Coming at a time when a national plan is gathering more supportas energy prices have escalated at the pump and in homes andbusinesses, the governors of the 30 U.S. oil and gas producingstates this week began their push for an official national energypolicy, offering their own four-pronged strategy.

The Oklahoma City-based Interstate Oil and Gas CompactCommission (IOGCC), which represents the governors of the 30states, said it wants to call attention to the potentially tightnatural gas market expected this coming winter as well as the highcosts put on the nation from imported oil, and said that an energypolicy is the best way to ensure problems are contained ahead oftime.

The four recommendations include the following: recommendationsto assess the costs of imported oil; increased research to ensurethat domestic oil and natural gas resources are developed to theirfull potential without sacrificing environmental protection; taxincentives to encourage more domestic exploration and production,modeled after successful state programs like Alaska’s; and”encouraging” the public to use energy efficient technologies toconserve the limited supply of fossil fuels in the United States.

Oklahoma Gov. Frank Keating and North Dakota Gov. Ed Schafer ledthe group’s call for a policy this week, and they also underscoredthe need for a “full” discussion about the nation’s energy future.

“The time for a national discussion is at hand and we invitecitizens and leaders at all levels of government to join us,”Keating and Schafer said in a statement.

Two things high on IOGCC’s agenda to be included in the nationalenergy policy are repealing net receipts sharing, and giving statesmore environmental protection authority.

IOGCC Vice Chairman Lawrence E. Bengal in June advocated therepeal of net receipts sharing, calling it an “ill conceived,costly and burdensome program from its inception.” Bengal thenurged members of Congress to enact HR 4340, which would replace netreceipts sharing by giving half of the royalties to the states andhalf to the federal government without first deducting federaladministrative charges.

Net receipts sharing requires states to share the federal costof managing onshore mineral royalties. It was mandated by the 1993Omnibus Budget Reconciliation Act, and before it was enacted,royalties were split equally between the states and the federalgovernment. In 1999, the IOGCC passed a resolution supporting therepeal of net receipts sharing.

In May, IOGCC’s Alaska Gov. Tony Knowles led the call to supportNew Hampshire U.S. Sen. Bob Smith’s plan to give the states moreregulatory power when it comes to environmental protection.

“State regulators have successfully shown they can identifytheir own environmental issues and have developed creativesolutions to tackle those issues,” Knowles said. “In Alaska, forexample, we are proving you can develop the nation’s largest oilfields while maintaining the nation’s most pristine environment.”

Under a proposed revenue sharing mechanism for the ultimateowner of the hydro system, PG&E Generating, as prices spike,utility customers would get 90% of the added profit returned tothem as sort of a “hedge” against price volatility.

“A key component of the settlement is a proposed agreement withCal-ISO that assures that power from the hydroelectric assets willnot be bid into the energy market in a way that can raise powerprices,” said Nettie Hoge, executive director for the consumergroup TURN (The Utility Reform Network), which supports thesettlement.

Various water interests have, or are, buying into the deal,which binds the new operator to honor all existing water agreementswith downstream users. Similarly, the settlement protectsagricultural water uses, a major politically sensitive issue inthis state’s arid central valley agricultural belt. PG&E Corp.is obligated to establish a $70 million fund “to enhanceenvironmental quality, water quality and recreationalopportunities.”

The settlement will have to survive state public hearings,environmental impact reviews and ultimate approval from FERC.

The PG&E hydroelectric system is the largest private sectorwater-based network of its kind in the nation, including 174 dams,and 360 miles of canals, tunnels and flumes. Its 68 power stationsproduce about 5% of the state’s annual electricity, and up to 10%of the power on hot, summer peak-demand days.

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