Senate Passes Energy Bill, without Tax Incentives or RPS
On Thursday, June 21, the Senate gave final approval to its energy bill, H.R. 6, the Creating Long-Term Energy Alternatives for the Nation Act (CLEAN), after almost two weeks of debate. Earlier that day, the Senate failed to invoke cloture (i.e. end debate and move to a final vote on the amendment) on the energy tax title that was offered as an amendment by Finance Committee Chairman Max Baucus (D-MT). (See summary of tax title below.) Republicans objected to the title because they believed it was unfair to the oil and gas industries. It is unclear at this time, if the energy tax title will be considered on a separate unrelated bill, or if the Senate will pass the measure on its own prior to going to conference with the House on H.R. 6.
After the vote on the tax title, the Senate proceeded to a cloture vote on the underlying energy bill. After extensive behind the scenes negotiating on the contentious issue of increasing of corporate average fuel standards (CAFE) for vehicles, a deal was struck and a compromise amendment was adopted by voice vote. With this victory behind them, -- the Democratic leadership decided to move to a vote on the final bill. It was approved by a vote of 65-27.
Senate Energy and Natural Resources (ENR) Committee Chairman Jeff Bingaman (D-NM) offered, but did not request a vote on his federal renewable portfolio standard (RPS) amendment. The Bingaman RPS would have required electric utilities to secure at least 15 percent of their power from renewable energy sources by the year 2020. The amendment would have applied to some large public power systems (i.e. with annual retail sales of more than 4 million MWH).
Bingaman had been working to secure the 60 votes needed to overcome a filibuster to his amendment, but was apparently unsuccessful even after, he offered to modify it to allow energy efficiency measures to count towards the RPS mandate. This modification was made at the request of Sen. Mary Landrieu (D-LA), but the change was apparently not enough to garner the needed votes to pass the measure in the Senate.
Despite Senate defeat of the tax title and RPS, it does not mean that a final energy bill will not include these provisions. The House bill is likely to include a tax title and Speaker Nancy Pelosi (D-CA) has said she would push for an RPS when its energy bill is debated on the floor.
Senate Finance Reports Tax Bill, Rejected on Floor
In action that preceded the defeat of the tax title on the Senate floor, the Senate Finance Committee approved, on June 19, by a vote of 15-5, the Energy Advancement and Investment Act of 2007, which provided a number of energy tax incentives of interest to NEPPA.
First, the $26.8 billion bill included a three-year extension of the Clean Renewable Energy Bond (CREB) program, with a $900 million annual volume cap. Sens. Maria Cantwell (D-WA), Olympia Snowe (R-ME) and John Kerry (D-MA) worked with committee staff to increase the overall volume cap and extend the length of the program. An earlier draft included only a two-year extension and a $700 million annual allocation.
The CREBs provision in the Senate bill did not, as public power had recommended, include a specific definition of "governmental entities with an obligation to serve". Moreover, the bill modified the program to include "transmission infrastructure" related to eligible renewable property. APPA and others opposed the inclusion of transmission in the definition of eligible projects, as they believe it would unfairly compete for the already limited amount of funding allocation. Morgan Meguire plans to meet with staff to Sens. Snowe and Kerry this week to discuss a strategy to help make the program more effective for public power.
The tax bill also included a five-year extension of the production tax credit (PTC) for renewable energy resources; a five-year extension for new energy efficient homes; increased deductions for energy efficient commercial buildings; a plug-in hybrid vehicle (PHEV) tax credit for light, medium, and heavy-duty vehicles; and an investment tax credit to convert hybrid electric vehicles to PHEV. NEPPA has supported efforts advanced by Sens. Snowe and Dianne Feinstein (D-CA) on energy efficiency tax incentives, particularly those included in the bill.
Further, the committee extended a 20 percent investment tax credit (ITC) for Integrated Gasification Combined-Cycle (IGCC) coal facilities and a 15 percent ITC for advanced coal-based electricity generation -- but tied the credit to projects that capture and sequester 70 percent of total carbon dioxide emissions. The committee also created a new tax credit bond proposal, called Clean Energy Coal Bonds (CECB), for public power systems to help finance similar clean coal projects, and allocates $3 billion for such projects.
House Continues Efforts to Advance Energy Bills; Floor Action after July 4th Recess
As the Senate debated and concluded action on its bill, a House committees continued their work on two more energy bills -- which are expected to be combined into one comprehensive bill and considered on the House floor shortly after the July 4 recess.
House Ways and Means Reports Tax Title
On June 20, the House Ways and Means Committee, largely along party lines with only one Republican (Jim Ramstad (R-MN) on board, approved HR 2776, the "Renewable Energy and Energy Conservation Tax Act of 2007."
The energy tax title included an extension of the Clean Renewable Energy Bond (CREB) program with a $2 billion cap ($1.2B for public power). It also included a number of technical modifications designed to make the CREB program work more efficiently, such as a definition of public power utilities "with an obligation to serve," as well as allocation methodology that is "pro rata" based on the projects size.
In addition, the energy tax title included a five-year extension of the production tax credit (PTC) for renewable resources, and incentives for conservation, energy efficiency, alternative fuels, and plug-in hybrid electric vehicles, among other things.
House Energy and Air Quality Subcommittee Reports Energy Title
Also on June 20, Chairman of the House Energy and Air Quality Subcommittee Rick Boucher (D-VA) reported a series of draft bills addressing energy efficiency; loan guarantees; renewable fuel infrastructure; and plug-in hybrid technologies, among other things. A number of the more controversial topics, such as coal-to-liquids (CTL), alternative fuels, and fuel economy standards were eliminated from the Boucher draft bills. He said he would address these issues when climate change legislation is advanced later in the 110th Congress.
The Subcommittee markup lasted 13 hours and foreshadowed the difficult task ahead for the Democrats trying to craft broader climate change legislation. For example, although the CTL amendment was defeated, it was evident that Speaker Pelosi, who opposes CTL plants, may have to compromise with Democrats like Boucher, who represents a district rich in coal. Rep. John Dingell (D-MI), Chairman of the full Energy and Commerce Committee, said that he would work with Barton to include CTL in a larger energy bill, to be considered this fall.
Chairman Dingell has scheduled a markup on the subcommittee reported bill for Wednesday, June 27. It is anticipated to be contentions, with many partisan amendments being considered.