November 14,2003

Baucus Joined by Ten Colleagues in Raising Serious Concerns about Status of Energy Negotiations

Group Contacts Chairman, Urge Inclusion and Discussion of Outstanding Issues

(WASHINGTON, D.C.) U.S. Senator Max Baucus, along with a group of fellow Senators, todaycontacted Senator Pete Domenici, Chairman of the Senate Energy and Natural Resources Committee, tohighlight their disappointment that important issues have been left unresolved because a number ofconferees have not be allowed to participate in the discussions.

The letter was also signed by Sens. Tim Johnson (D-S.D.), Kent Conrad (D-N.D.), Herb Kohl (DWis.),Blanche Lincoln (D-Ark.), Tom Harkin (D-Iowa), Byron Dorgan (D-N.D.), Russell Feingold (DWis.),Benjamin Nelson (D-Neb.), Mark Pryor (D-Ark.), Richard Durbin (D-Ill.).

"While I have been pleased that I have been partially included in the energy talks having to dowith the tax title due to Chairman Grassley's efforts, my colleagues and I have been completely shut outof discussions dealing with the majority of the bill," Baucus said. "The only way to achieve an energy billthat works for America is to have all sides at the table working out a compromise. I'm hopeful that theconferees will address the issues we raise today and that will be able to pass an effective energy bill thatbenefits consumers, protects the environment and promotes energy efficiency."

Full text of letter follows:

November 14, 2003
The Honorable Pete V. Domenici
Energy and Natural Resources Committee
364 Dirksen
Washington, DC 20510
Dear Chairman Domenici:

As the conference on energy legislation comes to a close, we feel it is necessary to empha severalareas of concern. We are writing to you because the conference process – with the exception ofnegotiations on the tax title – has provided very little opportunity for conferees to participate innegotiations. We believe this is very unfortunate given the importance of a balanced energy bill to ourconstituents and to the nation.

The satisfactory resolution of several issues will factor heavily into our decision to support or oppose afinal conference agreement on the energy bill. These issues include:

Renewable Fuels Standard (RFS): We strongly support inclusion of the Senate language on aRenewable Fuels Standard along with an increased schedule. A sound and predictable RFS iscritical to American efforts to reduce our dependence on foreign oil. The RFS should not includea liberal waiver provision, and it must reflect increases in production and capacity in its schedule.

In addition, we oppose the inclusion of expansive retroactive liability protection for MTBE producersin any energy bill that comes out of conference. If such a liability shield is enacted into law, the priceof addressing widespread MTBE contamination will fall on states and local communities. Over 28states have documented MTBE contamination and the costs associated with cleaning up these sites isestimated to be in the billions of dollars.

A meaningful RFS is critical for the economy and the energy independence of our nation. However,our commitment to a strong RFS should not be mistaken for a commitment to legislation that fails toaddress our remaining concerns.

Volumetric ethanol excise tax credit (VEETC)/Highway Trust Fund : VEETC provides themechanism to assure that America’s supply of ethanol to satisfy the RFS is secure and affordable.

Chairman Grassley has gone a long way toward securing the excise tax credit in the package andan extension of the ethanol incentives. Establishing the excise tax credit without repealing theexcise tax exemptions, however, fails to repair the damage to the Highway Trust Fund. Adding aparallel tax incentive and failure to correct the existing one will reduce highway revenues andengender fraud. The ability to continue using the excise tax exemption will also jeopardize theRFS if states are allowed to opt out of the RFS based on economic hardship associated with losthighway revenues.

Cooperative electricity issues: Cooperatives must not be subject to undue levels of FERCjurisdiction. Additionally, a final energy bill should include native load protections for ruralelectric cooperatives. Cooperatives and other transmission dependent utilities must be able to usetheir existing rights to reserve transmission capacity to meet their service obligations, both nowand in the future.

Credit eligibility for cooperatives, municipal utilities and Indian tribes: The Senate bill allowscooperatives and municipal utilities, as well as Native American tribes, to take advantage of theproduction tax credit for electricity produced from wind and other renewable sources (e.g.,biomass, solar, and geothermal). The same mechanism in the Senate bill allows those entities touse the clean coal tax credits. Public power systems and cooperatives serve 25% of the nation’selectricity consumers. They provide 20% of the nation’s utility generation of electricity. Indianlands hold enormous renewable energy potential. The Senate provisions should be included in theconference agreement or replaced with a mechanism providing the economic equivalent.

Electricity Policy: Any final energy bill must include strong consumer protections. Suchprotections are necessary to ensure reliable and affordable supplies of electricity for our homesand businesses. Allowing companies to manipulate energy markets and drive up electricity pricesis unacceptable and harmful to our economy and our domestic energy security. We feel stronglythat additional consumer and ratepayer protections – similar to the prohibition on fraudulent andmanipulative practices that passed the Senate by a vote of 57-40 – are needed and must beincluded in the energy bill.

If the Public Utility Holding Company Act is repealed in the final energy conference report, webelieve the Congress should ensure utility ratepayers are protected by giving FERC meaningfulutility merger review authority.

Renewable Portfolio Standard: A RPS promoting the production and consumption of electricitygenerated with renewable resources such as wind, solar, biomass, and geothermal is essential. Byensuring that retail electric utilities have generation portfolios that include ten percent ofrenewable energy or can purchase tradable credits from others that generate renewable energy,Congress can take an important step toward crafting a sound energy policy. A strong andbalanced RPS standard has twice passed the Senate, in H.R. 4 during the 107th Congress, andagain this year as part of H.R. 6. Additionally, on September 17, 2003, 53 Senators signed a lettersupporting the inclusion of a strong RPS in the final energy legislation.

We believe all of the above provisions are key to a balanced national energy policy that will enhance ourdomestic energy independence and security. However, the lack of transparency in the energy conferenceand reports of new provisions being added to the energy bill make it difficult for us to evaluate where wewill stand on a final energy conference report. We ask that you work with us prior to a final conferencemeeting to address these concerns.


Max Baucus
Byron Dorgan
Tim Johnson
Russell Feingold
Kent Conrad
Benjamin Nelson
Herb Kohl
Mark Pryor
Blanche Lincoln
Richard Durbin
Tom Harkin
cc: Majority Leader Bill Frist