[Budget of the United States Government]
[VI. Investing in the Common Good: Program Performance in Federal Functions]
[16. Energy]
[From the U.S. Government Publishing Office, www.gpo.gov]
16. ENERGY
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Table 16-1. FEDERAL RESOURCES IN SUPPORT OF ENERGY
(In millions of dollars)
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Estimate
Function 270 1998 -----------------------------------------------------------
Actual 1999 2000 2001 2002 2003 2004
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Spending:
Discretionary Budget Authority.......... 3,077 2,888 2,836 3,169 3,020 2,992 2,965
Mandatory Outlays:
Existing law.......................... -2,440 -3,184 -5,142 -4,404 -4,336 -4,244 -4,281
Credit Activity:
Direct loan disbursements............... 992 1,592 1,295 N/A N/A N/A N/A
Guaranteed loans........................ ........ ........ ........ N/A N/A N/A N/A
Tax Expenditures:
Existing law............................ 1,535 1,575 1,625 1,630 1,635 1,450 1,200
Proposed legislation.................... ........ 1 379 671 660 787 1,040
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N/A = Not available
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Federal energy programs contribute to energy security, economic
prosperity and environmental protection. Funded mainly through the
Energy Department (DOE), they range from protecting against disruptions
in petroleum supplies, to conducting research on renewable energy
sources, to cleaning up DOE facilities contaminated by years of nuclear-
related research activities. The Administration proposes to spend $2.8
billion for these programs. In addition, the Federal Government
allocates about $1.6 billion a year in tax benefits, mainly to encourage
development of traditional and alternative energy sources.
The Federal Government has a longstanding and evolving role in energy.
Most Federal energy programs and agencies have no State or private
counterparts and clearly involve the national interest. The federally-
owned Strategic Petroleum Reserve (SPR), for instance, protects against
supply disruptions and the resulting consumer price shocks, while
Federal regulators protect public health and the environment and ensure
fair, efficient energy rates. DOE's applied research and development
(R&D) programs in fossil, nuclear, solar/renewable energy and energy
conservation speed the development of technologies, usually through
cost-shared partnerships with industry. The programs not only open new
opportunities for American industry, but reach beyond what the
marketplace demands today, putting the Nation in a better position to
meet the demands of tomorrow.
Energy Resources
DOE maintains the SPR and invests in R&D to protect against petroleum
supply disruptions and reduce the environmental impacts of energy
production and use. The SPR was created in 1975 and now holds 563
million barrels of crude oil in underground salt caverns at four Gulf
Coast sites. The SPR helps protect the economy and provide flexibility
for the Nation's foreign policy in case of a severe energy supply
disruption.
In 2000, DOE will maintain its capability to reach its SPR
drawdown rate of about four million barrels a day within 15
days and to maintain that rate for at least 90 days.
DOE's energy R&D investments cover a broad array of resources and
technologies to make the production and use of all forms of energy--
including solar and renewables, fossil, and nuclear--more efficient and
less
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environmentally damaging. These investments not only lay the foundation
for a more sustainable energy future but also open major international
markets for manufacturers of advanced U.S. technology and enhance our
Nation's energy security.
Energy conservation programs, for which the budget proposes $838
million, are designed to improve the fuel economy of various
transportation modes, increase the productivity of our most energy-
intensive industries, and improve the energy efficiency of buildings and
appliances. They also include grants to States to fund energy-efficiency
programs and low-income home weatherization. Each of these activities
benefits our economy and reduces emissions of carbon dioxide and other
greenhouse gases. Many rely on partnerships with the private sector for
cost-sharing and commercialization. Energy-efficiency technologies that
have already come to market include heat-reflecting windows, high-
efficiency lights, geothermal heat pumps, high-efficiency electric
motors and compressors, and software for designing energy-efficient
buildings.
In 2000, DOE's Energy Conservation program will:
demonstrate low-cost, high-volume manufacturing processes for
key components of fuel cells for ultra-clean automobiles;
complete the development of advanced industrial turbines for
efficient in-plant generation of electricity and steam;
arrange for $400 million worth of energy-efficiency
improvements at Federal facilities to be financed through
regional and national energy-savings performance contracts;
and
weatherize 70,000 low-income homes.
Solar and renewable energy programs, for which the budget proposes
$399 million, focus on technologies that will help the Nation use its
abundant renewable resources such as wind, solar, and biomass to produce
low-cost, clean energy that contributes no net carbon dioxide to the
atmosphere. The United States is the world's technology leader in wind
energy, with a growing export market and production costs that have
fallen below five cents per kilowatt-hour. In addition, photovoltaics
are becoming more useful in remote power applications, and new biofuels
plants are being constructed. DOE also is coordinating the President's
Million Solar Roofs initiative, which was introduced in the 1999 Budget,
and States, cities, and Federal agencies to date have pledged 710,000
solar roof installations (a mixture of solar heat/hot water and
photovoltaics) over the next nine years.
In 2000, DOE's Solar and Renewable Energy program will:
support the President's Million Solar Roofs initiative
through partnerships and technical assistance so that at least
29,000 solar roofs will be installed in 2000; and
complete demonstrations of full-scale biomass co-firing with
coal, commercial-scale conversion of agricultural wastes to
ethanol, an advanced geothermal power cycle, and dispatchable
power from a solar ``power tower.''
DOE's energy efficiency and renewable energy programs form a major
part of the Administration's Climate Change Technology Initiative, which
is intended to find ways to reduce emissions of carbon dioxide and other
greenhouse gases in ways that benefit our economy rather than constrain
it. (For more details, see Chapter 7, ``Promoting Research.'')
Fossil fuel energy R&D programs, for which the budget proposes $364
million, help industry develop advanced technologies to produce and use
coal, oil, and gas resources more efficiently and cleanly. Federally-
funded development of clean, highly-efficient gas-fired and coal-fired
generating systems aim to reduce greenhouse gas emission rates, while
reducing electricity costs. The programs also help boost the domestic
production of oil and natural gas by funding R&D projects with industry
to cut exploration, development, and production costs.
In 2000, DOE will:
complete demonstration of new tertiary oil recovery
technologies;
begin testing the first commercial prototype solid-oxide fuel
cell for distributed power generation; and
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verify the design of a fuel-cell/turbine hybrid power plant.
Nuclear fission power is a widely used technology, providing over 20
percent of the electric power consumed in the United States and about 17
percent worldwide without generating greenhouse gases. If fossil plants
were used to produce the amount of electricity generated by these
nuclear plants, more than 300 million additional metric tons of carbon
would be emitted each year. Continued R&D addressing the issues that
threaten the acceptance and viability of nuclear fission in the United
States will help determine whether fission can fulfill its potential for
supplying economically-priced energy while reducing greenhouse gas
emissions.
In 2000, DOE will:
receive Nuclear Regulatory Commission approval to test
advanced ``chip''-based nuclear plant instrumentation and
control technology for increased reliability and safety;
complete validation of artificial intelligence software for
steam-tube inspection;
and identify new reactor and/or fuel-cycle concepts that may
improve the cost, performance, safety, or proliferation-
resistance of civilian nuclear power.
Environmental Quality
In Non-defense Environmental Management, the budget proposes $331
million to manage the Nation's most complex environmental cleanup
program, the result of more than four decades of research and production
of nuclear energy technology and materials. (For information on DOE's
Defense Environmental Management program, see Chapter 13, ``National
Defense.'') This will reduce environmental risk and manage the waste at:
(1) sites run by DOE's predecessor agencies; (2) sites contaminated by
uranium and thorium production from the 1950s to the 1970s; and (3)
DOE's uranium processing plants operated by the recently privatized
United States Enrichment Corporation.
In 2000, DOE will:
complete remediation at four geographic sites;
increase the total number of geographic sites completed to 76
of 113; and
make ready for disposal about 87 percent of the high-level
waste at the West Valley, New York site.
DOE's Civilian Radioactive Waste Management Program oversees the
management and disposal of spent nuclear fuel from commercial nuclear
reactors and high-level radioactive waste from Federal cleanup sites.
Following completion of the Viability Assessment for storing nuclear
waste in Yucca Mountain, DOE plans to:
complete an Environmental Impact Statement (EIS) in 2000 for
use of the Yucca Mountain site;
complete scientific and technical work identified in the
Viability Assessment as necessary for the Secretary to make a
nuclear waste site recommendation to the President in 2001;
and
if the site is determined to be suitable for a permanent
nuclear waste repository, submit a license application to the
Nuclear Regulatory Commission in 2002.
Energy Production and Power Marketing
The Federal Government is reshaping programs that produce, distribute,
and finance oil, gas, and electric power. In February, 1998, DOE sold
the Naval Petroleum Reserve, commonly known as Elk Hills, for $3.7
billion--the largest privatization of a federal entity in U.S. history.
Elk Hills had been set aside early this century to provide an oil
reserve for Navy ships, but in recent years was being operated by DOE as
a commercial oil and gas field because it was no longer needed for its
original purpose.
The four Federal Power Marketing Administrations, or PMAs,
(Bonneville, Southeastern, Southwestern, and Western) market electricity
generated by 127 multi-purpose Federal dams and manage 33,000 miles of
federally-owned transmission lines in 34 States. The PMAs sell about six
percent of the Nation's electricity, primarily to preferred customers
such as counties, cities, and publicly-owned utilities. The PMAs face
growing challenges as the
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electricity industry moves toward open, competitive markets.
In 2000, each PMA will operate its transmission system to
ensure that service is continuous and reliable--that is, that
the system achieves a ``pass'' rating each month under North
American Reliability Council performance standards.
The Tennessee Valley Authority (TVA) is a Federal Government
corporation and the Nation's single largest electric power generator. It
generates four percent of the electric power in the country and
transmits that power over its 17,000 mile transmission network to 159
municipal utilities and rural electric cooperatives that serve some
eight million customers in seven States.
TVA is responding to changes that are bringing greater competition to
the electric power industry by taking steps to increase its ability to
supply power at competitive prices. The agency is now engaged in a major
effort to cut its debt in half, from $28 billion in 1997 to $14 billion
in 2009.
In 2000, TVA will reduce its debt by $700 million.
(For information on TVA's non-power activities, see Chapter 21,
``Community and Regional Development.'')
In 2000, the Agriculture Department's Rural Utilities Service (RUS)
will make $1 billion in direct loans to rural electric cooperatives,
public bodies, nonprofit associations, and other utilities in rural
areas for generating, transmitting, and distributing electricity. Its
main goal is to finance modern, affordable electric service to rural
communities. Included within this funding amount is a new $400 million
Treasury rate loan proposal, which will help rural utility borrowers
position themselves to be viable in a competitive, deregulated
environment RUS borrowers continue to provide service the poorest
counties in rural America and counties suffering the most from
population out-migration.
In 2000, RUS will upgrade 130 rural electric systems,
benefitting over 1.6 billion customers and generating nearly
21,000 jobs.
Energy Regulation
The Federal Government's regulation of energy industries is designed
to protect public health, achieve environmental and energy goals, and
promote fair and efficient interstate energy markets. DOE improves the
Nation's use of energy resources through its appliance energy efficiency
program, which specifies minimum levels of energy efficiency for major
home appliances, such as water heaters, air conditioners, and
refrigerators. The Federal Energy Regulatory Commission (FERC), an
independent agency within DOE, regulates the transmission and wholesale
prices of electric power, including non-Federal hydroelectric power, and
the transportation of oil and natural gas by pipeline in interstate
commerce. FERC promotes competition in the natural gas industry and in
wholesale electric power markets. Recent FERC reforms to give consumers
competitive choices in services and suppliers will cut consumer energy
bills by $3 billion to $5 billion per year.
In 2000, DOE will issue three final rules and three proposed rules and
determinations on different categories of applicants. FERC will measure
the extent to which natural gas and electricity prices more clearly and
quickly reflect changing supply and demand conditions and will measure
the reduction in wholesale electricity price differences among regions,
to evaluate the success of its initiative to restructure interstate
natural gas and electricity markets.
DOE Corporate Management
Acquisition Reform at the Department of Energy is a high priority of
the Administration. Because more than 90 percent of the Department's
budget is spent on contracts to operate its facilities, improving
management and oversight of these contracts can improve mission support
and save taxpayer dollars. DOE has established a Department-wide system
to evaluate and use past performance data for contractor selections and
will work with OMB to achieve short-term PBSC successes in 2000 and
create incentives for more conversions.
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Nuclear Regulatory Commission (NRC)
NRC, an independent agency, regulates the Nation's civilian nuclear
reactors and the medical and industrial use of nuclear materials to
ensure public health and safety and to protect the environment. NRC
international activities also promote U.S. interests in nonproliferation
and the safe and secure use of nuclear materials in other countries. NRC
safety performance goals for 2000 include:
no civilian nuclear reactor accidents;
no significant accidental releases of radioactive material
from storage and transportation of nuclear waste; and
no offsite release of radioactivity beyond regulatory limits
from low-level waste disposal sites.
Tax Incentives
Federal tax incentives are mainly designed to encourage the domestic
production of fossil and other fuels, and to promote the vitality of our
energy industries and diversification of our domestic energy supplies.
Certain fuel producers many cut their taxable income as their fuel
resources are depleted. An income tax credit helps promote the
development of certain non-conventional fuels. It applies to oil
produced from shale and tar sands, gas produced from a number of
unconventional sources (including coal seams), some fuels processed from
wood, and steam produced from solid agricultural byproducts. Another tax
provision provides a credit to producers who make alcohol fuels--mainly
ethanol--from biomass materials. The law also allows a partial exemption
from Federal gasoline taxes for gasolines blended with ethanol. The
Climate Change Technology Initiative proposes $3.6 billion in new tax
incentives to help reduce greenhouse gases (see Table 33-4). These
incentives provide for purchases of energy-efficient homes and heating/
cooling equipment, electric and hybrid vehicles, rooftop solar systems,
and combined heat-and-power systems. They also extend wind and biomass
tax credits.