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Energy bill a special-interests triumph

Page 7 of 9 -- While environmentalists like to demonize the profitable oil industry, Maisano said, oil companies need financial incentives to search for reserves in untested areas. For example, some potential oil reserves are more expensive to get at, because they are deep in the earth; without a tax break, most companies wouldn't take the financial risk of drilling there, he said.

But critics, who include many fiscally conservative Republicans along with Democrats, insist that the tax breaks got out of hand during all the closed-door meetings, with many benefiting interests as narrow as individual companies. When the original version of the bill was finished, it had an estimated $20 billion in tax credits and subsidies to the energy industry.

But analysts believe the biggest financial windfall for the industry is in the deregulation provisions, which energy companies spent hundreds of millions of dollars to secure.

First on the to-do list was the elimination of a longtime regulation called the Public Utility Holding Company Act. Little known outside the energy and financial world, the regulation is a critical issue for the electrical industry, whose vast team of lobbyists persuaded negotiators in Congress to eradicate the law. In the hundreds of lobbying reports filed by those seeking to influence the energy bill, getting rid of electricity industry regulations shows up 98 times.

Electricity interests spent millions of dollars trying to kill the law. The Edison Electric Institute, which represents the electricity industry, spent $12,540,000 on a team of 35 lobbyists at its own shop and at 12 other firms to lobby Congress, the White House, and federal agencies against PUHCA and on other energy matters. Individual electricity companies and others against the landmark regulatory law dumped another $56,420,670 million on lobbying last year, according to reports filed with the clerks of the House and the Senate.

Nor has the industry been stingy in handing out campaign contributions. Electricity industry PACs and executives gave a total of $7,733,941 for the 2004 election cycle, making the industry the 19th biggest contributor, according to the Center for Responsive Politics. Tauzin, the powerful former chairman of the House Energy and Commerce Committee, was especially enriched, receiving more than $150,000 in campaign funds from the energy industry as a whole, including nearly $76,000 from the electricity sector, according to the center.

The effort was successful: Language killing the watershed regulatory law is included in all versions of the energy bill now on Capitol Hill. If the measure becomes law, both supporters and critics anticipate an explosion in energy investments.

But where financiers see investment opportunities, consumer advocates see future Enrons in the making, because the law was intended to insulate utilities from the kind of energy-trading schemes that caused the Houston-based Enron to collapse in the greatest bankruptcy in history. Get rid of the rules restricting cross-investment by utility holding companies, consumer advocates say, and the country faces an energy and stock market debacle much like the one that led to the creation of the public utilities act.   Continued...

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