The energy bill is an extremely complicated bill with several moving parts. There are two that are particularly relevant here.
1) Renewable Portfolio Standard: This forces utilities to produce (or purchase) a certain amount of their electricity from approved “renewable” sources. Hydroelectric and nuclear are not considered “renewable” under the bill.
2) $21.8 billion in tax increases (“closing loopholes”) on domestic energy producers. This is a pay-for for a program promoting the use of alternative fuels.
Republicans wanted both of these taken out of the bill, whereas Democrats had been hoping they could just drop RPS and still get the tax provisions. Today, the Republicans narrowly stopped them by finding the votes to stop the tax increase. Note that Mary Landrieu (D-La.), who is in big trouble for re-election, voted her oil state over her party. (FYI, McCain was the one senator not present for the vote.)
Reid will now come back with a version that doesn’t include the tax increases. That will go to the House, where there is an interesting dynamic. The Blue Dog Democrats are normally viewed as the more conservative members of the party, and several of them come from oil districts and states like Texas and Louisiana. You would think they would feel better about a bill that doesn’t raise taxes on their local industry.
But the Blue Dogs have also hung their hat on this idea of “Pay-Go,” which is why they’re still blocking a patch for the Alternative Minimum Tax unless it is accompanied by a large tax increase. If the tax hikes are dropped from the energy bill, then the bill isn’t paid for anymore.
How many Blue Dogs will demand that the bill meet Pay-Go standards and include the tax hike? How many will peel off to get an energy bill without a tax hike, in spite of Pay-Go? Will it be enough?
The Republicans could and should just vote “no” on any version of this bill, but don’t bet on it. Unless you are heavily invested in ethanol, there is no reason you should want this energy bill to pass.
Which is precisely why it will eventually pass, with Republican votes, and probably without the tax provisions.