APPENDIX C
THE MISSION AND FUNCTIONS OF THE DEPARTMENT OF ENERGY

ESTABLISHMENT OF THE DEPARTMENT OF ENERGY

The U.S. Department of Energy (DOE) was established in 1977 by the Department of Energy Organization Act, which primarily consolidated a number of pre-existing federal agencies and authorities. The creation of a DOE was recommended by the Administration and strongly supported in both Houses of the Congress. The stated purpose of the reorganization was to secure effective management of energy programs, to assure a coordinated national energy policy, and to create and implement a comprehensive energy conservation strategy. (P.L. 95-91, [42 USC1/71013])

The principal building blocks that were assembled within the Department were:

  • The Federal Energy Administration, a high level planning and administrative organization that previously had been created to administer the federal authorities stemming from the legislative and administrative responses to the “energy crisis” of the early 1970s;

  • The Energy Research and Development Administration (ERDA), under which the energy research and development (R&D) programs and nuclear weapons programs of the Atomic Energy Commission (AEC), other pre-existing, non-nuclear, energy R&D programs, and greatly expanded R&D activities created by new legislation had already been consolidated;



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The National Energy Modeling System APPENDIX C THE MISSION AND FUNCTIONS OF THE DEPARTMENT OF ENERGY ESTABLISHMENT OF THE DEPARTMENT OF ENERGY The U.S. Department of Energy (DOE) was established in 1977 by the Department of Energy Organization Act, which primarily consolidated a number of pre-existing federal agencies and authorities. The creation of a DOE was recommended by the Administration and strongly supported in both Houses of the Congress. The stated purpose of the reorganization was to secure effective management of energy programs, to assure a coordinated national energy policy, and to create and implement a comprehensive energy conservation strategy. (P.L. 95-91, [42 USC1/71013]) The principal building blocks that were assembled within the Department were: The Federal Energy Administration, a high level planning and administrative organization that previously had been created to administer the federal authorities stemming from the legislative and administrative responses to the “energy crisis” of the early 1970s; The Energy Research and Development Administration (ERDA), under which the energy research and development (R&D) programs and nuclear weapons programs of the Atomic Energy Commission (AEC), other pre-existing, non-nuclear, energy R&D programs, and greatly expanded R&D activities created by new legislation had already been consolidated;

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The National Energy Modeling System The federal electric power marketing agencies of the Department of Interior, two of which rank among the largest electric utilities in the nation; and Important regulatory functions relating to the leasing of energy resources on the federally administered public lands. A variety of other, less sweeping responsibilities and programs relating to energy were transferred to DOE from among the other departments. The formerly independent Federal Power Commission was reconstituted within the DOE as the Federal Energy Regulatory Commission (FERC). The FERC still operates as an independent regulatory agency, but the Secretary of Energy has certain coordination and advisory authorities regarding its activities. The Energy Information Administration (EIA), which was established within the DOE, was charged with a very broad responsibility for “…carrying out a central, comprehensive, and unified energy data and information program which will collect, evaluate, assemble, analyze, and disseminate data and information which is relevant to energy resource reserves, energy production, demand, and technology, and related economic and statistical information, or which is relevant to the adequacy of energy resources to meet demands in the near and longer term future for the Nation's economic and social needs.” A number of special provisions were incorporated in the EIA's enabling legislation that were intended to ensure the objectivity, validity, and independence from political bias of the Administration's data and analytical results. The Administrator is required to have a professional background that qualifies him to manage an energy information system, the Secretary initially was statutorily required to delegate to the Administrator certain legislative authorities for data collection (this provision was later amended), and an annual professional audit of EIA's statistical performance is required. The most interesting of the provisions relating to the EIA is that the Administrator is expressly granted authority to collect information, conduct analysis, and to publish reports without prior approval of “any other officer or employee of the United States with respect to the substance of any statistical or forecasting technical reports which he has prepared in accordance with law.” In practice, of course, there are many practical constraints on such independence, not the least of which are the budgetary controls over EIA's spending. Nevertheless, the intention of the Congress, with the approval of the President upon enactment of the legislation, is clear. The EIA is expected to be a center of valid, unbiased information describing the energy situation, including objective forecasts of energy trends. EIA also has the responsibility under the Act to furnish information and analysis to the other components of the DOE organization and to make its information and analysis available to the public subject to certain confidentiality restrictions of law. The Secretary

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The National Energy Modeling System also has the authority to utilize the capabilities of EIA in support of other Departmental functions. As it is presently constituted, the DOE encompasses the major part of direct federal programs and regulatory authorities that impact upon the national energy system specifically for purposes of governmental energy policies and goals. The DOE, moreover, is the governmental agency with the responsibility for surveillance of the energy system to identify public policy issues arising in the evolution of the system and, presumably, with the responsibility to make informed inputs about the energy-related consequences of federal initiatives taken for non-energy policy purposes, as examples, tax and environmental policies. It is also charged directly with implementing conservation and efficiency strategies. There are several aspects of the role of DOE that are directly related to the uses that may be made of a National Energy Modeling System. THE SECRETARY OF ENERGY AS CABINET SPOKESMAN In his capacity as a member of the Cabinet, the Secretary of Energy has the responsibility to bring a knowledge of the energy situation to the formulation of overall domestic and foreign policy initiatives. He ought to perceive emerging energy-related issues and propose policies to address them. He should be the source of informed judgment about the consequences for the energy system of policy proposals that are advanced for other social and economic purposes. For example, the Secretary has been explicitly charged by the Congress with a responsibility to provide “independent technical advice to the President on international negotiations involving energy resources.” As a member of the Cabinet, the Secretary also will be called upon to be the spokesman for the Administration on issues and policy initiatives that have important energy-related implications. He will be expected to have an in-depth technical appreciation of the way in which policy decisions will impact energy industries, energy consumers, and environmental quality. An important requirement upon DOE is to provide the information base and analytical support for the Secretary to comprehend the energy situation, formulate policy initiatives, particularly those that effectuate conservation and incorporate national environmental protection goals, and respond with expert advice to the policy proposals advanced by Executive officials in the Executive Branch and by the Congress. THE DEPARTMENT OF ENERGY AS STRATEGIC PLANNER The creation of DOE was responsive to a deeply felt need for comprehensive government surveillance of the national energy system and for the articulation of a comprehensive energy policy. This concept goes beyond the simple consolidation of direct federally sponsored energy programs and regulatory activities and even beyond the government-wide coordination of federal and state activities affecting the energy system. It implies a notion of strategic planning to ensure a secure energy supply for the future as

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The National Energy Modeling System well as “create and implement a comprehensive energy conservation strategy that will receive the highest priority in the national energy program” (42 USC7112[4]). The DOE enabling act also specifies that the Department's role is: “to provide for a mechanism through which a coordinated national energy policy can be formulated and implemented to deal with the short-, mid-, and long-term energy problems of the Nation; and to develop plans and programs for dealing with domestic energy production and import shortages.” Despite the wide variation among political convictions about the appropriate level of governmental intervention into the marketplace, the notion that a “national energy policy” is an appropriate goal has persisted. The Congress, in the enabling Act, mandated the DOE to submit a biennial “National Energy Plan” which constitutes a status report on the national energy situation along with forecasts of supply and demand trends. The Plan also was intended to include “the strategies that should be followed and resources that should be committed by government to achieve the welfare and economic objectives served by the energy system, and recommended governmental initiatives to implement the strategies.” The biennial National Energy Plan process has been continued with more or less enthusiasm on the part of the Secretarys, depending upon the contemporary attitudes toward the energy situation. The commentary of opinion-makers in and out of government since the advent of the invasion of Kuwait by Iraq, however, confirms that the energy planning process still falls short of expectations and also that the notion of a generic national energy policy remains a widely held goal. The Bush Administration, under the leadership of the current Secretary of Energy, has revitalized that notion in the form of the National Energy Strategy (NES) process. According to President Bush, the objective of the NES should be: “achieving balance among our increasing need for energy at reasonable prices, our commitment to a safer, healthier environment, our determination to maintain an economy second to none, and our goal to reduce dependence by ourselves and our friends and allies on potentially unreliable energy suppliers.” A “First Edition” of the NES was published by DOE in February of 1991 (DOE, 1991a). It followed DOE's solicitation and receipt of extensive comments invited through public hearings and written submittals from a broad range of spokesmen of the energy industries, energy consumers, representatives of all levels of government, and related interest groups. It also involved a substantial, indeed unprecedented, analytical effort carried out through a cooperative effort within the DOE. The expressed intention is that the NES process will continue. A report is anticipated biennially that will review the energy situation and outlook and will also propose policy initiatives for governmental action to implement the strategy. In its capacity as the strategic planning agency for energy policy, DOE also becomes the focal point for the federal government's ongoing interaction with the energy industries. Through regulatory and data collection functions and cooperative R&D contracts, DOE has day-to-day activities that involve contacts with most of the energy sectors. The Department's policymaking and

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The National Energy Modeling System spokesman roles, along with its technical understanding of the energy system, also make it a natural point of contact for energy industry associations and leaders who wish to influence the direction of federal policy. THE DEPARTMENT OF ENERGY'S INFORMATION ROLE As the Executive Branch and the Congress struggled with the critical public policy decisions required by the energy situation in the early 1970s, severe shortcomings became evident in the information available to help formulate and justify policy initiatives. At that time, the federal government compiled very little data relating to the general surveillance of the energy situation. Energy-related items were captured in the general census and economic data collection, but even that meager material was not well organized to respond to the policy questions being asked. Some specific information was available concerning the regulated energy utilities and the activities of the energy industries that pursued energy resource development on the public lands, but it did not provide comprehensive descriptions of even those energy activities. The energy supply industries themselves had some comprehension of the situation, but even the largest companies had remarkably little knowledge of the overall operation of their own industry sector beyond their own corporate activities and even less knowledge of their sector's interactions with those of the other energy forms, or with end-users. The information that policymakers derived from industry sources without verification, moreover, was often suspected to be self-serving. In the nearly paranoiac public response to energy price spikes and supply shortages, the policymakers were reluctant to rely upon industry information in making decisions. The industry data also held little credibility with the public when the ultimate decisions had to be justified in the political debate. Many of the most memorable errors in policymaking of the energy crisis era can probably be credited to a lack of comprehension of the practical limitations and capabilities of the energy system. The DOE was charged with improving the “effectiveness and objectivity of a central energy data collection and analysis program.” The central responsibility to develop and maintain a comprehensive description of the national energy situation was vested in the EIA. From the outset, that description was clearly expected to couple valid historical data series with objective and thoughtful forecasts of the future trends. THE DEPARTMENT OF ENERGY AS R&D MANAGER Finally, the DOE acquired the energy R&D programs that previously had been consolidated within the ERDA. The initial program emphasis, growing out of the extensive R&D activities of the Atomic Energy Commission, included a heavy emphasis on nuclear energy, and this nuclear-electric orientation persists today. Another major area of emphasis has been basic research, administered largely through the national laboratory establishment. These programs are loosely related to energy and nuclear weapons technologies and include high energy physics, medical sciences, and fundamental materials and process sciences.

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The National Energy Modeling System During the mid-1970s, however, a series of new grants of authority and appropriations of large amounts of funding created a broad R&D program extending to nearly every aspect of energy supply and demand technology. The DOE energy R&D programs carried out directly and through the national laboratory establishment now encompass basic energy sciences, high energy physics, fusion energy, and the more applied research into the nuclear, fossil, conservation, and renewable energy technologies. In recent years, budgetary constraints along with an explicit policy promulgated by the Reagan Administration to restrict DOE research to long-term, high-risk technologies have acted to bias the R&D program toward the basic sciences and long-range nuclear technologies. Some exceptions, such as the “clean coal” demonstration program, enjoyed Congressional support and have survived. More recent policy expressions appear to signal the reconsideration of that policy and a moderate shift of program resources to nearer-term R&D sectors. Pressures to address global warming issues, in part through increased emphasis on energy efficiency and renewables may accelerate that shift (NAS, 1991). However, large budgetary increases remain unlikely.