July 26, 2005

Lawmakers to add tax package to energy bill

By Tom Doggett and Chris Baltimore

WASHINGTON (Reuters) - Congressional negotiators on Tuesday
were set to finalize $11.5 billion in energy tax credits and
incentives, setting the stage for the U.S. Congress to vote on
a broad energy bill later this week.

House of Representatives and Senate negotiators worked past
midnight on Monday to complete the energy bill that aims to
boost traditional oil, natural gas and electricity supplies
while also promoting alternative energy sources.

Cost details have yet to be released, but Senate Finance
Committee chairman Charles Grassley said tax writers had agreed
on most of the $11.5 billion package.

That would be higher than the $6.7 billion recommended by
the Bush administration, but there was no threat of a
presidential veto because of cost. A White House spokesman on
Monday criticized the bill's tax credits for oil companies at a
time when crude is well above $50 a barrel.

Oil and gas subsidies in the bill come in at about $1.5
billion, Grassley said, much lower than the House-written bill,
which had about $4 billion in such incentives. The final
package will have $3.1 billion in incentives to produce
electricity from wind, solar and other renewable sources and
$1.3 billion for efficiency and conservation.

Democrats and environmentalists still pilloried the bill as
a giveaway to Big Oil that will do little to lower gasoline
prices or reduce U.S. dependence on foreign oil imports.

"This is the lobbyist backyard barbecue bill, because every
energy interest is going home with its pockets stuffed with
pork," said Jill Lancelot at Taxpayers for Common Sense.

Rep. Joe Barton of Texas, who headed negotiations, called
it a "transformational bill" that will spur new nuclear and
cleaner coal plants as well as hybrid-powered cars.

"It's harder and harder to find energy," Barton told
reporters. "It's only fair to have some incentives and credits
to encourage that."

During a final nine-hour negotiating session that ended
shortly before dawn on Tuesday, a joint Senate-House energy
bill conference committee agreed to nearly double production of
ethanol, a gasoline additive made from corn.

But the panel rejected Senate proposals to cut U.S. oil
consumption by 1 million barrels per day and to require
American utilities to generate more electricity from renewable
energy sources like wind and solar power.

President Bush asked Congress to approve the legislation
before this weekend, when lawmakers leave for their month-long
summer recess in August. Once the tax package is done, the full
House could vote on the bill as early as Wednesday. The Senate
may vote Thursday.


The ethanol compromise, which would raise output of the
additive to 7.5 billion gallons a year by 2012, is larger than
the 5 billion gallons approved by the House but smaller than
the 8 billion gallons sought by the Senate.

Ethanol, scorned by the oil industry, is popular in farm
states as a home-grown way to reduce oil imports and boost
farmers' incomes.

House negotiators also rejected a Senate plan requiring the
president to come up with ways to cut America's oil demand by 1
million barrels a day by 2015. Opponents said the proposal
would force Americans into carpools while making automakers
boost vehicle fuel standards.

Another Senate proposal that failed would have required use
of renewable sources to generate 10 percent of U.S. electricity
by 2020.

Also dropped from the bill was a House Republican plan to
shield from lawsuits those oil refiners that make a rival fuel
additive to ethanol -- methyl tertiary butyl ether, or MTBE.

Rep. Barton wanted to create an $11.4 billion fund to clean
up water supplies contaminated by MTBE in return for shielding
refiners such as Exxon Mobil Corp. from lawsuits. But the plan
was criticized by the oil industry, municipal water officials
and key U.S. senators.

House Majority Leader Tom DeLay told Reuters he was
"disappointed" the energy bill would not protect MTBE makers.
"We're not giving up on it," DeLay said, but did not elaborate
on how the plan could be revived.

The final energy bill did not include language to open the
Arctic National Wildlife Refuge to oil drilling. However, that
proposal has broad support and is expected to be included in
separate budget legislation later this year.