REGULATORY FOCUS A legislative proposal for "SENSE"
Michael R. Deland Both Houses of Congress are now scheduling hearings on the Solar Energy National Security and Employment Act (SENSE), which was introduced by a bipartisan group of legislators in late February. The 20 initial cosponsors, led by Sens. Pete Domenici (R-N.M.) and Dale Bumpers (DArk.) and Reps. Timothy Wirth (DColo.) and Silvio Conte (R-Mass.), have since elicited the support of an increasing number of their colleagues from both parties. The legislation was drafted mainly by the solar lobby and was announced at the nation's first press conference to be both powered and broadcast by solar energy. A mobile solar photovoltaic system supplied power for the conference, which was broadcast live by the country's first solar-powered radio station, WBNO in Bryan, Ohio. The SENSE act The legislation is divided into four separate titles, each to be introduced separately by bipartisan supporters. For example, Title II, which focuses on national security issues, is being sponsored by Sens. Barry Goldwater (R-Ariz.) and John Stennis (D-Miss.). It includes a directive to the Department of Defense to purchase energy conservation, biofuel, and renewable energy systems or components when they can be shown to be cost-effective and otherwise feasible. Among the key elements of SENSE are those dealing with small businesses 0013-936X/83/0916-0201A$01.50/0
and individual homeowners. Title I would extend the business energy tax credits for all renewable energy applications—now due to expire in 1985—until 1990. Tax credits for applications of solar, wind, and geothermal energy would increase from 15 to 25%, and the hydroelectric credit would rise from the current rate of 11% to 15%. At the same time, Title IV would extend the residential renewable energy tax credits to the end of 1990 and expand them to include passive as well as active applications. The tax credits are among the few features of the bill that have budgetary implications and thus are certain to be among the more controversial. However, a recent report released by the General Accounting Office (GAO) may serve to soften the opposition. GAO found that although extending tax credits for business investment in wind and solar energy would result in a short-term loss to the U.S. Treasury, in the long run that loss could be offset by increased tax collections resulting from investment in the more efficient solar systems. Another critical component of SENSE is the Title I provision that clarifies the section of the Public Utility Regulatory Policies Act of 1978 (PURPA), which allows small power producers to connect with and sell power to the utility grid. The rate of payment is based on the 100% replacement cost, or "full avoided cost," to the utility. Understandably, the utilities challenged this portion of PURPA, but in 1982 the U.S. Supreme Court affirmed its constitutionality. The potential impact of PURPA is enormous. The Federal Energy Regulatory Commission predicts the construction of 12 000 MW (roughly equal to the capacity of 12 nuclear power plants) of small power facility capacity by 1995. The incentives provided by PURPA could help realize this prediction, since small
© 1983 American Chemical Society
producers need the guaranteed rate to ensure project financing. The remaining sections of SENSE, including the reauthorization of the Solar Energy and Conservation Bank, all serve to further stimulate development of renewable energy resources. Budgetary battles Against this legislative backdrop is the ongoing debate over the degree to which renewable energy sources and conservation measures should be supported. In its drive to reduce the federal budget, the administration has proposed substantial slashes in these areas. For example, in FY 1983 the administration sought only $82 million for solar and other renewable energy programs and a miniscule $18 million for research and development in energy conservation. Congress countered by appropriating $253 million and $410 million, respectively. This year similar budgetary battle lines are being drawn. While the administration advocated a 29% boost for FY 1984 over its 1983 request for expenditures for renewable energy, that figure is still far less than the amount appropriated by Congress last year. The House recently rejected the administration's proposal and voted to hold funding at the 1983 level while adding $350 million in program additions for research and development and another $30 million for the Solar Bank. The Senate has yet to arrive at a consensus, so the FY 1984 budget is far from settled. Given the recent drop in oil prices, the decisions by Congress and the administration on the SENSE legislation and on the FY 1984 budget will be ideal indicators of the depth of the country's commitment to sources of renewable energy. Deland writes this column monthly and is counsel to ERT, Concord, Mass. Environ. Sci. Technol., Vol. 17, No. 5, 1983
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