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UPDATE - Senate advances production tax credit extension

The Senate endorsed a one-year extension of expiring production tax credits for renewable energy, including hydropower, by attaching the language April 10 to a bill to address the home mortgage market crisis. The amended bill was sent to the House on an 84-12 vote.

Sens. Maria Cantwell, D-Wash., and John Ensign, R-Nev., sponsored the amendment that would extend the production tax credit and other renewables incentives. (HNN 4/4/08) Supported by more than three dozen co-sponsors, the bi-partisan measure would extend the production tax credit in-service date for qualified hydropower facilities and other renewables for one year, through Dec. 31, 2009.

The existing production tax credit includes among eligible renewables "incremental" hydro: efficiency improvements or capacity additions to existing hydro projects, and the addition of hydropower generation to existing non-hydropower water resources facilities. It also includes small irrigation hydropower of less that 5 MW.

The Cantwell-Ensign amendment adds marine and hydrokinetic energy to the list of qualified energy projects for renewables incentives.

The amendment also would authorize an additional $400 million for the Clean Renewable Energy Bond program. The CREB program was created by the Energy Policy Act of 2005 as an incentive to entities exempt from taxation and, therefore, unable to use a production tax credit incentive.

Senators passed the Cantwell-Ensign amendment, 88-8, after rejecting an amendment by Sen. Lamar Alexander, R-Tenn., that would have extended renewables incentives for two years, rather than one.

The Senate then passed the amended home mortgage relief bill, HR 3221, sending it back to the House, which previously passed a bill that included a three-year extension of production tax credits and authorization for $2 billion in bonds. (HNN 2/27/08) The House also has its own, narrower home mortgage rescue plan.

Unlike previous attempts to extend the renewables incentives, the Cantwell-Ensign language does not attempt to repeal $18 billion in tax incentives for oil company investments in order to pay for the program. Previous measures failed repeatedly under threats of a Senate filibuster and a presidential veto. Instead, the estimated $6 billion Cantwell-Ensign proposal would be exempt from congressional rules requiring new spending bills to include "pay-as-you-go" funding language.

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