House bill’s hydro incentives overshadowed by offshore drilling fight

The House passed an energy package Sept. 16 containing several incentive plans that could help hydropower but also containing offshore oil drilling language expected to doom the bill in the Senate.

The Comprehensive American Energy Security and Consumer Protection Act (H.R.6899), was pushed through the House, 236-189, by majority Democrats within 24 hours of the bill’s introduction.

Minority Republicans, who have argued at length to remove restrictions on offshore drilling and to provide incentives to nuclear energy and clean coal as well as to hydropower and other renewables, said the Democrats’ bill is an election eve sham intended to buy votes for Democrats while failing to provide realistic language to enable offshore drilling.

The bill is expected to stall in the Senate, whose filibuster rules allow a minority to block legislation indefinitely. Additionally, the White House has indicated President Bush might veto the bill in its present form.

Senate Majority Leader Harry Reid, D-Nev., said Sept. 8 he expects Senate votes on several energy proposals, including legislation to expand offshore oil drilling and to provide tax incentives for renewable energy. (HNN 9/9/08) In numerous actions since last year, Congress has failed to agree on legislation to renew expiring production tax credits for renewable sources of energy, including some hydropower. (HNN 7/10/08)

The House bill would extend and expand federal tax incentives for renewables, reauthorize the Clean Renewable Energy Bond program, and establish a federal renewable electricity standard that would require utility companies to generate 15 percent of their electricity from renewables by 2020.

The package would open most of the U.S. coastline to offshore drilling, giving states the option to allow drilling between 50 and 100 miles off their shores. Areas more than 100 miles from the coast would be completely open to oil exploration.

Incentives for renewables would be funded by repealing tax subsidies for the oil industry.

The bill includes a three-year extension of expiring production tax credits for renewable energy, applying to facilities placed in service after Dec. 31, 2008, and before Jan. 1, 2012. Eligible facilities would include incremental hydropower resulting from additions or upgrades to existing hydro plants, and hydroelectric projects installed at non-hydropower dams and licensed by the Federal Energy Regulatory Commission.

The bill also would expand the list of renewables eligible for production tax credits to include marine and hydrokinetic renewables, including energy from waves, tides, and currents, in oceans, estuaries, and tidal areas. Energy from free flowing water in rivers, lakes, and streams, would be covered, as would energy from free flowing water in an irrigation system, canal, or other man-made channel. Qualified marine and hydrokinetic facilities must have a nameplate capacity of 150 kW or more, and must be placed in service before Jan. 1, 2012.

The bill would authorize new clean renewable energy bonds to benefit public power providers and cooperative electric companies, which are not eligible for federal tax incentives for generation at renewable energy facilities. The measure would place a national limitation of $1.75 billion on the amount of new bonds designated.

Bill includes federal renewable electricity standard

The bill would create a federal renewable electricity standard — or renewables portfolio standard. For calendar years 2010-2039, the bill would require utilities to generate a percentage of their base amount of total electricity sold from renewable energy sources. Eligible renewables would include ocean, incremental hydropower, and hydrokinetic energy. The required annual percentage would start at 2.75 in 2010, rising to 12.25 in 2019, and 15 thereafter.

The bill would exclude utilities’ existing hydropower from their base amount of electricity when calculating the amount of renewable energy they must obtain.

To implement the renewable electricity standard, the bill would establish a program of federal renewable energy credits. The system would issue credits to generators of renewable energy, track their sale, exchange, and retirement.

Senate to consider energy measures

The Senate is expected to take up its own energy measure before Sept. 26, a target adjournment date.

An energy tax package unveiled by Senate Finance Committee Chairman Max Baucus, D-Mont., and the committee’s ranking minority member, Sen. Chuck Grassley, R-Iowa, would extend the placed-in service date for production tax credits for three years, expand the list of eligible renewables to include ocean, tidal, and in-stream hydrokinetic technologies. It also would authorize $2 billion for clean renewable energy bonds to finance facilities that generate electricity from renewables. It does not include a federal renewable electricity standard.

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