House passes hydro incentives, renewables portfolio standard

The U.S. House passed energy bills Aug. 4 extending a production tax credit for renewables, including some hydro, making improvements to a Clean Renewable Energy Bond incentive program for public power systems, and adopting a national renewables portfolio standard.

In a rare Saturday session prior to August recess, the House passed the New Direction for Energy Independence, National Security, and Consumer Protection Act (H.R.3221) 241-172, and a tax package, the Renewable Energy and Energy Conservation Tax Act of 2007 (H.R.2776), 221-189. The bills would strip $16 billion in tax incentives from the petroleum industry, diverting that money to renewable energy sources.

The bills would extend production tax credits for renewable energy facilities for four years, for facilities placed in service through Dec. 31, 2012. They also would authorize $2 billion for the Clean Renewable Energy Bond program, which provides incentives, similar to the production tax credit, for non-taxpaying public utilities that develop renewable energy projects.

The legislation creates a new category of Clean Renewable Energy Bonds, called �new CREBs�, and sets a total national limit on bonding authority of $2 billion for the new bonds. The new CREBs program would divide the $2 billion allocation, with 60 percent of the bonding authority going to projects of public power providers and 40 percent to those of rural electric cooperatives.

The bills do not include a �sunset� provision, an expiration date, for the bond program. Current law sunsets the CREB program at the end of 2008.

The American Public Power Association said the bond program changes acknowledge the original congressional intent of the statute to provide public power systems a financial incentive for construction of renewable energy projects similar to the production tax credit used by for-profit utilities. During the first round of CREB allocations, public power received only $66 million of the $500 million in allocations available to governmental bodies, APPA added.

Renewables portfolio standard acknowledges hydro as renewable

The renewables portfolio standard language, offered as an amendment by Rep. Tom Udall, D-N.M., and adopted 220-190, calls for utilities to generate 15 percent of their electricity from renewables by 2020. It also creates a market-based mechanism of tradable renewable energy credits, allowing utilities to purchase credits to meet their renewables requirement at the lowest cost.

Incremental hydropower, and ocean and tidal resources would be counted as renewable resources under the renewables portfolio standard. Incremental hydro would include additions of capacity or efficiency improvements made on, or after, Jan. 1, 2001, or the effective date of an existing state renewables portfolio.

In a tacit admission that all hydroelectric power is renewable energy, the bill would allow utilities to deduct the amount of power they already receive from existing hydropower from their generation bases when figuring their renewables portfolio obligation. In previous proposals, utilities’ existing hydropower often was lumped in with their existing generation from non-renewable technologies.

For calendar years 2010 through 2039, retail electric suppliers would be required to have a base amount generated from renewable energy resources, or otherwise credited toward meeting that requirement. The annual percentage would start at 2.75 percent in 2010, and increase annually incrementally to 15 percent for 2020 through 2039. The requirement would expire in 2039.

Hydro received another vote of confidence when the House overwhelming approved, 402-9, an amendment by Rep. William Sali, R-Idaho, that declared Congress recognizes and supports renewable energy, specifically large and small conventional hydropower.

When Congress returns from its August recess, a conference committee will meet to reconcile the House bills with the Senate’s version, which is markedly different. The Senate refused June 21 to add $32 billion in clean energy tax incentives and a renewables portfolio standard to its bill. (HNN 6/22/07)

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