A legislative proposal recently floated by Sen. Richard Shelby (R-AL) to push back implementation of FERC’s standard market design (SMD) plan for U.S. wholesale power markets to 2008 “does not have sufficient votes” in the U.S. Senate and “it does not have my support,” Sen. Pete Domenici (R-NM) told reporters last week.

“To my knowledge, it has none of the members of the Energy Committee, none of the Republicans,” said Domenici, who chairs the Senate Energy and Natural Resources Committee. He noted that four Republican members who sit on that committee are “worried about standard market design and none of them are on that bill.”

Domenici is backing a proposal as part of the larger pending energy bill in the Senate that would delay implementation of the SMD proposal until after July 1, 2005. When asked whether he thinks the language that he plans to propose on SMD will pass, the New Mexico lawmaker said, “Absolutely.” Domenici added that “frankly, we have the basis of the standard market design language in a bill right now.”

He said that other electricity-related issues including the Public Utilities Holding Company Act, the Public Utilities Regulatory Policies Act, participant funding and merger review language are being worked on “but not in derogation of the two-year deferral on standard market design, which I worked out with the committee.” In other words, the two-year deferral on SMD won’t be changed while lawmakers continue to grapple with the other electricity issues in the energy bill.

Meanwhile, Domenici also commented on the energy bill’s proposal that would provide loan guarantees for new nuclear power plants. The lawmaker addressed whether he thinks the proposal will be a contentious item when the Senate and House of Representatives meet in conference over energy legislation. Domenici noted that Rep. Billy Tauzin (R-LA), chairman of the House Energy and Commerce Committee, “said something like, ‘I agree with Senator Domenici on nuclear energy'” shortly after the Senate approved the nuclear plant loan provision earlier this month. “I think that’s pretty important,” Domenici said.

“I have heard that contrary to Wall Street’s speculation, that there are a couple of companies who have said ‘keep that alive and we will seek a permit for a new [nuclear] power plant, all other things being equal,” Domenici went on to note.

“If I were 10 years younger, I would say without fear of being wrong that the United States is going to need an alternative to natural gas so desperately that nuclear power plants would be built and…the stimulus would be these loan guarantees,” the lawmaker also said.

“The truth of the matter is, we’re not going to be able to meet America’s exponential electricity growth without something like nuclear power plants,” Domenici said. “At a point in time, one of these is going to prove itself to be doable, so much easier than the 20-year-ago plants, that the door is going to come open.”

Domenici also said that wind power is “stirring up some significant controversy among proponents.” Specifically, the Senator said that the wind power subsidy “is so big that it is quite obvious that there will be huge numbers… of those giant wind mills built in America.”

The American Wind Energy Association (AWEA) has said that uncertainty over whether Congress will extend the current wind power production tax credit (PTC) is delaying business decisions in the sector. The PTC, which is set to expire Dec. 31, provides a 1.5-cent per kWh tax credit (adjusted annually for inflation) for electricity generated with wind turbines.

Domenici said that there is a nascent movement “to see if we ought to create something in this bill that gives some local authority to where these wind mills can and can’t be located, vis a vis vistas and/or locations close to cities and things of beauty and the like.”

The lawmaker said that he wouldn’t be shocked to see such an amendment offered as part of the overall energy bill. “I wouldn’t be surprised to see some effort to give local communities authority and then to give the land managers of the federal government some authority to do some planning with reference to where we put them.”

Domenici said that combining the existing subsidy with a subsidy included in a tax package sponsored by Sen. Charles Grassley (R-IA) leads to one conclusion. “There is no question that wind energy will be produced in large quantities in the United States.”

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