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A diverse set of lawmakers is aiming to revive expired clean energy tax credits alongside an early extension of a nuclear production credit.
That strategy aims to broaden support for the credits in the hopes of increasing the chances of passage in the near future, those lawmakers told Bloomberg BNA.
Despite a bipartisan coalition behind the credits, the lawmakers are likely to try to tack the bill onto a larger legislative vehicle, such as a comprehensive overhaul of the tax code. House Speaker Paul Ryan (R-Wis.) aims to pass that overhaul this calendar year.
Those backing the credits are bullish on the prospects for their passage, but congressional leaders indicate that individual revivals and extensions may violate the spirit of an overhaul, which primarily targets simplification of the overall tax code.
Still, the revival of the clean energy credits would help create more profit and growth for that industry, while the nuclear credit could deliver a critical lifeline to reactors in South Carolina and Georgia, those lawmakers say.
Rep. Tom Reed (R-N.Y.), the lead sponsor on legislation (H.R. 1090) that would extend clean energy credits, indicated the need for revival outweighs concerns over tax code complications.
Reed’s bill would revive tax credits for solar energy, fuel cells, microturbines and small-scale wind energy, among other industries, through 2021. Those credits are part of a broad group of temporary tax incentives known colloquially as “extenders.”
“I understand opening the whole extenders circus is not something that’s attractive,” Reed, a Ways and Means Committee member, told Bloomberg BNA. “But if the Senate is willing to negotiate and work with us, maybe there’s a path to get it to the finish line on one of these must-pass pieces of legislation.”
The legislation would also phase out the slate of credits from 30 percent downward over the coming years. Rep. Earl Blumenauer (D-Ore.), another Ways and Means member and a backer of Reed’s bill, also told Bloomberg BNA he’d support bundling the two proposals.
The Senate’s South Carolina delegation is pushing hard to see the nuclear production tax credit extended. In that effort, Sen. Lindsey Graham (R-S.C.) is reaching out to clean energy industry partners.
“We want to form a coalition,” he recently told reporters.
Currently only four new nuclear reactors being built in the U.S. would come close to being operational by 2020 to take advantage of the nuclear production tax credit: two by Southern Co. in Georgia and two by SCANA Corp. in South Carolina. All four, however, are AP1000 reactors that were being constructed by Westinghouse Electric Co. LLC, and the Toshiba subsidiary’s filing for bankruptcy in late March has thrown a wrench into whether they will be completed by a 2020 deadline.
Graham introduced legislation (S. 666) to extend the credit earlier this year.
The Nuclear Energy Institute, the trade group representing the nuclear industry, including nuclear operators Exelon Corp. and Entergy Corp., is lobbying to extend that deadline or drop it all together.
“It’s hard to say whether it’ll actually manifest itself and get across the finish line, but we’re very, very interested in it because we think it’s appropriate and for the plants that are being built right, it’s due credit,” Maria Korsnick, the trade group’s president and CEO, told Bloomberg BNA in a May 19 interview.
The bundling of the clean energy and nuclear credits are needed because siloed tax credit conversations on Capitol Hill that are confined to individual expiring credits don’t typically pan out well, Korsnick said.
The tax credit, which passed as part of the Energy Policy Act of 2005, provides a credit of 1.8 cents per kilowatt-hour of electricity produced by new nuclear power plants. The tax credit is available only for the first 6,000 megawatts of new nuclear generating capacity that goes into service on or before Dec. 31, 2020, and lasts only for the first eight years of operation.
A news release from Ryan’s office recently said a tax overhaul would make the code “simpler, flatter, and fairer.”
Republican leaders on the Capitol Hill aren’t prejudging the outcome of negotiations but still signal individual revivals or extensions run contrary to an overhaul. “To have all these tax extenders all over the place, that doesn’t bode well with what our goal is, and that is to have a tax reform that makes it more simplified,” House Budget Committee Chairman Diane Black (R-Tenn.) told Bloomberg BNA.
Despite the 2017 goal for an overhaul, negotiations remain at an early stage, however.
“We’re trying to come up with tax approaches that make sense, and it’s hard to just cherry pick various things right now,” Sen. Orrin Hatch (R-Utah), the Senate’s chief tax writer, told Bloomberg BNA. “We’re not sure what we can do in the end, and we’re going to have to really look at it very carefully.”
To contact the editor responsible for this story: Paul Connolly at PConnolly@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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