House Democrats have wasted little time in coming out with another bill that would fund renewable energy and energy conservation at the expense of oil and gas producers.

The legislation (HR 5351), which was unveiled by the House Ways and Means Committee Tuesday, would strip oil and gas companies of tax incentives and use them to extend tax credits for renewable fuels, such as wind, solar, geothermal, cellulosic ethanol and biofuels, and promote energy conservation. Many of the tax credits for renewable energy are due to expire at the end of the year.

“The American taxpayer should not be subsidizing oil and gas companies during times of record profits and record prices at the pump,” said House Ways and Means Chairman Charles Rangel (D-NY). The House is expected to take up the bill during the week of Feb. 25, according to a committee spokesman.

The House measure comes less than a week after Senate Republicans blocked an attempt by Democrats to extend tax credits for renewable energy in the economic stimulus package (see Daily GPI, Feb. 8).

The bill would extend renewable energy tax credit by three years (through Dec. 31, 2011) for certain qualifying facilities, including wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation hydropower, landfill gas and trash combustion facilities. Also candidates for the extended tax credit are facilities that generate electricity from marine renewables (waves and tides).

The proposal would cap the aggregate amount of tax credits that can be earned for these qualifying facilities placed in service after Dec. 31, 2009 at an amount equal to 35% of the facility’s cost.

The measure extends a 30% investment tax credit for solar energy property and qualified fuel cell property for eight years (through the end of 2016). It also increases the $500 per half kilowatt of capacity cap for qualified fuel cells to $1,500 per half kilowatt of capacity. And it removes an existing limitation that prevents public utilities from claiming the investment tax credit and allows the energy credit to be used to offset the alternative minimum tax. The bill extends tax credits for residential solar property and hybrid vehicles as well.

The House Ways and Means bill further authorizes $2 billion of new clean renewable energy bonds for public power providers and electric cooperatives. Sixty percent of the authorization must be used for qualifying projects of public power providers and 40% must be used for qualifying projects of electric cooperatives, according to a summary of the bill.

The proposal also extends the present-law deferral of gain on sales of transmission property by vertically integrated electric utilities to FERC-approved independent transmission companies. Rather than recognizing the full amount of gain in the year of the sale, this provision allows the gain on such sales to be recognized over an eight-year period. The rule applies to sales before Jan. 1, 2010.

At the same time, the bill would deny Section 199 benefits for the top integrated oil and gas companies, and freeze the benefits at 6% for the rest of the industry. The committee said this was a scaled-back version of a prior proposal calling for repeal of the Section 199 benefits for the entire oil and gas industry. The House panel estimates that this proposal will raise $13.57 billion over 10 years.

In addition, the measure would provide a clarification of foreign oil and gas extraction income. “The tax code limits the ability of oil and gas companies to claim foreign tax credits with respect to foreign oil and gas extraction income. Because of this limitation, there is a potential for oil and gas companies to manipulate their extraction income in order to achieve beneficial results under U.S. foreign tax credit rules. The bill would eliminate this potential,” the committee said. It projects that this clarification will raise $4.08 billion over 10 years.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.