Energy Deal Has Tax Breaks for Companies

A Call To Action
- By H. JOSEF HEBERT, Associated Press Writer
Tuesday, July 26, 2005

(07-26) 16:17 PDT WASHINGTON, (AP) --

Lawmakers scaled back support for energy conservation and efficiency programs as part of a $11.5 billion tax package expected to be added Wednesday to a sweeping energy bill that Congress hopes to complete this week.

The agreement, worked out in closed meetings of House and Senate negotiators, funnels about 60 percent of the tax breaks, about $8.5 billion, to traditional energy industries including coal, natural gas and electric companies. Many of the incentives are aimed at promoting new energy technologies.

Efficiency and conservation programs would get $1.3 billion, about a third of what the Senate had approved for such programs when it passed its energy legislation in June. In many cases the savings were achieved by shortening the duration that tax breaks will be available. About $3 billion goes to renewables, mostly tax breaks for wind turbines.

Sen. Jeff Bingaman of New Mexico, the ranking Senate Democrat on the panel that forged the energy compromise with the House and also involved in the tax negotiations, said the reductions in tax breaks for energy efficiency "is greater than I had wanted."

Nevertheless, said Bingaman, he supports the overall bill.

"Given the makeup of the Congress today and given the policies of the administration, this is as good a bill as I think we could hope to get," said Bingaman. He also failed in the House-Senate negotiations to get a provision requiring utilities to use renewable fuels to generate at least 10 percent of their electricity, a measure that the Senate has passed several times but was opposed by House Republicans.

Sen. Pete Domenici, R-M.M., who headed the Senate side negotiating the bill, said the measure will help diversify the nation's energy portfolio by spurring development of new technologies from the next generation of nuclear reactors to ways to burn coal with less smog-causing and climate-changing pollution.

"We mandate more conservation and higher efficiency," said Domenici, citing among other things new efficiency standards for 14 commercial appliances such as large refrigerators and cooling systems.

Completion of the tax package, which includes about $14.1 billion worth of tax breaks and incentives offset by $2.6 billion in new tax revenue set the stage for final approval of the bill in the House and Senate.

The House was likely to take up the measure as early as Wednesday, followed by the Senate on Thursday or Friday. President Bush had challenged Congress to complete an energy bill before leaving for the August recess after four years in which repeated attempts to enact a broad national energy agenda failed because of regional disputes or environmental fights.

While the bill was expected to get bipartisan support, some lawmakers criticized the legislation Wednesday for failing to do enough to curtail the country's thirst for oil.

"The bill does little to nothing to reduce our dependence on Middle East oil," said Sen. Bill Nelson, D-Fla., citing lawmakers' refusal to take even modest measures to increase automobile fuel efficiency.

Bingaman agreed the bill "does not reduce our dependence on foreign oil significantly" and noted that the House had rejected a "modest provision" approved by the Senate to require the president to outline how to reduce oil use by 1 million barrels a day by 2025. Critics of that proposal called it a backdoor way to impose tougher requirements on automakers.

Some House Democrats, meanwhile, criticized giving billions of dollars or subsidies to mature industries including oil companies already flush with money in this era of $60 per barrel of oil.

The bill would provide more than $4 billion in tax breaks and direct royalty relief for the oil and gas industries and an equal amount for the coal industry, while providing loan guarantees and other subsidies for the nuclear industry to build new reactors.

"There is a strong rationale for providing government financial support to new technologies and industries" but not to "giving taxpayer dollars to mature and wealthy industries," said California Democratic Reps. Henry Waxman, Hilda Solis and Lois Capps, and Edward Markey, D-Mass.

The watchdog group Taxpayers for Common Sense estimated the total cost of the bill, including authorized programs that may never get funding from Congress, at $80 billion.

"The bill is filled to the brim with massive giveaways for mega-rich energy companies," said Jill Lancelot, the group's president. "By stuffing the measure with so much pork, the(y) have attempted to buy off enough votes to guarantee passing a so-called energy bill."

Myron Ebel of the conservative Competitive Enterprise Institute also criticized the bill over its government subsidies. "A lot of these tax subsidies and loan guarantees look an awful lot like the failed energy policies of the 1970s," said Ebel in an interview.

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On the Net:

Senate Energy and Natural Resources Committee:

House Energy and Commerce Committee:

energy.senate.gov/public/

energycommerce.house.gov/


URL: http://sfgate.com/cgi-bin/article.cgi?file=/n/a/2005/07/26/national/w161718D04.DTL
©2005 Associated Press