Not a Jolly Holiday for Natural Gas, Hydro, Renewables Producers

By Published On: December 15, 2003

Many of the proposed beneficiaries of the now-dead federal energy bill?the natural gas industry and hydropower, wind, biomass, and geothermal generators?had little to give thanks for this past holiday. The natural gas industry sought expedited tax depreciation on an Alaskan pipeline to transport natural gas, which would limit gas imports; exemptions from the Clean Water Act requirements for drilling projects on federal lands; and funds for energy-efficiency projects and programs. The Senate?s failure to pass the legislation ?denies American consumers supplies of clean, efficient natural gas at affordable prices, but also abandons low-income and working families? because of the failure to authorize spending for the Low Income Home Energy Assistance Program, said the American Gas Association. The AGA stated last week it would work with Senate leaders to revive the bill in January, but the prospects are dim because it will be an election year. The hydropower industry sought reform of the Federal Energy Regulatory Commission?s dam relicensing process, which would give dam owners and operators a bigger say in environmental protection requirements. California would have been the most affected by the change because more than 100 dams in the state are up for relicensing in the next 15 years. The National Hydropower Association complained that the controversial relicensing provision?s demise meant the FERC-state process would continue to be ?dysfunctional, contentious, and costly.? But the relicensing opponents, who vigorously fought the change, were thrilled the legislation did not survive a cloture vote. The bill also would have provided the renewables industry some of the billions of dollars in the legislation?s subsidies and tax credits. Included in the now-defunct legislative package was a long-sought extension and expansion of the production tax credit for wind, biomass, and geothermal energy suppliers. ?The biomass industry has been in a fairly steady decline, and that will continue,? said Bill Carlson, chair of the California-based U.S. Biomass Power Producers Alliance. The industry worked for five years to get the production tax credit?$0.015/kWh, adjusted for inflation?broadened to cover all types of biomass energy facilities. The production credit now applies to wind and a narrow subset of biomass generators but expires at the end of this year. If the federal bill had passed, the credit would have been available for windmills and geothermal and biomass power producers. The wind energy industry has suffered a lapse in the production credit before. It was extended in 1999 and 2001, but both times Congress let the credit sunset. It subsequently extended it for up to two and a half years. ?It is impossible for the U.S. wind industry to maintain a steady growth rate in the present climate of uncertainty,? said Randall Swisher, American Wind Energy Association director. The tax production credit for renewables had bipartisan support despite the partisan and regional bickering that led to its demise. Among the many provisions facing opposition, which got drowned out in the outrage over the huge subsidies to the gas, coal, and nuclear industries, was one that would have repealed the Public Utility Holding Company Act. Ending PUHCA would have done away with utilities? ?must buy? and ?must sell? obligations, setting off utility merger mania and threatening renewable cogeneration and ratepayers.

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