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********************************************************************* Energy Exchanges Online - Scottsdale - December 4-6 B2B e-commerce has revolutionized commodity trading, the A&D process and procurement within the energy industry. With heavyweight keynotes and in-de= pth panel discussions this is the first event to bring the major energy compani= es, net markets, venture capitalists, regulatory bodies, investment banks and analysts together to thrash out why its not business as usual but business online. For more information please visit www.eyeforenergy.com/xonline ********************************************************************* =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH IssueAlert, November 8, 2000 As Presidential Election Hangs in Balance, So Do Key Energy Issues By: Will McNamara, Director, Electric Industry Analysis =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D After a tumultuous Election Day full of constant changes in the projections= , the identity of the next president of the United States was still unknown as of Wednesday morning, Nov. 8. The identity of the next U.S. president will be determined by a vote recount in Florida, which must be completed by the close of business Thursday, state election officials said. Tuesday's national vote count is so close, as is the number of electoral votes won by GOP candidate George W. Bush and Democrat Vice President Al Gore, that the presidential election is too close to call. It is also possible that one candidate could win the Electoral College vote and the other win the popular vote, which hasn't happened in a hundred years. ANALYSIS: Well, it certainly has been a history-making Election Day. I was prepared to analyze the future of the energy industry, based on which presidential candidate had been elected yesterday. As the candidates have such polarized platforms with regard to energy issues, it is not an=20 overestimation to say that many critical energy issues hinge on this election. As we await the final (and accurate) announcement of who is the next U.S. president, which may not come for another day or so, it is a good time to review how each candidate intends to address low domestic supplies of oil and natural gas, the status of deregulation, the development of renewable energy, and the high cost of energy due to recent price spikes. Throughout the campaign, Bush criticized the Clinton-Gore Administration for not developing a comprehensive energy policy. Rather than developing an effective energy policy, Bush accused Gore of raising gasoline taxes, discouraging domestic production of oil and natural gas, and failing to anticipate the oil and natural-gas price spikes that have occurred this year. Bush also was very critical of President Clinton's decision to tap into the Strategic Reserve Fund in September and release 30 million barrels of crude oil from the nation's emergency oil stockpile. As the United States now enters a so-called "energy crisis," brought about primarily as a result of rising demand and diminishing supplies, Bush has outlined an energy policy that includes more than 20 initiatives. I can't address all of them, but have identified the key policies that will likely unfold under a Bush administration. Perhaps the best summary of Bush's energy policy is that he supports a comprehensive approach to ensuring U.S. energy security, and intends to accomplish this by expanding domestic resources, using a range of fuels and technologies, supporting ongoing deregulation of the industry, and providing energy assistance to low-income households. Reduce American dependence on foreign supplies of oil. Bush repeatedly made the case that, since 1960, U.S. energy demand has more than doubled, far outstripping domestic production. Today, the United States consumes approximately one-third of the world's energy, and approximately 28 percent of our usage comes from foreign sources. Bush contends that U.S. dependence on foreign oil has increased from 50 percent in 1993 to 56 percent today, and that oil imports are projected to increase to 15 million barrels per day by 2010. To remedy this, Bush supports the development of domestic sources for oil, natural gas and renewable energy. Specifically, Bush has proposed opening 8 percent of the Arctic National Wildlife Refuge to=20 "environmentally responsible and regulated exploration," with the intent of replacing the oil that the United States now imports from Iraq. Regarding natural gas, Bush will examine whether certain promising natural-gas reserves in federal lands should be opened for exploration. Yet, it's important to note that Bush is not suggesting that domestic supply of oil and natural gas will be sufficient. Rather, he recognizes that access to an adequate supply of foreign oil and gas is strategically important to the United States and the global economy. However, instead of relying predominantly on Iraq= =01* especially as Saddam Hussein threatens to reduce production=01*Bush will work more clo= sely with Canada and Mexico to increase cross-border flows of oil, natural gas and electricity within North America. Support new pipeline construction. As domestic production of oil and natura= l gas increases to meet growing demand, Bush also supports the construction of new pipelines, and would expand refining capacity by tearing down=20 "regulatory hurdles." Bush has referenced the National Petroleum Council's estimates that the gas industry will require 38,000 miles of new transmission pipelin= es and 255,000 miles of distribution lines by 2015. Bush sees a need for new pipelines and distribution lines in the Midwest in particular, where=20 traditional coal plants should ultimately be replaced by gas-fired plants. Support the growth of renewable energy. Bush supports the development of renewable and low-emission fuels, and has committed to investing $2 billion over 10 years to fund "clean-coal technologies" and $1 billion over 10 years to help utilities purchase nuclear plants. At the same time, Bush will propose legislation requiring utilities to reduce harmful emissions from their generation plants, and offer tax credits for power produced from alternative or renewable fuels. However, Bush recognizes that while renewable energy is important, it currently accounts for less than 4 percen= t of the total U.S. energy consumption. Consequently, for the foreseeable future, Bush contends that hydrocarbons=01*oil, coal and natural gas=01*wil= l continue to play the primary role in meeting the growing energy needs of Americans. Support electric deregulation. Bush supports deregulation of the energy industry and prefers to let "markets, and not government officials=01*deter= mine investment decisions" and "give customers a choice of suppliers." Toward this end, Bush believes that federal restructuring legislation is needed to "assure the reliability of the nation's electrical grid, and to promote consumer choice by removing federal barriers to competition." While he supports consumer choice, Bush recognizes that often low-income families face high electricity prices (as was found in San Diego this summer).=20 Consequently, Bush supports the Low Income Home Energy Assistance Program (LIHEAP), the largest direct expenditure energy subsidy program, which has about $155 million left in funding to support emergency funding for cooling and heatin= g assistance. In addition, Bush will expand the Weatherization Assistance Program, which supports about 76,900 homes by spending $1.4 billion for Weatherization programs over the next ten years. As noted, the presidential candidates are proposing very different platform= s with regard to the energy industry. Thus, it is not surprising that Vice President Gore disagrees with most everything that Governor Bush is proposi= ng. Essentially the most striking difference comes down to conservation. While Bush supports the exploration of domestic fuels, Gore believes the United States should focus on doing more with what we already have, and protecting the environment for future generations. Of course, Gore carries the legacy of his Clinton-Gore administration, one that as noted has been criticized by Bush for not developing a=20 comprehensive energy policy. Thus, it is not completely clear how Gore would depart from what has been his administration's approach to energy issues over the last seven years. It is likely that Gore's administration would follow much the same path that the Clinton administration traveled, although Gore=20 certainly has made the environment one of his core platforms (for example, his 1993 book, Earth in the Balance). Thus, is not surprising that "creating a clean environment and stable climate" is one of the key foundations on which Gore has established his energy platform. Beyond that, Gore has said that his "new" energy policy will focus on five goals: 1). Saving energy, reducing pollution, promoting a higher standard of living and creating high-wage jobs. 2). Reducing the nation's dependence on unreliable imported oil. 3). Protecting children against the threat of pollution nationally and globally. 4). Dramatically reducing the threat posed by global warming. 5). Curtailing brownouts by increasing the=20 reliability of the power grid. Perhaps the central initiative that Gore has proposed is the creation of the National Energy Security and Environmental Trust Fund. Designed to "bring revolutionary change to our transportation and energy infrastructure= ," the Fund would help consumers purchase energy-efficient vehicles, homes and appliances, promote clean and reliable sources of electric power, and encourage long-term solutions to reduce U.S. dependence on imported sources of oil. Gore would provide consumers with a tax credit up to $2,000 to purchase energy-efficient new homes or up to a $1,000 credit to upgrade the efficiency of their current homes. Gore also supports expanding the current 10-percent tax credit provided to homes or businesses that use solar energy to generate electricity or heat water. Gore opposes drilling in federal land, and instead aims to protect the U.S. environment, increase reliance on low-pollution fuels and focus on energy-efficiency / lower consumption programs. Articulating the Democratic position on this issue, Senator Joe Lieberman made the following comments in the vice presidential debate: "There are more resources within the Unite= d States. If we can get three miles more per gallon from our cars, we'll get a million=01*we'll save a million barrels of oil a day, which is exactl= y what the refuge, at its best, in Alaska, would produce=01(We've got to deve= lop fuel cells, alternative energy. We've got to encourage people to conserve..= ." Gore supports tapping into the Strategic Petroleum Reserve Fund, as Preside= nt Clinton did in September, to increase oil supplies, prevent winter shortage= s of home heating oil and stabilize oil prices. Perhaps the only issue on which the two candidates agree is deregulation of the energy industry as a whole. This process is of course occurring on a state-by-state basis, although many states have begun to resist=20 competition due to current low prices in their states and fear of sudden price spikes as occurred in California this summer. Bush clearly supports a national restructuring law, while it unclear if Gore supports this as well, or prefe= rs to let states continue to deregulate on their own or opt out from this process. One thing is clear in all of this uncertainty. The future of the energy industry hangs in the balance and will continue in one of two drastically different directions as the final outcome of this election is determined. As supply and demand issues continue to generate concern across the country= , it is certain that energy issues will remain on the radar of whichever candidate is elected president. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D Discover a world of utilities information in our new e-zine, SourceBook Weekly, which will be launched on December 1, 2000. Get a free SourceBook Weekly article at: http://www.consultrci.com/web/rciweb.nsf/Web+Pages/SBEntrance.html =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let us know if we can help you with in-depth analyses or any other SCIENTECH information products. If you would like to refer a colleague to receive our free, daily IssueAlerts, please reply to this email and include their full name and email address or register directly at: http://www.consultrci.com/web/infostore.nsf/Products/IssueAlert Sincerely, Will McNamara Director, Electric Industry Analysis wmcnamara@scientech.com =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D Feedback regarding SCIENTECH's IssueAlert should be sent to=20 wmcnamara@scientech.com =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D SCIENTECH's IssueAlerts are compiled based on independent analysis by=20 SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlerts are not intended to predict financial performance of companies discussed or to be the basis for investment decisions of any kind. SCIENTECH's sole purpos= e in publishing its IssueAlerts is to offer an independent perspective regard= ing the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy and telecommunications issues. Copyright 2000. SCIENTECH, Inc. If you do not wish to receive any further IssueAlerts from SCIENTECH, pleas= e reply to this message and in the body of the email type "remove."
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