A nonpartisan panel of congressional tax experts has determined that a bill to extend a tax break popular among fossil fuel companies to clean energy firms would cost about $1.3 billion over a decade, an aide to the bill’s sponsor said this afternoon.
The Joint Committee on Taxation delivered its score this week to Sen. Chris Coons (D-Del.), who earlier this year introduced the “Master Limited Partnerships Parity Act,” which is seen as a candidate for inclusion in a broader tax reform package.
The ability to establish MLPs – which generate tradable shares similar to traditional stock but are not subject to corporate taxes – has been available to oil, gas and mining firms since the mid-1980s and has been a widely utilized mechanism to attract private investors. Coons’ bill would allow wind, solar, efficiency and similar firms to take advantage of the same tax structure.
The taxation panel determined that extending MLP treatment to clean energy firms would cost $307 million in lost revenue over the first five years, a figure that would grow to $1.3 billion over 10 years, according to an estimate provided to Coons’ staff and shared with E&ENews PM by his spokesman, Ian Koski.
Coons and his bipartisan co-sponsors are pleased with the cost estimate and now will look for an offsetting revenue increase or spending cut to keep the overall proposal revenue-neutral.
The bill, S. 795, has drawn a diverse cast of supporters, from a coalition of renewable energy companies to the American Petroleum Institute. Sen. Debbie Stabenow (D-Mich.), a co-sponsor of the bill who leads a Senate Finance subcommittee on energy, earlier this week said she would like to see the proposal included in tax reform.
Coons’ bill is a relative bargain compared with the cost to federal coffers of existing MLPs to fossil fuel companies, which the taxation panel estimates at about $1.5 billion per year and rising (EnergyWire, May 29).
The bill also carries a much lower price tag than the most lucrative current incentive for renewable energy producers – the production tax credit. Last year’s one-year extension of the PTC will cost about $12 billion over a decade, according to the taxation panel.
However, renewable industry lobbyists are quick to point out that the two systems cannot be directly compared. The PTC provides $23 to developers for every megawatt-hour of electricity they produce from wind and other qualified sources, whereas MLPs simply ease companies’ ability to attract private investors. Coons and most of his allies say they do not want MLPs to be seen as a replacement for the PTC.
|Wind Watch relies entirely
on User Funding