Date: 1981-07-29
Speaker: ROBERT C. BYRD (democrat)
Chamber: S

Mr. President. Just 1 year ago the Senate passed. by the overwhelming margin of 86 to 7. legislation to reduce the consumption of petroleum and natural gas by electric utilities. Known as the Powerplant Fuels Conservation Act of 1980. this bill was considered a key component of the accelerated national effort to reduce our dependence on imported oil. It was estimated that. by 1990. up to 1 million barrels per day could be saved through conversion of existing oil- and gasfired generating facilities to coal. A program to aid the financially troubled utility industry In achieving this goal was viewed as a sound Investment In this Nations economic and national security. Some say that times have changed. Market forces are now deemed to be the Panacea for our energy Ills. The new energy policy of the Reagan administration suggests that continued dependence on oil imports may be acceptable. Electrio utilities. as consumers of energy. are to be left alone to make the most appropriate business decisions. Public spending to achieve energy security is disfavored. It is predicted that the Nations energy problems will be cured as the economy is unleashed through a supplyside program of massive cuts in Federal spending and taxes. Continued American dependence on large quantities of foreign oila dependence which still drains almost $70 billion a year from our economyis intolerable. An ideological fixation on market forces is hardly an adequate substitute for the development of a coherent. comprehensive. longterm energy policy that offers guidance for the future. Currently. electric utility generating plants consume about 1.2 million barrels of oil per day. In evaluating potential areas for the United States to cut its dependence on foreign oil. oil used by utilities as a boiler fuel must be viewed as a prime target. Although known coal reserves comprise approximately 85 percent of our domestic fossil fuel resources. only 18 percent of the Nations total energy is produced .from coal. The substitution of coal for oil and natural gas to produce electricity is one obvious solution to the Nations energy problems which can obtain important and immediate results. For this to be achieved. however. the financially troubled condition of the utiilty industry needs to . be addressed. The amendment which I am proposing today is a simple and direct approach to encourage the voluntary conversion of oil- and gasfired powerplants to coal. The amendment provides for accelerated depreciation of 10 years for converted or replacement generating facilities and 3 years for related pollution control equipment. This compares to the depreciation schedules of 15 years and 5 years. respectively. which were incorporated in the tax bill as reported by the Finance Committee. It also equalizes the treatment afforded coalburning utility property with that provided for nuclear electric generation equipment. This change will make it possible for utilities that would otherwise not be in a position to convert to coal. to do so. In the early stages. this amendment would have a modest revenue effect. costing the U.S. Treasury approximately $20 million in 1982 and $64 million infiscal year 1983. As converted coalburning plants come on line. the revenue effects would be more significant. costing $104 million in fiscal year 1984. But it should be remembered that these costs will be more than offset by the fuel savings afforded utilities by the lower costs of coal and by reduced oil Imports. In fiscal year 1985 the revenue effect would amount to $116 million. and in fiscal year 1986 $144 million. The displacement of even 500.000 barrels per day by 1985 would reduce Americas foreign oil bill by no less than $6.5 billion per year. This is money which stays at home. providing Jobs and Investment opportunities to Promote this Nations economidc recovery. The reluctance of utilities to convert to coal stems. in part. from hte poor financial circumstances of the utility industry Itself. Although coal Is a far more economical fuel than expensive Imported oil. the conversion of powerplants to coalburning capacity has become too costly for most utilities to undertake. Prior to 1973. the utility Industry enjoyed a stable and prosperous growth. based on increased demand for electricity to power a burgeoning economy and declining costs for generating electric power. After the Arab oil embargo. the industrys growth rate plummeted and the unpredictability of energy demand forced many utilities to postpone planned expansion. Government air pollution regulations. complex and timeconsuming licensing procedures. and massive escalation In the costs of new plants created major problems for utilities. The reluctance of regulatory agencies to allow needed rate increases through which utilities could raise needed capital for new plants also added to the reluctance of utilities to switch to coal. As a result. the use of coal has not significantly Increased. despite excess production capacity in the coal industry and obvious cost advantages to the consumer. The financial conditions of those utilities with powerplants which can be converted from oil or gas to coal plants. vary considerably. Some utilities with suffcient capital resources are proceeding on this course due to the financial benefits resul ting from the use of coal. For other utilities. the costs of conversion or the financial conditions of the companies may delay or even preclude action unless some Federal assistance is offered. This amendment can help to attain the maximum level of oil savings by easing the financial plight of the utility industry in a way which has a modest impact on Federal revenues but a major impact on the increased use of coal. Coal conversion offers one of the most direct. nearterm and costeffective opportunities for reducing U.S. reliance on imported oil. The independence of our foreign policy and the resiliency of our economy are at stake in these decisions. This amendment offers a wise and frugal means of expediting the replacement of oil with coal. It is also a concrete step along the road to energy independence. which must remain an Irrefutable national priority. Mr. President. I ask unanimous consent that the Senator from Virginia be added as a cosponsor of the amendment.