Washington (Platts)--20Jun2007

The US House Ways and Means Committee Wednesday is preparing for floor
action an energy tax package that would increase taxes on the oil and gas
industry to provide $16 billion in incentives to boost renewable and
alternative.

    The Senate Finance Committee Tuesday completed work and passed an energy
tax bill double that size -- at $32 billion -- that has been added to the
wide-ranging energy legislation currently being debated on the Senate floor.
The Senate bill proposes about $30 billion in levies on the oil and gas
industry to pay for alternative energy incentives.

     While smaller, many of the provisions in the new House bill are similar
to the Senate's tax package.

     The House Ways and Means Committee bill is the House's second stab at
penalizing oil and gas companies this year. In January, the House passed
an energy bill (H.R. 6) that would strip $13 billion in tax savings from the
oil and gas industry. 

     The new tax package is to be added to a broader House energy bill that is
scheduled to be brought to a full House vote in July.

     Some of the provisions in the new House tax bill are the same as in the
earlier House bill, including the eliminating the manufacturers' tax credit
for all oil companies. Congress' Joint Committee on Taxation, however, nearly
doubled the estimate on the revenue the new bill would generate -- $11.43
billion over 10 years, up from $6.51 billion over 10 years in the January
bill. The Senate, however, wants to take the so-called 199 tax credit only
from major oil companies, raising about $2 billion less, or a total of $9.4
billion.

     Like the Senate bill, the House committee proposed limits on the foreign
tax credits oil and gas companies claim on foreign oil and gas extraction
income. Instead these companies would have to use independent market values to
calculate their foreign oil and gas extraction income. The provision is
expected to raise about $3.5 billion over 10 years.

     The House measure also would increase the amortization period for
geological and geophysical expenditures from five to seven years for large
integrated oil companies, creating a revenue raiser of $103 million over 10
years, according to the committee. 

     Key incentives for the electric utility industry include extending
renewable energy production tax credits for four years -- at an estimated to
cost more than $6.5 billion over 10 years -- and extending the solar and fuel
cell investment tax credit for eight years at a cost of $563 million.

     In addition, the House bill would further authorize $2 billion in
renewable energy bonds for municipal electric cooperative utilities and would
give electric utilities that sell transmission property eight years to pay the
tax on any gain from the sale.

      The measure also provides a new tax credits for plug-in vehicles and
calls for a study by the National Academy of Sciences to review the tax code
to identify provisions that would have a large impact on greenhouse gas
emissions.

		--Cathy Landry, cathy_landry@platts.com
		--Cathy Cash, cathy_cash@platts.com