Washington (Platts)--10Apr2008

The US Senate on Thursday approved in an 88-8 vote an amendment to a
housing stimulus bill that would extend a series of renewable energy
production tax credits for at least a year.

The Senate measure does not specify how the estimated $6 billion cost of
the extensions would be paid for, an omission that could prove problematic
when the Senate attempts to reconcile its measure with a package approved by
the House earlier this year. Under the House bill, the cost of extending the
renewable energy credits would be covered by repealing tax incentives for the
domestic oil and natural gas industry.

Existing credits for wind and solar energy projects are set to expire at
the end of this year.

Language extending the credits was included in an amendment offered by
Senators Maria Cantwell, a Washington Democrat, and John Ensign, a Nevada
Republican. The larger housing bill was approved shortly after the vote on the
renewable amendment.

Supporters of the amendment said extending the tax incentives for
renewable energy would create thousands of high-paying jobs, reduce US
dependence on foreign energy and help combat global warming.

The vote on the Cantwell-Ensign amendment came after the Senate rejected
in a 79-15 vote an amendment by Republican Senators Lamar Alexander of
Tennessee and Jon Kyl of Arizona that would have halved the 2-cent/kWh
production tax credit for wind energy.

The Cantwell-Ensign amendment would extend the existing credit tax credit
for facilities placed in service through December 31, 2009, that produce
electricity from wind, biomass, geothermal, landfill gas, trash combustion,
hydro and small irrigation, including marine and hydrokinetic energy.

The amendment also would extend the 30% business credit for solar energy
investments through December 31, 2016, and the residential tax credit for
solar property purchases through December 31, 2009, would allow electric
utilities to claim the solar investment tax credit and would repeal the $2,000
credit cap on residential investments.

The measure also would authorize $400 million to the Clean Renewable
Energy Bonds program created in 2005 to benefit consumer-owned utilities.

Cantwell-Ensign also would extend through December 31, 2009, an eight-year
deferral for electric utilities to pay capital gains on transmissions
transactions.

The House in February passed an $18 billion, multi-year renewable energy
tax incentive bill paid for by repealing billions of dollars in tax breaks for
the domestic oil and gas industry. The Senate rejected a similar measure last
year because of opposition to the oil and gas industry language.

A House-Senate conference would be required to reconcile the different
renewable energy tax incentive packages.

Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, New
Mexico-Democrat, supported the Cantwell-Ensign amendment although he has been
working with the Senate Finance Committee chairman, Max Baucus, and the White
House on an alternative proposal. Baucus has said he would have his tax
package with renewable energy incentives drafted as early as next week.

--Cathy Cash, cathy_cash@platts.com