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Energy Bill Deal With Tax Breaks OK'd

Posted on: Monday, 17 November 2003, 06:00 CST

House and Senate conferees approved late Monday a massive energy bill that includes $23 billion in tax incentives, clearing the way for the legislation's final congressional approval, probably this week.

The House could take up the measure, a top priority for President Bush, as early as Tuesday.

The conferees rejected dozens of amendments, most of them brought by Democrats, as they left the Republican-crafted bill - the product of weeks of closed-door negotiations - largely intact.

House negotiators passed it by voice vote, followed by approval from the Senate side by a vote of 8-5. The seven GOP senators were joined by Sen. Byron Dorgan, D-N.D., in support of the bill.

Among amendments turned back by the House after being offered by Senate negotiators was a provision to require electric utilities to produce 10 percent of their power from renewable fuels. The utility industry had fought the fuel-use mandate.

Two-thirds of the $23 billion in tax breaks in the bill would go to the oil, gas and coal industries, prompting one Democrat to label it "a hodgepodge of subsidies for the politically well-connected."

Congressional estimates released Monday put the cost of the total package, the first overhaul of the nation's energy priorities in a decade, at $32 billion over 10 years, including about $9 billion for nontax measures and revenue losses.

GOP conference leaders said they were determined to complete the legislation Monday night so the House could take it up as early as Tuesday.

"This is a solid agreement," Sen. Pete Domenici, R-N.M., declared as he opened the bipartisan conference designed to merge bills passed this year by the House and Senate.

He said the bill, which runs to 1,148 pages, was the product of delicate compromises between the House and Senate, and warned that to many changes could jeopardize the package.

"I don't think we can take a risk of undoing this," said Domenci.

Final details of the bill's tax section were completed during the weekend to end after closed negotiations on the bill over the last 2 1/2 months.

Among the bill's major provisions:

-Tax incentives total $14.5 billion for oil, natural gas and coal industries.

-More than $5.2 billion in tax credits and other tax benefits over 10 years for developing renewable energy sources, including tax breaks for corn-based ethanol.

-Doubled use of ethanol in gasoline, a boon to farmers and widely supported by both Republicans and Democrats.

-Federal rules and standards for high-voltage power lines to lessen the likelihood of cascading power failures like the one that produced last August's blackout from Michigan to New York and into Canada.

-A $1.8 billion research project to develop clean coal technology and tax benefits for a new generation of nuclear power plants to ensure diversity in energy sources for electricity production.

-Provisions to speed up permits and ease environmental rules to develop of oil and gas resources on federal land.

"We provide billions of dollars in dozens of ways to reduce our dependance on foreign oil," Rep. Billy Tauzin, R-La., chief of the House negotiators, said.

Democrats argued the legislation falls short of what is needed.

Rep. Jeff Bingaman, D-N.M., said the bill lacks enough incentive to promote domestic production or foster energy conservation to reduce America's reliance on oil imports or guard against problems in the electricity industry that led to soaring power prices in the West two years ago or the blackout last August.

"The tax goodies go to huge energy conglomerates, and most subsidize things that the companies already are doing," complained Sen. Ron Wyden, D-Ore., another of the conferees. He described the bill as "a hodgepodge of subsidies for the politically well-connected."

Republicans countered that the tax incentives and other provisions were a blueprint for diversifying the nation's energy sources and improve the reliability of electricity transmission systems.

Most of the tax incentives and other financial benefits - loan guarantees, royalty relief or direct government spending - would go to energy industries. Only about $1.5 billion in tax breaks over 10 years is earmarked for energy efficiency.

Among the measures with direct benefit to consumers would a tax credit of up to $4,000 for the purchase of hybrid gas-electric cars. The amount of the credit would depend on fuel savings and how much of the car's power would come from electricity. Hybrid cars such as Toyota's Prius now in showrooms could get credits of about $2,000 under the sliding scale

Other provisions would:

-Providing $1.1 billion to six states that have offshore oil and gas development to deal with coastal erosion. More than half of the money would go to Louisiana, a major oil and gas producer.

-Loan guarantees of up to $18 billion to carry natural gas from Alaska's North Slope to the Midwest.

-Tax credits for biodiesel fuel made from soybeans or restaurant grease.

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On the Net:

Senate Energy and Natural Resources Committee: http://energy.senate.gov/legislation/energybill2003/energybill2003.cfm

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