ENERGY POLICY ACT : A CRITICAL ANALYSIS

INTRODUCTION :


The Energy Policy Act, which was signed into law in 1992, came into

effect on 24 October 1997. This law, for the first time, mandates

energy-efficiency standards for all general purpose motors, from 1 to

200 horsepower, which are manufactured for sale in the United States.


The EPAct defines ‘electric motor’ to include: ‘general purpose, T-

frame, single speed, foot-mounting, polyphase squirrel cage induction


motor of the National Electrical Manufacturers Association (NEMA)

Design A and B, continuous-rated, operating on 230/460 volts and

constant 60 hertz line power, as defined in NEMA Standards Publication

MG1 - 1987.’ In addition, the EPAct also establishes new testing

procedures and labelling requirements for electric motors. The US

Department of Energy (DOE) is responsible for establishing the rules to

implement and enforce the EPAct.


ENERGY POLICY ACT:


The Energy Policy Act of 2005 ( P.L. 109-58 ), signed by President Bush

on August 8, 2005, was the first omnibus energy legislation enacted in

more than a decade. Spurred by rising energy prices and growing

dependence on foreign oil, the new energy law was shaped by

competing concerns about energy security, environmental quality, and

economic growth. Major provisions in the bill include: Electricity. The

Federal Energy Regulatory Commission (FERC) is authorized to certify a

national electric reliability organization (ERO) to enforce mandatory


reliability standards for the bulk-power system. Federal power of


eminent domain may be used to acquire electric transmission rights-of-

way in areas designated as congested by the Secretary of Energy. The


act repeals a requirement under the Public Utility Regulatory Policies

Act (PURPA) that utilities must purchase power from all qualifying

facilities and small power producers at a rate based on the utilities'

avoided cost. Also repealed is the Public Utility Holding Company Act of

1935 (PUHCA), which restricted the structure of holding companies of

investor-owned utilities. Renewable Fuels Standard. Gasoline sold in

the United States must contain an increasing amount of renewable fuel,

such as ethanol or biodiesel. Motor fuels must contain at least 4.0

billion gallons of renewables in 2006, a level that increases by 700

million gallons each year through 2011 before reaching a level of 7.5

billion gallons in 2012. Tax Incentives. Tax reductions of $14.5 billion

over 11 years are provided to encourage domestic energy production

and energy efficiency, including about $1.3 billion for energy efficiency

and conservation, about $4.5 billion for renewable energy, a $2.6 billion

package of oil and gas incentives, nearly $3.0 billion for coal, and more

than $3.0 billion in electricity incentives (which includes a new

production tax credit for nuclear power). Energy Efficiency. Improved

national energy efficiency is encouraged through new statutory

standards, requirements for federal action, and incentives for voluntary

improvements. Domestic Energy Production. The act encourages

production on federal lands through royalty reductions for marginal oil

and gas wells on public lands and the outer continental shelf. Provisions

are also included to increase access to federal lands for drilling activities

and other energy projects. Several proposals that were intensely

debated during consideration of the energy bill did not make it into the

enacted legislation. The most prominent of these defeated provisions

would have allowed oil and gas production in the Arctic National


Wildlife Refuge (ANWR), increased corporate average fuel economy

(CAFE) standards, and established stronger federal efforts to reduce

greenhouse gases.

Improved national energy efficiency is encouraged through new

statutory standards, requirements for federal action, and incentives for

voluntary improvements. This title deals almost entirely with energy

used by buildings, industrial processes, appliances and commercial

equipment, and other stationary activities. Highly controversial

efficiency standards for motor vehicles are excluded from the act. New

efficiency standards for appliances and commercial equipment in

Subtitle C may have the most certain impact, with the effectiveness of

many of the title’s other provisions depending largely on appropriations

and implementation.

Federal Programs

Summary of Provisions. Measures aimed at the federal government’s

own energy efficiency and water consumption range from the

treatment of energy costs in the federal budget and procurement

processes to specific requirements for upgrading equipment in

congressional office buildings. Energy and Water Saving Measures in

Congressional Buildings (Sec. 101). The Architect of the Capitol is

required to plan and implement an energy and water conservation

strategy for congressional buildings that is consistent with that required

of other federal buildings. An annual report is required. Energy

Management Requirements (Sec. 102). The baseline for federal energy

savings is updated from FY1985 to FY2003, and a new 20% reduction

goal is set for FY2015. By the end of 2014, DOE is to assess progress and

set a new goal for FY2016 through FY2025. Standards for exclusion are

set, which empower DOE to exempt, under certain conditions, buildings

that serve a national security function or for which achieving the target


would be impracticable. Further, agencies are allowed to retain

appropriations for energy expenses that are saved by the energy

efficiency measures. A report to Congress is required. Energy Use

Measurement and Accountability (Sec. 103). Federal buildings are

required to be metered or sub-metered by October 1, 2012, to help

reduce energy costs and promote energy savings. Further, the

Secretary of Energy is required to prepare guidelines for agency energy

managers to facilitate implementation of metering. After guidelines are

established, each agency is required to submit an implementation plan

to DOE. Procurement of Energy Efficient Products (Sec. 104). Federal

agencies are required to purchase products certified as energy-efficient

under the Energy Star program or energy-efficient products designated

by the Federal Energy Management Program (FEMP), provided that the

products are found to be “cost-effective” and “reasonably available.”


Energy Savings Performance Contracts (Sec. 105). The authority to


enter into energy savings performance contracts — in which private-

sector contractors install energy conservation measures in federal


buildings in exchange for a specified share of any resulting energy cost

savings — is extended from 2006 to 2016. Any energy savings

performance contract entered into after October 1, 2003, and before

the date of enactment of this act, is considered as extended by this

section. Voluntary Commitments to Reduce Industrial Energy Intensity

(Sec. 106). DOE is authorized to form voluntary agreements with

industry sectors or companies to reduce energy use per unit of

production by 2.5% annually from 2007 through 2016. Participants are

eligible for technical assistance and grants. A report to Congress with an

evaluation of energy-savings impacts is required by June 30, 2012, and


by June 30, 2017. Advanced Building Efficiency Testbed (Sec. 107). DOE

is required to create a program to develop, test, and demonstrate

advanced federal and private building efficiency technologies.

Appropriations of $6.0 million per year for FY2006 through FY2008 are

authorized. Increased Use of Recovered Mineral Component in

Federally Funded Projects Involving Procurement of Cement or

Concrete (Sec.108). DOT and other agencies that regularly procure or

provide federal funds to procure material for cement or concrete

projects are directed to fully implement all procurement requirements

and incentives that provide for incorporating recovered mineral

components, such as blast furnace slag and coal combustion fly ash. A

report to Congress on the energy savings and environmental benefits is

required 30 months after enactment. Federal Building Performance

Standards (Sec. 109). DOE is directed to set revised energy efficiency

standards for new federal buildings at a level 30% stricter than industry


or international standards — provided the standards would be“life-

cycle cost-effective.” Each agency’s annual budget request is required


to list all new federal buildings and whether each one meets these

standards. Daylight Savings (Sec. 110). Starting in 2007, daylight saving

time will begin three or four weeks earlier (the second Sunday in

March) and end one week later (the first Sunday in November). This is