Washington (Platts)--23Jan2009

US Senate Finance Committee Democrats on Friday released a package of tax
incentives and cuts that would provide billions of dollars more for energy
efficiency, renewable energy and transmission projects than was included in a
corresponding package approved Thursday by the US House Ways and Means
Committee, according to a summary released Friday.

The House bill is scheduled for a January 28 floor vote as part of a
larger $825 million stimulus pacakage.

While the Senate has yet to introduce a final bill, the chamber's
Finance and Appropriations committees are scheduled to vote on measures next
week.

The Senate's package would contain nearly $34 billion in energy-related
tax breaks, according to a Finance Committee summary, well above the roughly
$20 billion provided by the House measure.

But the Senate Finance Committee bill follows the House measure more
closely in several ways. Both packages include a three-year extension of the
production tax credit for renewable energy, at an estimated 10-year cost to
the federal government of $13.1 billion.

Both would allow wind, biomass, geothermal, and a variety of other
industries to choose an investment tax credit rather than a PTC for new
projects brought online in 2009 and 2010. Renewable industries have had
difficulty securing financing for new projects in the past year as income has
dwindled and PTCs have lost value.

Both bills also would remove dollar caps on a variety of residential
renewable energy investment tax credits, allowing homeowners to claim a 30%
credit on small wind energy investments and residential solar and geothermal
equipment.

Both panels also include incentives for homeowners to improve the energy
efficiency of their existing homes. They would extend a tax credit for
efficiency upgrades through 2010 and increase it from 10% of the cost to 30%
for 2009 and 2010.

Further, both bills would increase incentives for service stations that
purchase alternative energy fuel pumps from 30% to 50% and provide an
additional $2.4 billion of qualified energy conservation bonds to local
governments' conservation initiatives.

An additional $1.6 billion in direct funding would also be provided for
facilities that generate electricity from renewable resources.

There are also key differences between the two measures. The House
package would allow renewable energy investors to opt for loans rather than ta
tax credit under a new Department of Energy program. The House bill would
authorize $8 billion for the program, which a Senate Finance Committee aide
said the Senate did not include such a program.

The Senate plan would allow a five-year "carryback" of credits,
allowing investors to receive refunds for past income taxes paid to offset
renewable energy and efficiency expenditures. The change would cost the
federal government $11 billion over 10 years. The House measure does not.

The Senate also provides a new 30% manufacturer's tax credit for
companies that make renewable energy equipment, at a cost of $1.4 billion to
federal coffers. The credit was supported by the solar energy industry, in
particular, and was not included in the House tax package.

--Jean Chemnick, jean_chemnick@platts.com