On the heels of his announcement of a “leaner” energy bill, Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-NM) indicated last week that he is looking to cut the cost of the omnibus energy measure by as much as one-third before offering it on the Senate floor later this month as an amendment to a larger bill. The six-year transportation reauthorization bill is being eyed as the most likely legislative vehicle to attach the energy measure.

Specifically, Domenici has asked his staff to come up with $8-$10 billion in cuts to the energy bill’s $31 billion tax package, which includes $24 billion in tax cuts and $7 billion in tax incentives, and has said he plans to nix the liability waiver for producers of the gasoline additive methyl tertiary butyl ether (MTBE), sources told NGI.

These were the “two most controversial items” in the conference report on the broad energy measure (HR 6), which cleared the House last November, but lost steam in the Senate when Republican leaders failed to garner enough votes to bring the bill to the floor.

Domenici “is not trying to reinvent the entire bill,” said an energy industry legislative analyst. He’s “just targeting the issues” that caused the bill to stall in the Senate at the end of 2003.

“I think it’s a good-faith effort to get the bill [through the] Senate,” he said. But whether Domenici can “line up enough votes” to accomplish that is the million-dollar question, the analyst noted.

Domenici said he has informed House Energy and Commerce Committee Chairman W.J. “Billy” Tauzin (R-LA), who is quitting his chair post later this month (see related story), and the House leadership about his plans to cut the tax package and delete the MTBE safe-harbor provision.

“They aren’t particularly happy about it, but I believe stripping MTBE out is necessary to get this bill through the Senate,” Domenici said. He noted that most of the cost cuts would come from tax incentives, but he did not identify which incentives were most vulnerable.

He anticipates that Republican fiscal conservatives in the Senate will raise a budget point of order with respect to the electricity reliability provision of the bill. “On this vital issue, a budget point of order is inevitable. However, the cost of this provision will be completely offset by fees charged to power companies to implement the program.”

A budget point of order would require 60 votes to overcome.

Domenici announced his intention to send a “leaner” energy bill to the Senate after President Bush forwarded a more austere budget for fiscal 2005 to Capitol Hill last week. “The budget the president sent to the Hill [Monday] is a tough one, but it reflects economic realities. It is necessary, in light of current deficit numbers, to trim spending [in] every way we can,” he said.

Calling it a “simple, straightforward process,” Domenici noted he would prune the costs of the energy measure “while keeping its core provisions intact.”

Despite public sentiment to the contrary, the chairman said he still was committed to pushing a comprehensive energy bill through the Senate. “No single provision in this bill solves our energy challenges. We need a comprehensive approach that helps us conserve energy, increase production and diversify our fuel supplies. Anything less falls far short of the national energy policy [that] this country urgently needs.”

However, a number of energy lobbyists and analysts in Washington are less optimistic, believing the broad measure subsequently will be severed into pieces.

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