ENERGY EFFICIENCY:

Vehicle program to be stripped from Shaheen-Portman to shrink price tag

Sponsors of a leading energy efficiency bill will eliminate a provision aimed at boosting the federal government's use of electric and natural gas-fueled vehicles after congressional budget scorers determined it would increase spending by $350 million over the next decade, a Senate aide said Friday.

At issue is the nonpartisan Congressional Budget Office's budget estimate for the efficiency bill from Sens. Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio). The bill would establish a grant program for states interested in financing efficiency programs, update voluntary building codes and implement other programs aimed at reducing energy use by industry and federal agencies.

In addition to the mandatory spending increase associated with the vehicle program, the rest of the bill, S. 761, would increase discretionary outlays subject to annual appropriations by $210 million over the next five years, CBO said in the estimate released Friday.

The aide, who spoke on background, said the bill's sponsors would increase offsetting cuts to other spending authorizations in order to close that gap before it comes to the Senate floor. Shaheen and Portman, the aide said, "are committed to having it have zero cost at the end of the day."

The bill sailed out of committee in early May, and Senate leaders are continuing to negotiate an agreement on amendments to make time for it on the floor. It could be brought up as soon as this month, likely after the upper chamber completes its work on a complex immigration reform package.

Shaheen and Portman reintroduced their bill this year after an earlier version died amid procedural wrangling in the Senate and resistance from House conservatives. While the latest cost figure is still higher than the senators would like, it is significantly below the $1.2 billion CBO said the previous version would cost over five years. The key difference between the two versions is that the latest incarnation eliminated a proposed guarantee efficiency loan guarantee program with a one-time authorization of $250 million for grants to states.

This year, CBO also apparently changed how it scored another part of the bill relating to federal agencies' use of energy savings performance contracts (ESPCs) or utility energy service contracts (UESCs).

The contracts allow agencies to partner with private contractors to make facilities more efficient at almost no upfront cost; contractors are paid for performing retrofits out of a portion of the resulting money saved on energy bills.

Shaheen-Portman would have expanded agencies' ability to use ESPCs and UESCs by allowing them to cover infrastructure for natural gas or electric vehicles. A similar provision limited to just electric vehicles was included in the previous bill, but CBO in its 2011 score didn't assign that provision a cost.

This year, CBO said it anticipated $350 million in additional mandatory spending related to the expanded applicability of the energy savings contracts.

CBO estimated $100 million would be spent on upfront costs for natural gas or electric vehicles and related fueling infrastructure. Another $250 million would be spent on vehicle-to-grid systems that allow advanced electric vehicles to communicate with the electric grid, enough to construct such systems at about 50 sites and purchase 3,500 advanced electric vehicles, according to CBO.

Any savings would not be recouped until after the 10-year budget window, CBO said. Now, the provision will be stripped from the bill entirely before it hits the floor, the Senate aide said Friday.

Efficiency advocates have long struggled to convince CBO to change its methodology, arguing that ESPCs and UESCs result in immediate savings because not all of the energy savings is paid back to the contractor.

"To say nothing significant will happen over 10 years is definitely overestimating the net costs," said Steven Nadel, executive director of the American Council for an Energy-Efficient Economy. "They only do these contracts where they're going to have a positive cash flow over the life of the projects."

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