Washington (Platts)--5Mar2008

Democrats in the US Congress have decided against using budget rules to
push through the Senate an energy tax package that would offset the cost of
extending renewable energy production tax credits by eliminating or scaling
back oil and natural gas industry tax credits.

The House and Senate Budget committees released their annual budget
resolutions Wednesday, both of which include funds for energy legislation that
may be produced by other committees.

Neither committee opted to include the controversial energy tax credit
package in a "budget reconciliation" bill, however that would have allowed it
to be passed by the Senate without giving Republicans the opportunity to
filibuster the measure. Under Senate rules, a budget reconciliation bill
cannot be filibustered.

Incentives for wind, solar, biomass, efficiency, "clean" coal and other
technologies are set to expire at the end of 2008. The Democrat-controlled
House beginning last year repeatedly passed bills that would have extended
the credits beyond that date, only to see the measures defeated by Senate
Republicans, who object to provisions that would have paid for the extensions
by cutting oil and gas industry tax breaks. The House late last month again
passed a similar proposal that is now before the Senate Finance Committee.

Senate Budget Committee Chairman Kent Conrad of North Dakota told
reporters on Wednesday that his proposed budget resolution allowed for $13.4
billion for renewable energy and energy efficiency tax breaks that he said
would go to encourage investment in technologies like wind and clean coal. The
Senate Finance Committee would be responsible for drafting a final measure.

The Finance Committee is currently reviewing the House's latest bill.
Senate Majority Leader Harry Reid last week said he is hopeful Democrats could
recruit one or more new Republican votes for the bill, which would allow it to
pass the Senate with the needed 60 votes. A similar proposal fell one vote
short in December.

The House budget resolution does not set aside a specific amount of money
for energy tax extensions or other intiatives, but does include a provision
that would allow the extensions to be drafted and passed by other committees.

A House Budget Committee summary said the chairman's resolution would
allow for full funding of the Energy Department's weatherization assistance
program for low-income families, which target for elimination in President
Bush's fiscal 2009 budget. It also "accommodates energy tax legislation," the
summary said.

--Jean Chemnick,jean_chemnick@platts.com