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Red, White, and Ready: The Patriotic Push for Energy Legislation

After 10 years of waiting, some experts say a Republican-controlled Congress and a patriotic mood will make the difference in passing energy legislation this year.
Fortnightly Magazine - May 1 2003

taxed once, and some dividends are not taxed at all," Shapiro says. "The proper way to do this would have been to make it deductible at the corporate level, not at the individual level, so it doesn't even make real sense as tax policy. It will raise the cost of borrowing for cities and states that now enjoy a tax preference and will now have to be placed in a more competitive position that will raise the rates for them to borrow. So the cities and state governments are against it, and fiscal conservatives are against it."

Meanwhile, the energy industry has been waiting since 1992 for passage of comprehensive legislation to provide direction to an increasingly beleaguered sector. Public Utilities Fortnightly talks with a senator and congressmen on both sides of the aisle, as well as the Bush administration and president of the National Association of Regulatory Utility Commissioners, to find out if energy legislation will be worth the wait.

"I have several concerns about the president's dividend proposal. First, we should be finding ways to stimulate our economy, and it is questionable whether this proposal would do that."

The 107th Congress failed to send a comprehensive energy bill to President Bush. Do you expect a comprehensive bill with an electricity title to make it to his desk this congressional session?

Last year I had a good feeling that Congress was going to pass a comprehensive energy bill and send it to the president. But then elections came, and the results of those elections led to the conference ending without getting to a bill. As a general rule, most big bills in the Senate do not have a quick second act, and electricity is certainly not going to be any easier this time. But the House and Senate leadership are taking another shot at an energy bill. The goal, I believe, is to conference the bill this summer and get it to President Bush's desk before the August recess.

Is repeal of the Public Utility Holding Company Act a priority in this Congress?

Repealing the Public Utility Holding Company Act remains a priority for many of us in Congress-but only if the legislation includes adequate consumer protections, and only if it strengthens market power protections. Our bill last year would have done that by giving FERC tools to make sure that competitive markets work well to provide customers with affordable electricity, and by strengthening authority over mergers, clarifying authority over market-based rates, and increasing transparency in energy market information. The 2002 Senate bill also required the Federal Trade Commission to protect consumers against unfair trade practices in energy marketing, and created ways to better inform consumers.

As large dividend producers, utilities generally back repeal of the dividend tax. What are the chances of repeal?

I have several concerns about the president's dividend proposal. First, we should be finding ways to stimulate our economy, and it is questionable whether this proposal would do that. Second, this proposal is complicated and would be hard to administer. It would be up to the shareholders