The Senate Finance Committee meets today for a markup of a $13.5 billion energy tax package, which will likely be the only piece of the entire comprehensive energy legislation (S 1766) to go through a committee markup. Senate Majority Leader Tom Daschle (D-SD) halted a markup on the energy bill by the Senate Energy and Natural Resources Committee last October.

Daschle also is likely to propose budget offsets for the energy tax package and has suggested the Bush tax cut proposals could be candidates. Senate Finance plans to avoid the issue of budget offsets in marking up the tax package.

The bipartisan Senate energy tax package was crafted by Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Sen. Charles Grassley (R-IA). The package would provide $13.5 billion in energy tax credits and incentives for a 10-year period, 2002-2012. It includes $3.2 billion in tax credits for oil and gas production, including a new $3/bbl credit for the production of oil and 50¢/Mcf for gas from marginal wells up to a total production of 1,095 boe/year. The credits would be phased in when prices fall below $18/bbl or $2/Mcf. The House version of the bill would allow producers to hold onto unused credits for up to 10 years, but in the Senate version, credits would have to be used within the year issued.

The Senate tax bill also provides $3.2 billion for renewable energy, extending the tax credit for wind energy, closed-loop biomass and poultry waste. Alternative vehicles and fuel incentives total $2 billion. Conservation and energy efficiency credits would receive $1.5 billion. Coal would receive new tax incentives for clean coal technology totaling $1.9 billion. There also are electric industry tax incentives, including help on decommissioning costs of nuclear power plants, totaling $1.3 billion.

The package also directs the Treasury Department and the Federal Energy Regulatory Commission to conduct ongoing studies on tax implications that could be used to facilitate electric industry restructuring.

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