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Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: "SCIENTECH IssueAlert" <IssueAlert@scientech.com< X-To: X-cc: X-bcc: X-Folder: \Mark_Haedicke_Jun2001\Notes Folders\Notes inbox X-Origin: Haedicke-M X-FileName: mhaedic.nsf Today's IssueAlert Sponsors:=20 [IMAGE] Switch Rates, Predictions and Analysis in Retail Energy Foresight. Rely on Retail Energy Foresight for current and projected switch rates and= =20 thoughtful analysis on restructured energy markets and related issues. =20 Download FREE trial copies at www.xenergy.com/xensecure.nsf or contact Susa= n=20 Weber at 781.273.5700 or via e-mail at sweber@xenergy.com. Retail Energy= =20 Foresight is a bimonthly publication from XENERGY, a leader in energy=20 consulting and strategic information since 1975. =20 www.xenergy.com/xensecure.nsf=20 [IMAGE] Rapidpartsmart is the newest, most powerful online parts search engine in = =20 the power industry. Rapidpartsmart is the complete source to locate, buy a= nd=20 sell engineered parts worldwide. Rapidpartsmart integrates over 5 million= =20 supply items into asset management and work management systems to ensure= =20 that you know all supply sources, all the time. Rapidpartsmart increases= =20 supply options, reduces outage risks and cuts inventory investment. Contac= t=20 John Kelly at (727) 669-3006 for more information or go to=20 www.rapidpartsmart.com=20 Miss last week? Catch up on the latest developments in the energy industry= =20 with SCIENTECH's IssuesWatch For advertising information, email Nancy Spring, or call (505)244-7613.=20 [IMAGE] IssueAlert for March 12, 2001=20 Bush Energy Plan Emerges,=20 Cuts in Renewable Energy Spending Expected by Will McNamara=20 Director, Electric Industry Analysis [Knight Ridder Washington Bureau, March 8] Days after telling the nation th= at=20 there's a real energy crisis and vowing to "promote alternative energy=20 sources and conservation," President Bush is proposing a budget that would= =20 reduce federal spending on energy efficiency and renewable energy by as muc= h=20 as a third, and increase funding for oil and natural-gas drilling. Bush=20 proposes to cut the Department of Energy's renewable fuels and energy=20 efficiency budget by 30 to 40 percent, according to Energy Department and= =20 White House officials who have briefed energy and environmental lobbyists.= =20 The president's proposed Energy Department budget is another indication tha= t=20 the administration will emphasize increasing oil, natural-gas and coal=20 production more than cutting energy demand or developing alternatives to=20 fossil fuels.=20 Analysis: During his presidential campaign, President Bush was critical of= =20 Bill Clinton for failing to adopt a national energy policy. Facing=20 unavoidable problems within the nation's energy industry=01*including the= =20 ongoing California problem, supply concerns across the country, and=20 predictions of several more years of erratic electricity, natural-gas and o= il=20 prices=01*Bush has been on a fast track to develop his own comprehensive en= ergy=20 strategy. More than likely, the president is still weeks away from unveilin= g=20 his official energy plan. However, the word circulating through Washington= =20 D.C. (and the energy industry as a whole) is that his plan will emphasize= =20 increasing oil, natural gas and coal production (by giving unique financial= =20 incentives to producers) and de-emphasize conservation efforts and renewabl= e=20 energies. =20 Given the fact that President Bush's energy plan has not yet been released,= =20 analysis of the proposed plan is still based on speculation at this point.= =20 While many opponents of the proposed plan are quick to criticize anticipate= d=20 cuts for energy efficiency and renewable energy, Bush has not indicated tha= t=20 these approaches will not have a role in his administration's strategy. It = is=20 important to keep in mind that, while funding for efficiency and renewables= =20 may indeed be reduced, there is still is a budget for these technologies in= =20 the Department of Energy. Bush may believe that the time has now come to le= t=20 market forces support further growth of renewable energies such as wind and= =20 solar, while he searches for a more immediate solution to the significant= =20 problems facing the energy industry.=20 According to the Knight Ridder report, Energy Department spokesperson Joe= =20 Davis expects that there will be cuts associated with the department's $19= =20 billion budget in an effort to deal with "belt-tightening." In fact, Bush's= =20 proposed $19 billion DOE budget is $700 million less than what the departme= nt=20 now spends. Reportedly, the cuts are being made so that the president can= =20 boost spending on "clean coal" technology to make the fossil fuel more=20 efficient and less harmful to the environment. =20 Rumors of Bush's budget cuts for renewable energy and conservation efforts= =20 have sparked an immediate outcry from environmental groups and leaders with= in=20 the Democratic Party. For instance, New Mexico Senator Jeff Bingaman, the= =20 ranking Democrat on the Senate Energy Committee, went on record in=20 disagreement with the proposed cuts. "Clearly if we don't dedicate adequate= =20 resources (to research and development for energy efficiency), we lose our= =20 ability to benefit from this technology," Bingaman said.=20 Renewable energy supporters point to the fact that the clean coal technolog= y=20 program already in place still has about $600 million in unspent funding,= =20 despite the fact that it has produced few usable results. In addition,=20 conservation advocates refer to a report concluding that the Department of= =20 Energy's conservation program has already saved $30 billion and 5.55=20 quadrillion Btus of energy. The overall consensus of the groups that oppose= =20 Bush's expected spending cuts is that, now more than ever, spending for=20 renewable energy and conservation programs should be increased, not cut. = =20 It has already been well established that President Bush supports opening u= p=20 federally protected lands for increased oil and natural-gas drilling. The= =20 president has made no secret of his intention to move forward with the=20 controversial step to open the Arctic National Wildlife Refuge (ANWR) in=20 Alaska. The Bush administration is pushing to open and develop for drilling= 8=20 percent of ANWR, which consists of 1.5 million tundra acres and spans 200= =20 miles along the Arctic Ocean. Throughout his campaign, President Bush=20 reiterated that he would make this move, a point on which he differed sharp= ly=20 from Al Gore, who maintained that he would keep the land protected. For som= e=20 time it was expected that Bush's energy plan would also include expanded=20 conservation efforts and increased funding for alternative fuels. However,= =20 according to Bush's team the short answer to the electricity shortage that= =20 has rocked California and put fear into the rest of the country is to=20 "increase domestic supplies of natural gas, coal and oil, all of which can = be=20 used to run power plants."=20 As another action plan, President Bush has argued that the United States=20 needs to become more autonomous when it comes to meeting its energy needs.= =20 The Bush administration has claimed that the United States has become too= =20 dependent on foreign sources of oil, especially when there are abundant=20 reserves that can be processed domestically. Yet, it's also important to no= te=20 that President Bush has never suggested that domestic supply of oil and=20 natural gas will be sufficient. Rather, the president recognizes that acces= s=20 to an adequate supply of foreign oil and gas is strategically important to= =20 the United States and the global economy. =20 However, instead of relying predominantly on the Middle East, Bush will wor= k=20 more closely with Canada and Mexico to increase cross-border flows of oil,= =20 natural gas and electricity within North America. Toward that end, Bush has= =20 asked Mexico's President Vincente Fox to help by allowing private U.S.=20 capital to build electricity plants and transmission lines in Mexico that= =20 would send power north. This has been a rather contentious issue in Mexico,= a=20 country that has had a long-standing history of state-owned electricity. Pa= st=20 proposals to privatize or allow even minimal levels of private investment i= n=20 Mexico have been widely denounced. Fox has responded that Mexico is having= =20 trouble meeting its own power needs, let alone being able to send power to= =20 the United States. However, Fox has agreed to work with President Bush on= =20 establishing a regional energy plan between the two countries with the=20 objective of providing enough power to fuel their growing economies. =20 Running concurrent to Bush's proposed energy plan is a comprehensive energy= =20 bill reportedly being developed by Senate Republicans, under the leadership= =20 of Senate Energy Committee Chairman Frank Murkowski, a Republican from=20 Alaska. The bill appears to be a mirror image of the policies expected in= =20 Bush's energy plan, including drilling in the ANWR and also tax breaks=20 offered to the oil industry. For instance, the measure reportedly would gra= nt=20 oil producers operating on federal lands a break on their royalty payments = to=20 the government, along with granting federal royalty relief for producers=20 operating in deep waters and difficult formations such as tight rocks and= =20 coal beds. In addition, the bill would require that federal agencies such a= s=20 the Environmental Protection Agency (EPA) and the Interior Department confi= rm=20 with the Energy Secretary before taking any action "that would have a=20 significant effect of reducing domestic energy supply." =20 Of course, earlier this month the U.S. Supreme Court granted extended power= =20 to the EPA to regulate emissions from utility power plants, along with othe= r=20 industries. In one of the most important environmental and business decisio= ns=20 in decades, the Supreme Court rejected industry arguments that the federal= =20 government must consider cost and not just health benefits in setting=20 national air pollution standards. Largely rejecting arguments by business= =20 groups, the Supreme Court said that the EPA has the power to issue new=20 standards designed to reduce the levels of smog and soot in the air. Prior = to=20 this ruling, it was suggested that President Bush was also considering=20 relaxing some environmental standards to allow electrical plants to expand= =20 capacity. It is unknown at this point whether or not Bush will still go in= =20 this direction, considering that the Supreme Court unanimously sided with t= he=20 EPA's authority in these matters. =20 Moreover, it may be premature to draw any conclusions about President Bush'= s=20 energy plan until the official strategy is released and we can assess=20 specific numbers. I have not seen anything that would indicate that the=20 president does not support a significant role for renewable energies such a= s=20 wind and solar, along with increased conservation efforts. In fact, recall= =20 that Bush was an active participant in the Texas restructuring legislation,= =20 in which the Renewables Portfolio Standard requires that approximately 5=20 percent of fuel generation comes from renewable sources. In fact, the=20 deregulation law in Texas is considered the most supportive of renewable=20 forms of energy when compared to the 24 states that have enacted legislatio= n=20 for electric competition. Consequently, during his tenure as Governor of=20 Texas, President Bush demonstrated support for alternative forms of energy.= =20 However, as demand continues to outpace supply on a national basis, the=20 president appears to be looking for an immediate solution, which more than= =20 likely will give priority to large-scale production plants efforts includin= g=20 coal, natural gas and nuclear. In the next few weeks, when President Bush's= =20 energy plan is formally released, it may very well emerge that his=20 administration proposes a more balanced approach to the nation's energy=20 needs, which still includes conservation efforts and exploration of renewab= le=20 energies.=20 An archive list of previous IssueAlerts is available at www.ConsultRCI.com [IMAGE] The most comprehensive, up-to-date map of the North American Power System b= y=20 RDI/FT Energy is now available from SCIENTECH. =20 Reach thousands of utility analysts and decision makers every day. Your=20 company can schedule a sponsorship of IssueAlert by contacting Nancy Spring= =20 via e-mail or calling (505)244-7613. Advertising opportunities are also=20 available on our website.=20 SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let = us=20 know if we can help you with in-depth analyses or any other SCIENTECH=20 information products. If you would like to refer a colleague to receive ou= r=20 free, daily IssueAlerts, please reply to this email and include their ful= l=20 name and email address or register directly on our site. =20 If you no longer wish to receive this daily email, send a message to=20 IssueAlert, and include the word "delete" in the subject line.=20 SCIENTECH's IssueAlerts(SM) are compiled based on the independent analysis= =20 of SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlert= s=20 are not intended to predict financial performance of companies discussed, = or=20 to be the basis for investment decisions of any kind. SCIENTECH's sole=20 purpose in publishing its IssueAlerts is to offer an independent perspecti= ve=20 regarding the key events occurring in the energy industry, based on its=20 long-standing reputation as an expert on energy issues. =20 Copyright 2001. SCIENTECH, Inc. All rights reserved.
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