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Highlights

The Energy Policy Act of 2005 (Act) contains provisions that address a variety of challenges that face the geothermal industry, including the high risk and uncertainty of developing geothermal power plants, lack of sufficient transmission capacity, and delays in federal leasing. Among the provisions are means to simplify federal royalties on geothermal resources while overall collecting the same level of royalty revenue. The Act also changes how these royalties are to be shared with local governments (disbursements). This report describes: (1) the current extent of and potential for geothermal development; (2) challenges faced by developers of geothermal resources; (3) federal, state, and local government actions to address these challenges; and (4) how provisions of the Act are likely to affect federal geothermal royalty disbursement and collections.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Interior To assist in achieving the same level of geothermal royalties as would have been collected prior to the Energy Policy Act of 2005, the Secretary of the Department of the Interior should instruct the appropriate managers within the Minerals Management Service to correct erroneous and missing royalty data, when necessary, so that it will have an accurate baseline of royalty collections for each payor.
Closed - Implemented
MMS addressed this recommendation by: identifying, requesting, and receiving documentation from three payors to correct erroneous and missing geothermal royalty data for the period September 1999 through April 2007.
Department of the Interior To assist in achieving the same level of geothermal royalties as would have been collected prior to the Energy Policy Act of 2005, the Secretary of the Department of the Interior should instruct the appropriate managers within the Minerals Management Service to routinely collect from royalty payors the gross sales revenues for electricity sold in order to compare these revenues with past royalty collections and to verify compliance with the percentages prescribed within the Act for leases to be issued in the future.
Closed - Implemented
MMS addressed this recommendation and improved its geothermal royalty collections program by: revising Chapter 7 of the Minerals Reporter Handbook to require payors of leases issued after August 8, 2005 to report gross proceeds from the non-arm's-length sales of electricity as "sales value" on the Form MMS-2014.

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