Energy Tax Credits Win Senate Approval

WASHINGTON, DC, May 12, 2004 (ENS) - The U.S. Senate Tuesday approved $13 billion in energy tax breaks and incentives as part of a corporate tax package, the first breakthrough since November for the Bush administration's energy policy.

The measure encourages the building of new nuclear power plants and supplies federal funding for an Alaska natural gas pipeline to the lower 48 States.

If the bill becomes law, companies that produce energy using renewables, such as geothermal, solar and wind, would get tax refunds to help them compete with oil and coal companies which already receive substantial subsidies from the federal government.

The legislation offers a production tax credit of 1.8 cents per kilowatt hour to renewable energy generators. Companies would have until January 2007 to qualify, or begin production, and would then receive the tax credit for 10 years.

Senator Harry Reid, a Nevada Democrat, is taking credit for writing the renewable energy tax incentives into the bill. He says they will open up fresh employment opportunities in his state by spurring development of geothermal and solar power.

"Nevada has been blessed with abundant energy resources that we need to develop," Reid said. "Companies are just waiting for these tax incentives so they can come to Nevada and start production. We will create hundreds and hundreds of jobs in the state and really strengthen our economy."

"Every driver in Nevada knows that our nation needs a new energy strategy," Reid said. "Since the beginning of this year, gasoline prices have soared to record levels. We still remember the electric power crisis of a few years ago, which cost Nevada consumers billions. And we all understand that America's dependence on oil from the volatile Middle East is not good for our national security."

Senator John McCain, an Arizona Republican, called the energy incentives "corporate giveaways" that would increase the federal deficit.

The energy tax package contains some of the measures that were in a larger energy bill that failed to pass the Senate last November. It does not include a provision to double the production of ethanol, a fuel additive derived from corn, that is popular in farm belt states.

Also missing are the electricity reliability standards that are viewed as urgent after last summer's blackout across the Northeast.

The larger energy bill could be moved to the Senate floor later in the session, but if it passes, it would have to be reconciled with a different version that has already passed the House of Representatives.