Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

Legislation and Regulations• Royalty relief for oil and natural gas production inwater depths greater than 400 meters in the Gulfof Mexico• Restrictions on new oil and natural gas drilling inor under the Great Lakes• Reduction of the existing capital recovery periodfor new electric transmission and distribution assetsfrom 20 years to 15 years• Expansion of the amortization period for pollutioncontrol equipment on coal-fired power plantsfrom 5 years to 7 years• A PTC of 1.8 cents per kilowatthour for up to6,000 megawatts of new nuclear capacity broughtonline before 2021• An investment tax credit for the construction anddevelopment of new or repowered coal-fired generatingprojects• Extension, modification, and expansion of thePTC for renewable electricity generation.The following discussion provides a summary of theprovisions in EPACT2005 that are included inAEO2006 and some of the provisions that could beincluded if more complete information were availableabout their funding and implementation. This discussionis not a complete summary of all the sections ofEPACT2005. More extensive summaries are availablefrom other sources [2].End-Use DemandThis section summarizes the provisions of EPACT-2005 that affect the end-use demand sectors.BuildingsEPACT2005 includes provisions with the potential toaffect energy demand in the residential and commercialbuildings sector. Many are included in Title I,“Energy Efficiency.” Others can be found in therenewable energy, R&D, and tax titles.Sections 101 through 105 and Section 109 addressFederal energy use, allowing for energy conservationmeasures in congressional buildings (Section 101);updating Executive Order mandates regarding Federalpurchasing requirements and energy intensityreductions (Sections 102 through 104); extending theuse of Energy Savings Performance Contracts tofinance projects through 2016 (Section 105); andupdating performance standards for Federal buildings(Section 109). The Federal purchasing requirementsand performance standards are represented inNEMS as a result of earlier Executive Orders. Otheraspects of these provisions address a level of detailthat is not modeled in NEMS.Sections 135 and 136 establish or tighten mandatoryenergy conservation standards for a number of residentialproducts and appliances and commercialequipment, affecting projected residential and commercialenergy use. Standards for torchiere lamps areexplicitly modeled in NEMS, allowing for a directaccounting of energy savings from a maximum wattallowance. Savings resulting from standards for residentialdehumidifiers and ceiling fan light kits, basedon shipment estimates, are phased in over theAEO2006 forecast period to account for capital stockturnover. Standards for explicitly modeled commercialequipment, including lighting equipment, packagedair conditioning and heating equipment,refrigerator and freezer equipment, and automaticicemakers, are directly represented in the AEO2006projections. Savings resulting from standards for exitsigns, traffic signals, distribution transformers, andpre-rinse spray valves are estimated and phased inover the AEO2006 forecast period to account for capitalstock turnover.Provisions under Title XIII provide tax credits tobusinesses and individuals for investment in energyefficiency and renewable energy properties. Section1332 provides a tax credit of $1,000 or $2,000 to buildersof homes that are 30 or 50 percent more efficientthan current code in 2006 and 2007. Section 1333allows tax credits for purchasers of energy-efficientequipment, including water heaters, air conditioners,heat pumps, furnaces, boilers, windows, and otherenergy-efficient building shell products. The credit isavailable in 2006 and 2007, and the amount varieswith the technology purchased. Section 1334 providesa tax credit for producers of energy-efficient clotheswashers, dishwashers, and refrigerators. Section1335 provides tax credits for purchasers of solarwater heaters, solar PV equipment, and fuel cells forthe years 2006 and 2007. All these tax credits are representedin AEO2006. For modeling purposes, it isassumed that the credits will be passed on to consumersin the form of lower first costs for purchases of theproducts specified.Section 1336 provides a business investment taxcredit of 30 percent for fuel cells and 10 percent formicroturbines, and Section 1337 increases the businessinvestment tax credit for solar property from thecurrent level of 10 percent to 30 percent. These provisions,which apply to property installed in 2006 or2007, are included in AEO2006.16 Energy Information Administration / Annual Energy Outlook 2006