obtain their commitment to implement those proposals in the immediate future.”

In addition to gas users, “the department should meet with natural gas distributors, interstate pipelines, FERC and state regulators to identify opportunities to reduce natural gas demand and to identify regulatory impediments to those opportunities,” he said.

In a separate letter to Interior Secretary Gale Norton, Bingaman urged her to put on fast track certain programs that are called for in the new energy bill. For one, the bill requires Interior to develop cooperative programs with the Department of Agriculture and Environmental Protection Agency to assign extra experts from the agencies to Bureau of Land Management (BLM) field offices in order to speed up the regulatory review of proposed energy projects, including oil and natural gas development.

The energy bill provided “dedicated funding” for this activity, so Interior “does not need to wait for additional appropriations to get started,” Bingaman said. “I encourage you to put this interagency pilot program on a fast track.”

In addition, the energy bill requires Interior to develop and implement best management practices to improve the administration of oil and gas leases and to ensure quick processing of oil and gas leases and applications for permits to drill. “”While the [bill] gave you 18 months to complete the task of identifying and implementing these best management practices, I encourage you to put this initiative on the fast track as well,” he noted.

Bingaman said the energy bill further simplifies the rules that allow Interior to take federal oil and gas royalties in-kind, rather than in cash. “In particular, it allows the department, in disposing of the oil and natural gas it acquires under the program, to give preference to federal and state agencies that are providing low-income energy assistance. I encourage you to implement this aspect of the program as quickly as possible.”

The new energy measure also requires the BLM and U.S. Forest Service to better coordinate their policies, plans and activities relating to oil and gas production on federal lands. This should “receive high priority” as well, Bingaman said.

Bingaman, along with Sens. Olympia Snowe (R-ME) and Dianne Feinstein (D-CA), called on Treasury Secretary John W. Snow and Bodman to focus on the financial incentives that promote energy efficiency. The energy bill provides incentives for energy-efficient commercial buildings, home retrofits and equipment replacement in 2006, along with incentives for building new homes that meet specified energy efficiency standards.

“Many communities hit by Hurricane Katrina will require significant quantities of new housing. The rebuilding of the Gulf Coast area presents an opportunity to improve the energy efficiency of the housing stock — reducing the future demand for energy and improving the quality of life for homeowners and renters,” the senators said.

They called on Snow and Bodman to “place a high priority on developing the necessary regulations and guidelines required to implement these energy efficiency provisions so that consumers can take advantage of these incentives without delay.”

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