UPDATE 3-White House threatens to veto energy bill

(Recasts, updates with analyst comments)

WASHINGTON, Dec 3 (Reuters) - The White House on Monday threatened to veto legislation pending in the U.S. House of Representatives that would require the first big increase in three decades in the country’s automobile fuel efficiency.

Congressional Democrats have hammered out a complicated deal that could result in a 40 percent boost in fuel efficiency standards by 2020.

The White House said it opposed provisions expected to be included in the bill that would require utilities to get 15 percent of their electricity from renewable sources by 2020, and raise taxes on oil and natural gas companies.

“It appears Congress may intend to produce a bill the President cannot sign,” top White House economic advisor Allan Hubbard said in a letter to House Speaker Nancy Pelosi.

The keystone of the House energy bill -- expected to see a vote this week -- would raise fuel-economy standards to 35 miles per gallon (6.72 liters per 100 km).

The White House has backed a rise in fuel economy standards as well as a boost in renewable fuels like ethanol, which is also expected to be included.


But by seeking to include renewable requirements for utilities and higher taxes for oil companies, Pelosi is “playing chicken” with the White House and the Senate, said Kevin Book, an analyst with Friedman, Billings, Ramsey and Co.

With primary elections in states like Iowa looming in early 2008, Democrats and Republicans alike are under the gun to show that they are working to ease the pain of $90 oil and $3 gasoline prices on consumers, Book said in a report.

For that reason, “We expect the House to proceed back to a a leaner energy bill” that will escape a White House veto and a possible filibuster threat in the Senate, Book said.

Gasoline demand accounts for about 45 percent of the almost 21 million barrels of oil consumed in the United States daily. Many energy experts say the most effective way to reduce U.S. oil imports is to boost vehicle fuel efficiency.

In a key concession to Detroit automakers, the deal sets separate standards for cars and light trucks -- a departure from Senate-passed legislation that sets unified standards.

Sen. Pete Domenici, senior Republican on the Senate Energy Committee, told his staff to cease negotiating with Democrats on energy legislation. He said the renewable electricity standard made the bill “untenable for many in the Senate.”


Utilities oppose Pelosi’s proposal, which would impose penalties on those that fail to get 15 percent of their electricity from renewable sources by 2020. The provision has been included in prior energy legislation passed in the House but not the Senate.

Utilities in Southeast and Midwest states lacking the wind needed to justify new wind turbines would have to pay billions of dollars in penalties.

Once the House passes its energy bill, the Senate would take up an identical measure, avoiding a bargaining session to rectify differences that have hamstrung previous energy legislation. But inclusion of the renewable electricity standard could spark a Senate filibuster, which would take 60 of 100 votes to overcome.

Senate Majority Leader Harry Reid said he spoke on Monday with Domenici and Democrat Jeff Bingaman, chairman of the energy committee, about the House measure and he believes there will be 60 lawmakers in the Senate for the energy bill, even with a renewable electricity standard.

“I think yes, we do have enough votes, but time will tell,” Reid told reporters on Capitol Hill. Reid said he expects the House to send the Senate the energy legislation this week. (additional reporting by Tom Doggett) (Editing by David Gregorio; Reuters Messaging:; 202 898 8316))