UPDATE – Congress runs out clock on production tax credit extension

As production tax credits for some hydropower and other renewable energy sources moved closer to expiration at year-end, leaders said Congress might run out of time to reconcile competing House and Senate tax credit extension bills before the Election Day recess.

The House passed a tax measure Sept. 26 that would extend expiring production tax credits for renewable energy, including incremental hydropower, and expand the incentives to include ocean and hydrokinetic technologies. (HNN 9/26/08)

However, three days earlier, Senate leaders warned the upper chamber would be unable to reach agreement on any renewables incentives other than the hard-fought bill senators passed Sept. 23. Additionally, the White House threatened to veto the House version of the legislation.

House Majority Leader Steny Hoyer, D-Md., told reporters Sept. 29 that the House would not have time to consider the Senate’s version of the renewable energy bill and urged the Senate to approve the legislation passed by the House.

Hoyer said there is no intention to have the House return during its recess to address the tax credits issue, if no deal is reached this week. He said he would continue to work with Senate Majority Leader Harry Reid, D-Nev., to pass the legislation, “even if it’s next year.”

A final bill could be considered during the lame-duck session of Congress after the election.

The Senate bill was a part of a larger tax package that included tax incentives for other businesses and a one-year fix to the Alternative Minimum Tax so millions of Americans would not be subject to higher income taxes. Although part of the Senate package was funded through limiting tax breaks to energy companies, other portions of the bill were not funded.

House, Senate dispute funding for incentives

The major dispute between the House and Senate is the differing ways in which the two bills would be funded. The House bill includes revenue-raising measures, mainly aimed at oil companies, to pay for extending the expiring renewable energy incentives.

Hoyer and other House Democrats chided the Senate for not funding its entire tax package as the House did.

The Senate bill only partially pays for the renewables incentives, in deference to minority Republicans who argue there is no need to raise additional revenue if the renewables incentives are merely an extension of the status quo. Unlike the situation in the House, the Republicans in the Senate have sufficient votes to filibuster to block a bill, ensuring their objections are heeded.

Both the Senate and House bills would extend expiring tax incentives for renewables, including some hydropower, although for different lengths of time, and would expand incentives to ocean, wave, and tidal technologies. (HNN 9/23/08) In both bills, eligible facilities would include incremental hydropower from additions or upgrades to existing hydro plants, and hydro projects installed at non-hydropower dams.

The House bill does not include an extension of the Clean Renewable Energy Bonds program for public power utilities and electric cooperatives to finance plants that generate electricity from renewables. The Senate bill would extend the bond program with a new $800 million limitation on bonding.

The House bill would extend the incremental hydropower project in-service date for production tax credits nearly three years to Sept. 30, 2011, from Dec. 31, 2008, while the Senate bill would extend the in-service date two years, to Jan. 1, 2011. The House bill would require that facilities using ocean, tidal, and in-stream technologies be placed in service before Oct. 1, 2011, while the Senate bill would give those facilities until Jan. 1, 2012.

The House previously voted, Sept. 16, on an energy package containing incentives that would help hydropower. However, that bill also contained offshore oil drilling language that was expected to doom that version. (HNN 9/17/08)

The earlier House bill also included a federal renewable electricity standard requiring utility companies to generate 15 percent of their electricity from renewables by 2020. That language was not contained in either of the latest House and Senate versions.

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