Similar to land development projects at the local level, regulations play a significant role in building and designing growth and expansion plans for energy providers.

The significance of the Energy Policy Act of 2005, which President George Bush signed last month, depends upon various political and environmental viewpoints.

“It is very clear that we (the U.S.) needed to act so that we can accommodate the energy needs of the country,” remarks Elliot J. Roseman, a Vice President with ICF Consulting. “It was not a question of whether you improve or build new energy facilities, it became a question of what type of facilities to build. This legislation provides incentives to make some of these energy production facilities economically feasible.”
From a land development perspective, most of the impacts of the Energy Act will be indirect. With the overwhelming majority of initiatives providing incentives to energy companies, it is through the design, renovation, and construction of new and existing facilities that some trickle-down benefits will hit the land development industry.

However, these activities may also see an increase due to provisions in the 2005 Energy Act that streamline regulatory processes that tend to dramatically slow design and construction – in many cases lengthening the process and increasing costs so much that projects are abandoned.

For instance, in the liquefied natural gas (LNG) industry, the legislation established the Federal Energy Regulatory Commission’s (FERC’s) exclusive approval authority, and thus eliminated some of the uncertainty in state and federal jurisdiction.

Neil Sullivan, a Senior Associate at ICF Consulting with extensive experience in the preparation and review of National Environmental Policy Act (NEPA) documents, explains that “the implication is that more advanced projects will move forward more quickly. States will still have an important role and the Energy Act encourages LNG project applicants to cooperate with State and local officials. It also requires applicants to pre-file with FERC in order to get a head start on the environmental impact statement process under NEPA.”

Electricity Reigns – R.O.W. Takings Could Increase
The transmission of electricity received a strong push in the Energy Act. The Act allows the U.S. Department of Energy (DOE) to designate transmission corridors of ‘national interest’ to upgrade or add transmission for reliability or economic purposes. The “economic” aspect of this authority will be controversial. The law also gives the FERC new “backstop authority” to site power transmission facilities in the corridors that the DOE designates.

Congress has also directed FERC to finalize within 180 days new rules establishing an enforceable framework of mandatory power-grid reliability rules, to set up a new entity for overseeing these rules, and to establish the capability to monitor the grid nationwide. To comply with these rules, utilities will have to make additional investments to upgrade existing corridors or develop new ones, which could also have non-trivial land use implications.

According to the experts at ICF, “this authority will also make it harder for public interest and environmental groups to delay the approval of power lines.” All these measures imply a shift of authority from the states to the federal government in order to streamline power line siting and construction.

When the DOE and FERC identify these new electric transmission corridors, it will undoubtedly spark additional concerns with the government taking private property for public use.

FERC Chairman Kelliher also praised Congress for granting FERC additional tools to review utility mergers and acquisitions and prevent market manipulation. “Congress acted to prevent market manipulation by establishing an express prohibition of market manipulation and giving the Commission the ability to act swiftly to bar and sanction manipulative practices. We felt these new tools were necessary to enable us to respond to the changes that have occurred in electricity and gas markets since the 1930s. Congress apparently agreed,” the Chairman observed.

The energy bill includes provisions addressing price transparency in electric and natural gas markets, and significantly revises FERC’s enforcement and civil penalties authorities. “Putting FERC’s civil penalty muscle on par with those of other federal agencies should be a significant deterrent to any repeat of the sort of unscrupulous behavior that occurred during the Western energy crisis in 2000 and 2001,” the Chairman noted.

Perhaps the largest contingent of opponents to this new Energy Act includes those who wanted and expected more emphasis on renewable energy. In specific, it does not provide a national renewable portfolio standard (RPS) which would have required that a specific percentage of power be generated nationwide from such sources by a given date, and would have had significant impacts on the development of energy sources such as new wind projects.

Instead, as with other energy resources, the Energy Act relied on incentives by It extending and expanding the production tax credit (PTC). In addition to adding a two-year extension, geothermal, open-loop biomass, and landfill gas technologies were upgraded to full status with wind, closed-loop biomass, solar and others that enjoy a 10-year credit of 1.8 cents per kilowatt-hour. This will certainly encourage the development of more renewable projects, with land use implications, at least through the expiration of the tax credits at the end of 2007.

As illustrated, while incentives were clearly the rule rather than the exception in this legislation, the Energy Act did provide hard requirements for the nation’s production of ethanol. The challenge, though, remains. While refineries are required to double production of ethanol, refining capacities in the country are already at production limits. Therefore, producing additional ethanol without the demand could result in an imbalance of supplies.

Politics
Undoubtedly, the Energy Policy Act of 2005 will cost the consumers additional dollars – not only from additional funding for tax incentives from the federal government, but also from increasing energy costs.

There really is little choice.
Without increasing energy capacity, whether by expanding current resources or from the research and development of more costly renewable energy sources, the U.S. energy problem won’t go away. Well, actually, the problem wouldn’t go away, but having a reliable and able energy source could go away.

While energy costs will rise, and the public will begin a massive outcry, the temperament may be somewhat quieted by the costs of oil and gas that the public faces every day. These prices will justify the resolve to support movement on an energy plan.

Still, politics will continue to play a role.
To make the point, U.S. Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee, stated , “Our goal in writing this legislation was, very simply, to both ease demand, increase supply and save consumers and businesses money spent on energy. We want people free to save, invest and spend in ways that grow the economy. The energy bill will create thousands of new American jobs and protect thousands more.”

Meanwhile, Bill Garrett, Co-President of Cleanpeace, stated that “the new Energy Policy Act is the Administration’s domestic anti-competitive equivalent of the OPEC cartel and a plethora of unfair trade practices wrapped-up in one radioactive, oil soaked package…the Energy Law stacks the deck against abundant, undepletable, energy and that stacks the deck against America,” said Garrett.

The Cleanpeace stance is that the huge taxpayer subsidies and unfair policy advantages heaped on depletable coal, oil, gas and radioactive nuclear fuels under the Energy Act severely hobble competition from safe, abundant, undepletable energy resources, and will assure the nuclear industry clear competition-free access to fill the rapidly growing gap as other fuels deplete.

While this debate will continue, for the current time, there is, at least, a plan that will be followed.  SLDT