2004 Legal Seminar

Legislative Developments in the 108th Congress and

Prospects for the 109th Congress\Presentation by

Joe Nipper, Senior Vice President, Government Relations

at theAPPA Legal Seminar

November, 2004, San Francisco, CA

•Report on the 108th Congress•Results of the 2004 Election

•Some impacts of election results•Prospects for the 109th Congress

The 108th Congress

Energy/Electricity Legislation• H.R. 6 Conference Report hits

brick wall (Senate) late in 2003• 1st phase: denial – stripped

down bill, S. 2095• 2nd phase: denial – “let my

pieces go”• 3rd phase: denial – holding

reliability provisions hostage

The 108th Congress

Pieces of H.R. 6/S. 2095 moved separately

• Taxes• Alaska natural gas pipeline• Price – Anderson reauthorization• LIHEAP

The 108th Congress

Taxes• Energy tax provisions included in

FSC/ETI– Production tax credit expansion and

extension– No comparable incentive included for

public power– “Transco” provisions granting capital

gains relief for sale of transmission assets to third party transmission company

– “85/15” relief for co-ops– Prohibition on sale in/lease out (SILO)

transactions (House version)

The 108th Congress

Other Issues• VOIP legislation; not enacted• Bankruptcy reform – House version includes

political subdivisions in definition of “forward contract merchant”; conference not completed

• Circular 230; characterization of tax-exempt bonds as tax shelters; still pending

• EPA to issue new, favorable rules on cooling water intake structures (Sec. 316(b))

The 108th Congress

Lame Duck Session• Starts November 16, over by

Thanksgiving• Nine appropriations bills remaining;

likely to adopt omnibus bill• Must approve increase in debt limit by

Nov. 18• Intelligence reform bill (?)• Barton plans to try again on the

comprehensive energy bill

The 109th Congress

New Composition of the CongressSenate

55 Republicans44 Democrats1 Independent

House231 Republicans201 Democrats1 Independent2 Undecided – LA-03 and LA-07

The 109th Congress

Newly Elected SenatorsRepublicans Democrats

Martinez – FL Salazar – CO Vitter – LA Obama – IL Burr – NCDeMint – SCCoburn – OKThune – SD Murkowski – AKIsakson – GA

Cost of Various Senate Races

Obama 14,294,725

Keyes 1,350,281

Bunning 4,864,321

Mongiardo 1,914,979

Daschle 17,256,885Thune 7,251,087

Through October 11Source: Federal Election Commission

Senate Energy and Natural Resources

Domenici Bingaman

(Nickles) Akaka

Craig Dorgan

(Campbell) (Graham)

Thomas Wyden

Alexander Johnson

Murkowski Landrieu

Talent Bayh

Burns Feinstein

Smith Schumer

Bunning Cantwell

Kyl

Other Changes in the Senate

•One member of Environment and Public Works not returning – Graham (D-FL)•Stevens (R-AK) will chair Commerce Committee•Cochran (R-MS) will chair Appropriations Committee•Reid (D-NV) new minority leader

State and Local Results

• Colorado adopts RPS; 10% by 2015; applicable to communities of 40,000 or more

• Columbia, MO adopts RPS; 15% by 2022

• Batavia, St. Charles and Geneva, IL defeated referenda to authorize municipal entry into telecom

State and Local Results (cont’d)

• Rolfe and Wellman, IA approved referenda to explore municipalization

• Auburn, NY approved referendum on municipalization

• Washington County, OR defeated proposal to establish a public utility district

• Moreno Valley, CA referendum (sponsored by SCE) to inhibit the new municipal utility – still counting the ballots

The 109th Congress

House• Most Republican gains were as a

result of re-districted Texas – a net gain of four in that state

• Longest serving Republican, Phil Crane (IL) was defeated

• No changes in leadership or committees of interest to public power

The 109th Congress

HouseVacancies on the Energy and Commerce

Committee

Republican DemocratTauzin – LA Duetsch – FL Greenwood – PA McCarthy –

MO Burr – NC John – LA

The 109th Congress

• 55 Republicans in the Senate gives them a good chance to get to a filibuster-proof 60 votes on some, but not all, controversial issues

• It will also increase the committee ratios, which is potentially significant on EPW

• Chafee (R-RI) may switch

The 109th Congress

Energy Legislation• Domenici prepared to act early on

comprehensive bill• ANWR could be taken up under budget

reconciliation• Barton has other priorities; would break

energy into smaller pieces

Clear Skies Act• Chances of passage improve significantly in

the Senate• Barton’s first priority (along with telecom

and Medicare)

The 109th Congress

Telecom/Broadband• Partial or comprehensive overhaul of the ’96

Act will begin in both chambers• Strong push to exempt IP-enabled services

from federal, state and local regulation• Large incumbents have targeted public

power

Endangered Species Act

The 109th Congress

A top priority for APPA will be tax credit bond legislation

• To be introduced by Sens. Grassley (R-IA) and Baucus (D-MT) early in the session

• Provides public power and co-ops with an incentive for development of renewable energy

• Based on capital requirements, not production

• Taxable bonds that provide the issuer with a no-interest loan, the purchaser with a tax credit (instead of tax-free interest), and the Treasury with a tax payment from the purchaser

The 109th Congress

Budget pressures could make public power benefits vulnerable

• Record deficit• Tax cuts made permanent• Iraq supplemental of at least $70 billion• Potential reinstatement of pay-as-you-go

rules• Republican intra-party debate on fiscal

discipline

Sale of revenue assets such as the PMAs could become more appealing

www.appanet.org

2004 Legal Seminar