Energy Tax Provisions Struggle To Find A Home

Historically, comprehensive energy bills have been the legislative vehicles of choice for energy-related tax provisions. But as the Senate Energy Committee works on its attempt to advance a broad energy measure, efforts elsewhere in Congress to overhaul the tax code are sucking the wind out of its sails.

“There have been lots of discussions about whether or not we have a tax title in the energy bill,” Sen. Cory Gardner (R-Colo.), a panel member, said in an interview. “The question is whether or not we can get it through in an environment where nobody wants to do rifle-shot tax reform.”

Instead, Garnder says, Congress is embarking on its own tax-reform effort – politically risky as presidential elections draw near. The Senate Finance Committee specifically, is aiming to tackle the issue this year.

“They want to do comprehensive tax reform – which means we don’t get anything done,” Gardner said.

Gardner has a hydroelectric tax provision he’d like to see included in the Energy Committee’s legislation, along with a gradual ramping down of tax credits for wind and solar. Sen. Chris Coons (D-Del.) has said he’d like to see the panel’s bill open Master Limited Partnerships to renewable energy companies, which do not currently qualify for the tax-advantageous structure.

Sen. Maria Cantwell of Washington, the top Democrat on the committee, said through a spokesperson that she wants to see energy tax provisions move forward, regardless of the vehicle.

If the panel approves a bill with a tax section, the legislation would move to the Finance Committee, where – if it survived – it could come out looking markedly different from the one produced by the Energy Committee.

“That’s not going to happen,” Cantwell’s spokesperson, Rosemarie Calabro Tully, said. Instead, it’s more likely that tax amendments would get added once the bill is up for debate on the Senate floor. “After the committee process, it would be possible,” she said.

Robert Dillon, a spokesman for ENR Republicans said determining tax credits wasn’t within the committee’s jurisdiction. “So it’s not something that would happen in the committee,” he said.

Previous big energy bills have birthed several tax provisions. Nonconventional fuel production got a 20-year tax credit through the 1980 Energy Act; the wind production tax credit came about through the 1992 Energy Policy Act; and nuclear, solar and other renewables received big tax credits in the 2005 Energy Policy Act.

But with a comprehensive tax reform effort impending in the Senate Finance Committee, some lawmakers would rather take a bird’s eye view of tax measures.

“Any phase-out must be done in the context of comprehensive tax reform, where all energy tax provisions are on the table,” Sen. Chuck Grassley (R-Iowa), the father of the wind production tax credit, said at a forum hosted by the American Council on Renewable Energy in April. “Targeting certain provisions for elimination outside tax reform makes little sense.”

Grassley did not respond to requests for comment on this article.

Cantwell is also a member of the Finance Committee, where her efforts to extend renewable tax credits could prove more fruitful. That committee has been split into working groups to craft a tax-reform package. Two of them – the Business Income Tax Working Group, co-chaired by Sens. John Thune (R-S.D.) and Ben Cardin (D-Md.), and the Community Development and Infrastructure Working Group, co-chaired by Sens. Dean Heller (R-Nev.) and Michael Bennet (D-Colo.) – have jurisdiction over the energy portions of tax reform.

But as the 2016 election cycle heats up and both parties shy away from making choices that could be costly come election day, the chances for comprehensive tax reform grow less likely – as do the prospects for updating, extending or phasing out various energy tax measures.

Morning Consult