UPDATE – Senate rejects stimulus bill with energy incentives

The Senate has refused to allow floor debate of a Senate committee’s version of an economic stimulus package that included language to extend expiring production tax credits and Clean Renewable Energy Bonds for renewable energy projects.

Two days earlier, the Senate voted, 80-4, to allow debate of the original $146 billion House-passed economic stimulus bill. (HNN 2/5/08) However, the Feb. 6 tally was one vote short of the 60 needed to prevent a threatened filibuster against the Senate Finance Committee amendments, which boosted the stimulus bill price tag to $157 billion.

The final count was 58-41 when Senate Majority Leader Harry Reid, D-Nev., switched to �no� in a procedural move that allows him to bring up the bill again.

The House measure, a bipartisan proposal by the House and the White House, would give individuals a one-time $600 payment and couples $1,200 plus $300 per child with an admonition to spend it as a jolt to the slowing economy. The Senate version added benefits for the long-term unemployed, expanded proposed tax rebates to include retirees and disabled veterans, and extended the expiring tax incentives for renewables including some hydropower.

It was not immediately clear what the sharply divided Senate would do next. It could vote on the House-passed bill or other amendments to expand the economic stimulus legislation. Most Senate Republicans opposed the expansion of jobless benefits, although many favored adding to the House package cash payments to senior citizens and disabled veterans.

The Finance Committee had endorsed a one-year extension of the production tax credits for renewable energy sources currently qualified under the expiring PTC law. The eligible project in-service date would be extended to Dec. 31, 2009.

Among qualified energy sources are small irrigation hydropower of less that 5 MW, and “incremental” hydro: efficiency improvements or capacity additions to existing hydro projects, and the addition of hydropower generation to existing non-hydropower water resources facilities. The incremental hydropower projects would continue to receive only half the production tax credit offered to other technologies. Based on inflation adjustment in 2007, hydro projects received 1 cent per kWh, compared to 2 cents/kWh for other technologies.

The committee also endorsed a one-year extension of the Clean Renewable Energy Bond program and an increase in the volume cap on bonds by $400 million. Clean Renewable Energy Bonds were created to provide tax-exempt state and local governments and electric cooperatives with a federal incentive to invest in renewable energy generation projects. They are to provide an incentive similar to the production tax credits available to investor-owned utilities that invest in such projects.

Congress previously authorized a total of $1.2 billion in bonding authority for the program, which is scheduled to expire Dec. 31, 2008.

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