Senate OKs Energy Bill

The Senate, ending a week of gridlock, passed an outline for a sweeping national energy policy Thursday that calls for greater use of corn-based ethanol and billions of dollars in tax measures to spur energy development and conservation.

The vote was 84-14.

More than the provisions of the bill -- which was identical to a measure the Senate approved a year ago -- passage was designed to clear the way for a compromise with the House on legislation that President Bush (search) could sign as early as the end of the year.

The way was cleared for passage of the bill when Senate Republicans abandoned legislation they had been struggling over and resurrected an energy package approved by the Senate last year when Democrats were in control.

"Never in our dreams did we imagine that we could pass a Democratic bill in a Republican Congress," said Senate Democratic leader Tom Daschle (search) of South Dakota.

"This is a day to smile and smile big," said Sen. Pete Domenici (search), R-N.M., the chairman of the Energy Committee, who has struggled for weeks to push a GOP-drafted bill through a balky Senate. He predicted that significant parts of the bill will be reworked during negotiations with the House, possibly adding some of the pro-nuclear programs he had favored in the bill that was scrubbed.

Earlier in the day, it appeared the energy legislation was doomed as Republicans and Democrats accused each other of impeding progress with a monthlong congressional vacation looming.

But the gridlock was broken when both sides agreed to simply abandon the bill at the center of the dispute and substitute one that last year cleared the Senate 88-11, but died when agreement couldn't be reached with the House on a final bill.

The legislation would:

-- Double the use of corn-based ethanol in gasoline, while banning the use of the troublesome use of another additive, MTBE, that has been found to contaminate drinking water supplies.

-- Provide $16 billion in tax breaks and incentives to promote energy production and conservation.

-- Spur production of a natural gas pipeline in Alaska.

-- Rescind a Depression-era law that restricted merger activities of utility holding companies.

Unlike the House-passed bill, which would open the way for drilling in the Arctic National Wildlife Refuge in Alaska, the Senate measure makes no mention of refuge development.

The 800-page energy legislation has been the focus of on-and-off again floor debate for more than a month. A final decision to abandon it in favor of last year's bill came at a meeting of Republican senators, most of whom had concluded that otherwise the issue was dead at least until later this year or next.

"They made us an offer we couldn't refuse," said Daschle.

"It's been a fascinating day," Majority Leader Bill Frist of Tennessee, told reporters, although he acknowledged the way the compromise developed was "a little bit unusual."

The idea of reverting to last year's energy bill, emerged early in the week, according to Republican sources and gained momentum as it became clearer that the legislation before the Senate was going nowhere.

At midday Thursday, Daschle alluded to last year's legislation, suggesting it would have been a better way to go. Frist quickly picked up on it and said the bill would be acceptable to Republicans. Daschle said he telephoned Frist and the negotiations were rolling.

The compromise had the blessing of the Bush administration.

Energy Secretary Spencer Abraham called getting the bill through the Senate "a vitally critical step to ensure that consumers, farmers, small businesses, manufactures and their employees will benefit from sound energy policy."

"The president looks forward to working with the [House-Senate] conferees to ensure that we enact a balanced and comprehensive energy policy this year," White House spokesman Scott McClellan said in a statement.

But the deal appeared to be a setback for Domenici, who had worked hard to include major provisions that would benefit the nuclear industry, including loan guarantees for building six next-generation nuclear power plants. Last year's bill had no such measures.

"The reason I'm smiling is because I'm going to rewrite that bill," said Domenici after the bill passed, alluding to possible changes in the bill in negotiations with the House, where Republicans will have an upper hand.

Sen. Jeff Bingaman, D-N.M., said the bill that emerged is better than what had been before the Senate, including additional measures to spur energy conservation, renewable fuels development and consumer protection against potential electricity market abuses.