National Energy Act

(Reported to House from the Committee on Interstate and Foreign Commerce, H. Rept. 95-496 (Part IV))

National Energy Act - Establishes the following national energy goals for 1985: (1) reduction of annual growth in energy demand to not more than two percent; (2) reduction of oil imports to less than six million barrels per day; (3) reduction of gasoline consumption of ten percent from 1977 levels; (4) improvement of the efficiency in the energy use of heating and cooling systems in 90 percent of residential buildings, schools, and hospitals; (5) increased coal production of at least 400 million tons over 1976 levels; and (6) use of solar energy in at least 2.5 million homes.

=Title I: Pricing, Regulatory, and Other Nontax Provisions= - Directs the Federal Energy Administrator to establish procedures for the submission, approval, and implementation of residential energy conservation plans by State utility regulatory authorities. Prescribes energy conservation measures to be included in such plans. Establishes criteria governing programs to be carried out by public utilities as part of such energy conservation plans. Authorizes exemptions from such requirements where alternative programs will be implemented. Authorizes the Administrator to implement and enforce a Federal plan in the event of inadequate State action.

Declares that nothing in this Act shall supersede any State or local law or regulation, except upon a determination by the Administrator. Declares that nothing in this Act shall restrict Federal or State authority from enforcing any provision of law to prevent unfair methods of competition and unfair or deceptive acts or practices by public utilities.

Authorizes the Administrator to promulgate such rules as may be necessary to carry out this Act.

Requires the Administrator to consult with the National Bureau of Standards with regard to any product or material standard which is relied upon in implementing this Act.

Authorizes to be appropriated $5,000,000 for each of the three fiscal years beginning after the date of enactment of this Act.

Requires the Administrator to undertake a study and to submit recommendations to the President and the Congress, no later than 18 months after enactment, respecting the application of energy conservation standards to existing residential buildings.

Amends the National Housing Act to direct the Secretary of Housing and Urban Development to prescribe an actuarially sound premium rate for loans for energy conserving improvements. Amends the Federal Home Loan Mortgage Corporation Act and the Federal National Mortgage Association Charter Act to include loans or credits for energy conservation purposes within the scope of such programs. Authorizes additional appropriations for the weatherization assistance program administered by the Federal Energy Administrator under the Energy Conservation and Production Act.

Amends the Energy Conservation and Production Act to authorize appropriations for new building performance standard grants by the Secretary of Housing and Urban Development for fiscal years 1978 and 1979.

Directs the Federal Energy Administrator to establish energy efficiency standards for specified household appliances. Stipulates that such standards shall reflect the maximum improvement in energy efficiency which is technologically and economically feasible.

Preempts all State energy efficiency standards prescribed after the date of enactment. Permits any person subject to a State energy efficiency regulation prescribed on or before the date of enactment of this Act to petition the Administrator to prescribe a rule under this Act which supersedes such State regulation. Authorizes additional appropriations to the Administrator for fiscal year 1978 to carry out such functions.

Amends the Motor Vehicle Information and Cost Savings Act to require disclosure of additional information relating to tax liability or tax benefits based on automobile fuel economy. Authorizes the Federal Trade Commission to prescribe rules requiring disclosure of such tax information in television Advertisements.

Directs the Administrator to set targets for increased utilization of energy-saving recovered materials for four industries: metals and metal products, paper and allied products, textile mill products, and rubber.

Authorizes the Administrator to make grants to: (1) States to conduct preliminary energy audits; (2) States, schools, and health care facilities for technical assistance programs; and (3) schools and health care facilities for energy conservation project costs.

Requires the Administrator to publish guidelines for the conduct of preliminary energy audits.

Requires the Administrator, within 120 days after enactment of this Act to prescribe guidelines for the development of State plans to implement technical assistance programs and energy conservation projects.

Requires the Administrator to allocate 80 percent of the funds available for financial assistance among the States according to a formula devised by the Administrator. Specifies that ten percent is to be allocated for critical energy situations, and ten percent is to be allocated for classes of hardship cases.

Authorizes to be appropriated for the purpose of making grants to States $300,000,000 for fiscal years 1978, 1979, and 1980.

Declares that the maximum lawful price for any first sale of new natural gas produced in the United States and delivered during any calendar month which begins on or after the date of the enactment of this Act shall be the current Btu related price at the time of such deliveries. Defines the current Btu related price to be the average per barrel domestic refiner cost of acquiring domestic crude oil in the preceeding three calendar months divided by a Btu conversion factor of 5,800,000 Btu's per barrel of crude oil.

Establishes the maximum lawful price for any first sale of old natural gas produced in the United States and sold under an existing contract. Establishes the maximum lawful price for any first sale of old natural gas under a new contract at $1.45 per million Btu's multiplied by the inflation adjustment.

Requires the Federal Power Commission to prescribe the maximum price for any first sale of old natural gas sold under a rollover contract. Requires the Commission to prescribe and make effective rules applicable to such sales under rollover contracts within 60 days after enactment.

Authorizes the Commission to prescribe prices in excess of those established under this Act to encourage production of high cost natural gas.

Requires the Commission to implement, within 90 days after the date of enactment of this Act, a system for incremental pricing of natural gas to customers by interstate or intrastate pipeline companies.

Requires the Secretary of Agriculture to identify agricultural and food processing uses for which natural gas is essential and for which no alternative fuel is reasonably available.

Prohibits any pipeline company or local distribution company from curtailing natural gas service to users engaged in essential agricultural uses identified by the Secretary of Agriculture.

Requires the Federal Power Commission, within 60 days after the date of enactment of this Act, to require all interstate pipeline companies to manage their respective storage injections and withdrawals to assure that service to low-priority customers will not adversely affect any high-priority customer.

Amends the Natural Gas Act to exclude from the Federal Power Commission's jurisdiction any sale to which this Act applies. Includes within the jurisdiction of the Commission synthetic natural gas projects which produce pipeline-quality gas and are operated by a natural gas company or an affiliate.

Amends the Emergency Natural Gas Act of 1977 to extend the allocation authorities to April 30, 1979, and to include intrastate pipelines in such authorities.

Establishes a Utility Advisory Committee to advise the Commission on: (1) electricity generation transmission efficiency; (2) consumer representation and assistance; (3) natural gas utilities; and (4) residential energy conservation programs.

Sets forth the electric utilities covered by this Act and the timing of the application of this Act to such covered utilities.

Establishes minimum rate standards for electric utility rates subject to this Act. Requires each State regulated electric utility to gather such information as the Commission determines necessary to determine the cost of providing electric service.

Declares that no rate of a State regulated utility shall be determined to be in compliance with this Act if such utility recovers from electric consumers expenditures by such utility for promotional, political, or institutional advertising.

Stipulates that each State regulated utility may recover from its electric consumers the reasonable costs incurred by such utility for any pollution control facility.

Prohibits the increase in rates by any State regulated electric utility unless: (1) there has been an opportunity for the consideration of such rate increase in an evidentiary hearing; (2) such rate increase is established to provide incentives for efficient resource use and is necessary to enable the utility to meet its immediate short-term financial obligations; or (3) such increase reflects an increase in the cost of electric power purchased from a centrally dispatched power pool.

Requires that the rates of any electric utility which is a State utility agency shall be based on the total of all costs of electric energy generated or purchased for resale by that utility.

Declares that nothing in this Act is to be construed to authorize or require the recovery by an electric utility of revenues or a rate of return in excess of that allowed by State or Federal law.

Directs regulated electric utilities to provide rates which do not discriminate against solar electric generating systems and other small electric generating systems with capacities of 15,000 kilowatts or less.

Requires State regulated electric utilities (1) to submit, as part of any application for a rate increase, analyses of the cost effectiveness of other load management techniques as have been identified by the Administrator, and (2) to offer to electric customers those alternative load management techniques which have been determined to be practicable and cost effective.

Sets forth minimum requirements for the transmission of information to electric consumers by State regulated electric utilities.

Requires that no State-regulated electric utility may terminate electric service to any consumer of electric energy except pursuant to procedures prescribed by the State regulatory authority.

Makes specified provisions of this Act applicable to nonregulated utilities in the same manner as to each State-regulated electric utility.

Authorizes a State regulatory authority to make a compliance determination with respect to a utility over which it has ratemaking authority if such authority: (1) notifies the Commission that it assumes such responsibility; (2) makes the appropriate compliance determinations in evidentiary proceedings; and (3) complies with the provisions of this Act.

Requires State regulatory authorities to prescribe methods for the determination of costs of service. Declares that such methods shall reflect differences in cost-incurrence for each electric consumer attributable to daily and seasonal time of use of such service.

Directs the Commission to prescribe rules requiring each State regulatory authority which has assumed responsibility for making compliance determinations to prohibit or restrict the use of such bulk or master meters in buildings as it deems necessary to carry out the purposes of this Act.

Authorizes any electric consumer or State agency to intervene as of right as a party in any evidentiary hearing or other proceeding of a State regulatory authority which has assumed authority to make determinations under this Act.

Prohibits any State-regulated electric utility or nonregulated public system from increasing any rate at which it sells electric energy unless such utility has been determined to be in compliance with the requirements of this Act.

Grants jurisdictional authority to the appropriate United States district court to enjoin an electric utility from violating the rate increase prohibitions contained in this Act.

Directs the Commission to encourage interconnection and coordination within each district established under the Federal Power Act. Authorizes the Commission, on its own motion or upon the application of any State commission, electric utility, or qualifying cogeneration facility, to order interconnection between utilities, or the sale, delivery or exchange of energy between utilities or a utility and such cogeneration facility.

Amends the Federal Power Act to require the Commission to issue rules and orders requiring utilities to report anticipated electricity shortages.

Provides that an electric utility filing for a wholesale rate increase shall notify its wholesale consumer of a filing at least 30 days before such filing.

Sets forth restrictions on the use of automatic adjustment clauses in wholesale electricity sales and specifies procedures for review of such clauses and orders by the Federal Power Commission.

Directs the Commission, within two years after the date of enactment of this Act, and after consultation with representatives of State regulatory authorities, to prescribe rules respecting electric utility reliability.

Directs the Commission, within one year after the date of enactment of this Act and after consultation with State regulatory authorities, to prescribe rules requiring electric utilities to offer to sell electric energy to the owner or operator of a qualifying cogeneration facility, and to offer to purchase electric energy from such owner or operator.

Amends the Federal Power Act to prohibit any person from holding the position of officer or director of more than one public utility, or from holding the position of officer or director of a public utility, and the position of officer, director, partner, appointee or representative of certain banks, or companies.

Authorizes the Commission to issue an order prohibiting any unfair method of competition, or rejecting any filing of a contract, agreement, tariff or schedule which would result in any unfair method of competition.

Declares that nothing in this Act shall be deemed to convey to any person immunity from civil or criminal liability under the antitrust laws, or to restrict any authority the Commission may have under the Federal Power Act to regulate unfair methods of competition.

Authorizes the Administrator to make grants: (1) to provide additional staffing for state utility regulatory commissions; (2) to facilitate public participation in such commissions' proceedings; and (3) to encourage the development of innovative rate structures for electric utilities.

Amends the Federal Power Act to establish within the Federal Power Commission an Office of Public Counsel. Provides that the Office shall be headed by a Director appointed by the President and confirmed by the Senate, for a term of four years.

Requires the Administrator, in exercising his responsibilities under the Energy Conservation and Production Act to: (1) publish a list of State regulatory authorities and nonregulated utilities which are subject to the provisions of the National Energy Act and, (2) inform such bodies of new developments in load management techniques.

Makes the provisions of this Act relating to natural gas utilities effective only with respect to sales of natural gas for purposes other than resale in a calendar year two or more years after the date of enactment of this Act.

Requires the Federal Energy Administrator, in consultation with the Federal Power Commission, to undertake a study of the effect of various methods of pricing natural gas. Requires the Administrator to develop proposals to improve gas utility rate design and to encourage conservation of natural gas. Stipulates that such proposals be transmitted to each House of Congress within one year of the date of enactment of this Act.

Prohibits gas utilities from recovering through their rates, the expense of any promotional, political, or institutional advertising.

Sets forth the minimum procedural standards which State regulatory authorities must establish regarding the circumstances under which natural gas service may be terminated to any consumer. Extends such minimum procedural standards to all nonregulated gas utilities.

Prohibits State-regulated gas utilities and nonregulated public systems from increasing rates for natural gas other than pursuant to a purchased gas adjustment clause applicable to the rates and charges of such utility unless they have been found to be in compliance with this Act.

Vests jurisdiction in United States district courts to enjoin gas utilities from violating any prohibition with respect to rate increases.

Authorizes a State regulatory authority to make a compliance determination with respect to a utility over which it has ratemaking authority.

Permits the Commission or any affected State agency to obtain review of any determination with respect to rate increases by commencing a civil action in the appropriate United States court of appeals.

Creates a program of Federal grants and loans to encourage the development of hydroelectric projects of less than 20,000 horsepower (15,000 kilowatts) of installed capacity at existing dams. Authorizes the appropriation of up to $100,000,000 each year over the next three fiscal years, starting October 1, 1977, for grants and loans to carry out the purposes of such program.

Provides that if the Federal Power Commission is terminated, any reference to the Federal Power Commission shall be deemed to be a reference to the officer, department, agency, or commission in which the functions of the Federal Energy Administration are vested, transferred, or delegated pursuant to law.

Declares that the Nation's health and welfare and security, and the regulation of interstate commerce, require a comprehensive program for the greater use of fuels, other than petroleum and natural gas, as the primary energy source of utilities and major fuel burning installations.

Prohibits the use of natural gas or petroleum for new electric powerplants, but allows the owners to seek temporary or permanent exemptions by petition. Requires approval of the powerplant and its site by the applicable State regulatory authority. Permits new electric powerplants operated solely for peakload purposes to obtain a permanent exemption from the prohibition against the use of petroleum.

Prohibits new major fuel-burning installations (MFBI) which are boilers from using natural gas or petroleum or both, as a primary energy source.

Prohibits existing powerplants from: (1) using natural gas as its primary energy source beginning January 1, 1990; (2) converting to natural gas, if such powerplant used petroleum as its primary energy source on or before April 20, 1977; and (3) using greater proportions of natural gas by an existing powerplant than was used between 1974 and 1976 or during its first two years of operation.

Authorizes the Administration to issue rules prohibiting the use of natural gas as a primary energy source in boilers that consumes Mcf of natural gas per day on a peak day but less than the amount consumed by a MFBI.

Requires the Administrator, no later than 180 days after enactment of this Act, to prohibit any natural gas pipeline or local distribution company from providing natural gas service for outdoor lighting purposes.

Authorizes the Administrator to grant an exemption to any new or existing electric powerplant or MFBI that is prohibited from using natural gas as a primary energy source for the use of high Btu synthetic gas derived from coal.

Requires that the Administrator follow the informal rulemaking procedures of the Administrative Procedure Act in issuing any rule or granting any exemption under this Act.

Provides civil and criminal penalties for violating the prohibitions contained in this Act.

Authorizes any aggrieved person to commence civil actions against Federal agencies who fail to perform a nondiscretionary requirement and against persons who violate any provisions, rule, or order.

Delineates the contractual rights of parties to a firm natural gas service contract where the conversion from the use of natural gas to the use of alternative fuels is mandated by a prohibition on the use of natural gas.

Authorizes the President, when he determines that a national energy supply interruption or shortage exists, under the Energy Policy and Conservation Act, to allocate coal or prohibit an electric powerplant or MFBI from using natural gas or petroleum.

Prohibits Federal facilities constructed by or on behalf of the United States after the effective date of this Act from using natural gas as a primary energy source unless the President informs the Congress that such use is necessary for national security reasons.

Requires the Administrator to submit to Congress an annual report describing the actions taken under the coal conversion program. Authorizes the appropriation of $11,500,000,000 for fiscal year 1978 for coal conversion.

Directs the Administrator of the Environmental Protection Agency to conduct a continuing study of the impact on people and the environment of the use of coal or other fuels.

Amends the Energy Policy and Conservation Act to authorize the Secretary of Transportation to provide for the establishment of a van pooling program for Federal officers and employees. Authorizes to be appropriated to the Secretary for such purposes not to exceed $15,000,000 for fiscal years 1978-1982.

Directs the Federal Energy Administrator to establish a program to demonstrate solar heating and cooling technology in Federal buildings. Establishes criteria governing the submission of proposals by the various Federal agencies for approval by the Administrator. Authorizes the appropriation of $100,000,000 through fiscal year 1980 for such program.

Declares the policy of the United States that the Federal Government has the responsibility to promote the use of energy conservation and solar heating and cooling in Federal buildings.

Directs the Administrator of the Federal Energy Administrator or his successor to establish methods for estimating and comparing life cycle capital and operating costs for residential, commercial, industrial, and Federal buildings. Requires all new Federal buildings to be life cycle cost effective in accordance with the methods established under this Act.

Directs the Administrator to establish energy performance targets for existing buildings, structures, and facilities.

Directs each Federal agency to conduct a preliminary energy audit of all existing Federal buildings under its jurisdiction which contain 30,000 or more square feet. Requires a subsequent energy audit of all Federal buildings which contain at least 1,000 square feet.

Requires at least one percent of such square footage in all Federal buildings to be retrofitted to improve their energy efficiency.

Requires all existing Federal buildings by January 1, 1990, to have been retrofitted to assure their maximum possible life cycle cost effectiveness.

Directs all Federal agencies in leasing buildings to give preference to buildings which use solar heating and cooling or which otherwise have a higher degree of energy efficiency.

Directs the Administrator to submit an annual report to Congress on such activities.

Federal Photovoltaic Utilization Act - Establishes a photovoltaic energy commercialization program for the accelerated procurement and installation of photovoltaic solar electric systems in Federal facilities.

Establishes an advisory committee to assist the Administrator in the establishment and conduct of the program.

Authorizes to be appropriated to the Administrator for photovoltaic system acquisition not to exceed $39,000,000 for the period October 1, 1978, through September 30, 1981.

=Title II: Tax Provisions= - Energy Tax Act - Amends the Internal Revenue Code of 1954 to allow a credit of 20 percent on the first $2,000 of cumulative expenditures on energy conserving components. Makes such credit effective for expenditures made from April 20, 1977, to December 31, 1982.

Allows a credit of up to $2,150 on the first $10,000 of expenditures on solar and wind energy equipment.

Imposes an excise tax on the sale by a manufacturer of each automobile that falls below a specified gasoline efficiency standard for each model year. Imposes such tax on automobiles weighing less than 6,000 pounds. Imposes a tax equal to $339 for an automobile efficiency rating of 15 miles per gallon in 1979 which is increased to $397 for an efficiency rating of 23.5 miles per gallon in 1985 and later years. Imposes such tax at a maximum rate equal to $553 in 1979 for efficiency ratings at or below 12.5 or 13 miles per gallon and increased to $3,856 in 1985 and later model years.

Repeals the personal deduction for State and local government taxes paid on the purchase of gasoline, diesel, and other motor fuels for nonbusiness use after December 31, 1977.

Extends the Federal excise tax of four cents a gallon on gasoline through September 30, 1985.

Repeals the $.02 a gallon refund of the excise tax on gasoline and special motor fuel used in a motorboat.

Repeals the ten percent excise tax on all buses and the eight percent excise tax on bus parts and accessories.

Repeals the excise taxes on tires, inner tubes, tread rubber, gasoline, other motor fuels, and lubricating oil sold for use with intercity, local, and school buses.

Allows a tax credit of 100 percent of the first $300 of cost for the purchase of a qualified electric car.

Imposes a crude oil equalization excise tax on the first purchase of price controlled domestically produced crude oil. Imposes such tax in 1978 at a rate of $3.50 per barrel on lower tier oil. Revises such tax in 1979 to equal the excess of the national average refiner acquisition cost for upper tier crude oil over such acquisition cost of lower tier crude oil. Revises such tax in 1980 to equal the difference between the wellhead prices of uncontrolled and controlled crude oil of the same classification. Terminates such tax on September 30, 1981.

Imposes a natural gas liquids equalization tax on sales to end users based on the price gap between the controlled price and the wholesale price for No. 2 distillate in the region.

Grants authority to the President to suspend the equalization tax increase if there is a significant increase in the world price of oil thereby causing a substantial adverse economic effect.

Allows as a credit against the individual income tax an apportioned amount equal to the net receipts from the crude oil equalization taxes. Makes special payments in 1979 equal to the credits rebated to individual taxpayers to adults who are recipients of monthly benefits under social security.

Provides a refund of the crude oil equalization tax to distributors for heating oil used in exempt structures such as residences, churches, schools, universities, and hospitals. Conditions such refund on the requirement that it be passed through completely to the customers as lower prices.

Imposes an excise tax on the use of oil or natural gas as fuel in a trade or business. Divides such tax into three levels: (1) Tier 1, which includes any use not classified under Tier 2 or 3; (2) Tier 2, which includes any use in a boiler or internal combustion engine; or (3) Tier 3, which includes electric utilities and non-regulated producers of electricity using boilers with a total rating of at least 100 megawatts per plant. Sets forth a schedule to determine the tax for each tier.

Allows a taxpayer to elect a credit against the use tax of one dollar for each dollar of qualified investment, up to 100 percent of the taxpayer's oil and natural gas use taxes, made after April 20, 1977.

Allows a taxpayer a ten percent business energy tax credit for investments by business in qualified property intended to reduce the amounts of oil, natural gas, or other energy consumed in heating or cooling a building or used in an industrial process. Makes such credit effective for investments in qualifying property made between April 20, 1977 and January 1, 1983.

Allows a deduction for intangible drilling costs related to the exploration and development of geothermal resources.

Exempts new lubricating oil from the $.06 per gallon excise tax if it is combined with rerefined oil and the new oil makes up 55 percent or less of the mixture.

Requires the President to report each year to the Congress on the savings in energy use accomplished, the revenue received, and the revenue disbursed under each program contained in the Energy Tax Act of 1977.

Sets forth Congressional procedures for the veto by either House of the Congress of a Presidential suspension plan submitted with respect to the excise tax on the business use of oil and gas or the equalization tax on oil and gas.