Long-awaited omnibus energy legislation is headed to the White House after it cleared the Senate by a nearly three-to-one margin Friday and was voted out by the House a day earlier, crossing the finishing line ahead of the Aug. 1 deadline set by President Bush.

By 74 to 26, the Republican-led Senate approved the bipartisan energy bill conference report (HR 6) that overhauls the U.S. energy policy for the first time in 13 years. The measure seeks to bolster production of oil, natural gas, electricity and renewable fuels, as well as the construction of new liquefied natural gas (LNG) import terminals, pipelines and gas storage facilities. It also repeals the Public Utility Holdings Company Act of 1935, includes provisions to expand the nuclear industry in the U.S. and contains $14.5 billion in energy tax incentives.

The favorable vote in the Senate came only one day after the House by a vote of 275 to 156 approved the same conference report, which was completed by House-Senate conferees early Tuesday (see Daily GPI, July 29).

The decision to drop liability protection for producers of the gasoline additive methyl tertiary butyl ether and drilling in Alaska’s Arctic National Wildlife Refuge (ANWR) paved the way for the easy victory in the Senate. The measure would likely still be hung up in the chamber if the two issues remained.

The legislation is a significant victory for Bush, who has pressed for a national energy policy since he first took office in early 2001. He is expected to sign the bill into law even though it fails to deliver some key items, such as drilling in ANWR and reduced tax incentives for oil and natural gas companies amid record energy prices. A date for the signing of the bill by the president has not been scheduled yet.

Before voting on the conference report, the Senate defeated a procedural motion raised by Sen. Russ Feingold (D-WI) that held the energy measure violated the Budget Act by exceeding the amount allotted for the bill. The Congressional Budget Office estimated that enactment of the bill would increase direct spending by $2.2 billion over the 2006-2010 period, which was $200 million more than what the Senate Budget Committee allowed.

Noting that the amount was just $200 million, Sen. Pete Domenici (R-NM), called Feingold’s motion a “nothing point of order,” and motioned for a waiver of the Budget Act. The Senate agreed to the waiver by a vote of 71 to 29.

With this bill, “we will enhance our supply of natural gas,” and stabilize prices, said Domenici, the chief Senate negotiator on the conference panel and chairman of the Senate Energy and Natural Resources Committee. “Our electrical system will be…safer and more sound,” and “we will have diversity of energy [sources],” he said prior to the Senate vote.

The natural gas industry echoed those sentiments. “This energy bill paves the way for new efforts to bring natural gas prices down for everyone,” said David Parker, president of the American Gas Association, which represents local distribution companies. But relief will not come immediately. “The energy predicament we find ourselves in did not happen overnight. Fixing it will take hard work by the industry and cooperation from government. The industry is up to the challenge,” said Joseph A. Blount, chairman of the Natural Gas Supply Association, which represents major producers.

FERC Chairman Joseph Kelliher said the new energy bill gives the Commission “significant new responsibilities to oversee and enforce mandatory power grid reliability rules, to protect against market manipulation and the exercise of market power, to reform the hydropower licensing process and to strengthen our nation’s energy infrastructure — particularly the interstate [gas and electric] transmission grid and liquefied natural gas import facilities.”

“I feel very strongly that the positives outweigh the negatives in this bill,” said Sen. Jeff Bingaman (D-NM), a top Senate negotiation on the conference committee. “Overall, it is a very balanced piece of legislation,” echoed Sen. Mary Landrieu (D-LA).

Key natural gas features of the sweeping energy bill:

The entire House-Senate conference report on the energy bill is available at https://energy.senate.gov and https://energycommerce.house.gov .

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