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THE ENERGY POLICY ACT OF 1992:
A BUDGETARY PERSPECTIVE
 
 
December 1992
 
 

This Congressional Budget Office (CBO) Staff Memorandum summarizes the estimated budgetary costs of the Energy Policy Act of 1992. The act was passed by the 102nd Congress and signed into law on October 24, 1992. The memorandum focuses on the act's authorizations for spending on a variety of programs conducted by the Department of Energy (DOE), and it compares the authorizations with current and historical spending for such DOE programs.

The memorandum was prepared by Kim Cawley and Peter Fontaine of CBO's Budget Analysis Division under the supervision of Robert A. Sunshine, Paul Van de Water, and C.G. Nuckols. Chris Spoor edited the text. Jeff Holland prepared the figures, and Wendy Stralow prepared the final version of the text.
 
 

CONTENTS
 

INTRODUCTION

SUMMARY OF BUDGETARY COSTS

ALTERNATIVE-FUEL VEHICLES

RENEWABLE ENERGY

ENERGY CONSERVATION

NUCLEAR ENERGY

FOSSIL ENERGY

GLOBAL WARMING

BASIC ENERGY SCIENCES

APPENDIX: DETAILED AUTHORIZATION TABLES
 

TABLES
 
1.  Summary of Authorizations in the Energy Policy Act
2.  Effects of the Energy Policy Act on Direct Spending and Receipts
3.  History of Funding for Renewable and Other Energy R&D
4.  History of Funding for Energy Conservation
5.  History of Funding for Nuclear Energy R&D
6.  History of Funding for Fossil Energy R&D
7.  History of Funding for Basic Energy Sciences
A-1.  Specified Authorizations in the Energy Policy Act
A-2.  Estimated Authorizations in the Energy Policy Act
A-3.  Energy Policy Act Authorizations by Spending Category
 
FIGURES
 
1.  Composition of Energy Policy Act Authorizations for Fiscal Years 1993 and 1994
2.  Energy Policy Act Authorizations for Fiscal Year 1993: Continuing Programs by Category Versus New Initiatives
3.  Energy Policy Act Authorizations for Fiscal Year 1994: Continuing Programs by Category Versus New Initiatives
 
BOX
 
1.  Authorizations, Appropriations, and Direct Spending
 
 

INTRODUCTION

After two years of legislative work on a wide-ranging energy bill, the Congress cleared H.R. 776, the Energy Policy Act of 1992, on October 8, 1992. The President signed the bill into law on October 24, 1992, making it Public Law 102-486. The Energy Policy Act is the broadest and most extensive energy legislation enacted since the National Energy Act of 1978. The final product lacks some controversial provisions that made their way into earlier versions of the legislation; in particular, Congress jettisoned provisions that would have allowed exploratory drilling for oil and gas in the Arctic National Wildlife Refuge, mandated higher corporate average fuel economy standards for automobiles, and required the government to buy back certain offshore leases from private companies that plan to drill for oil and gas. The act does, however, contain some significant changes in federal energy policy, most notably a reform of regulations on the U.S. electric utility industry.

The utility industry reform will allow and encourage more competition between established utilities and independent power producers in the wholesale power market. In addition to this major regulatory change, the act contains several changes to the U.S. tax code, including new tax incentives for energy conservation, renewable energy, and alternative-fuel vehicles and tax cuts for independent oil and gas drillers. Another key point of the act's revenue title is a new health care entitlement for retired coal miners, together with increased taxes to pay for those benefits.

The act converts the government's uranium enrichment enterprise from an annually appropriated program in the Department of Energy (DOE) to a direct spending program in the form of a federally owned corporation. The act requires nuclear utilities to begin making payments to cover part of the costs of cleaning up federal uranium enrichment facilities. In addition, the act streamlines the government's licensing process for new nuclear power plants, and it mandates higher energy-efficiency standards for appliances, plumbing equipment, and buildings.

Aside from regulatory and tax-related provisions, the Energy Policy Act contains numerous authorizations for new or continued spending by DOE, covering a broad range of programs. In this memorandum, the Congressional Budget Office (CBO) tallies those authorizations of appropriations. It organizes them into seven major spending categories and compares them with recent appropriations to give some perspective on the act's spending priorities. The ultimate impact of setting such spending priorities, however, is wholly dependent on future appropriation action, since authorizations by themselves do not constitute any authority to spend federal funds. The next several years' appropriation bills will determine whether and to what degree the act's spending priorities are followed. Moreover, the act does not fully indicate spending priorities for the long term because its authorizations after 1994 are incomplete. Some programs could continue for several years even though the act specifies authorizations for only one or two years. In fact, many energy programs have received appropriations in the past even when formal authorizations were not enacted. Hence, the act's authorizations may be a guide to future spending, but not a complete or certain one.

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