Supporters trumpet bipartisan bill to establish renewable, fossil parity
But even without comprehensive tax reform, which remains a heavy lift, sponsors say they will push the idea in isolation, pointing to broad support from both sides of the aisle, companies in almost every energy sector and members of the Obama administration.
At issue is the “Master Limited Partnerships Parity Act,” which is being reintroduced today. The bill would allow wind, solar, efficiency and other clean energy companies to establish MLPs, which have ownership shares traded like traditional stock but are taxed as partnerships instead of as corporations.
Oil, natural gas, coal and pipeline companies can establish MLPs and have shown enthusiasm for the structure as a way to attract private investors, but renewable energy companies do not have the same option.
“In my view, that starves a vital and growing part of our energy sector of the capital it needs to grow,” Sen. Chris Coons (D-Del.), the bill’s lead sponsor, told reporters at a press briefing this morning.
Co-sponsoring the MLP bill are Sens. Jerry Moran (R-Kan.); Debbie Stabenow (D-Mich.), who chairs a Finance Committee panel on energy taxes; and Lisa Murkowski (R-Alaska), ranking member of the Energy and Natural Resources Committee. In the House, Reps. Ted Poe (R-Texas), Mike Thompson (D-N.Y.), Peter Welch (D-Vt.) and Chris Gibson (R-N.Y.) are introducing a companion bill.
The bill is a slight variation on legislation Coons introduced in the last Congress to extend MLPs to wind, solar, geothermal, biomass and other renewable sources. This year’s version expands that list to include waste-heat to power, carbon capture and storage, biochemicals, and energy-efficient construction.
Coons said he had submitted the bill to the Joint Committee on Taxation but had not yet received a cost estimate. He said he did not expect it to be much above the $1 billion last year’s bill was estimated at. He said bill sponsors are still looking for ways to offset that cost.
The bill’s introduction comes amid growing momentum for comprehensive tax reform that remains a long shot but seems more likely to come to fruition following Senate Finance Chairman Max Baucus’ (D-Mont.) decision not to seek re-election next year. Overhauling the tax code for the first time in a generation is seen as a potential legacy pursuit for Baucus, who has been working closely with Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, who will be relinquishing his gavel after next year
Coons said his goals in expanding MLP eligibility do not conflict with those of the tax reformers, who generally are looking to eliminate various tax incentives and loopholes in order to reduce the top-line corporate tax rate. While there have been some calls to eliminate MLPs altogether because critics say they allow oil companies to avoid paying taxes, Coons said the odds of that happening are slim and suggested that a better approach would be ensuring that all energy sources could benefit from the structure.
The Finance Committee plans to release a white paper tomorrow addressing how various energy-sector tax policies could be addressed in the context of tax reform.
If tax reform doesn’t happen this year, sponsors said, the MLP bill should be passed on a stand-alone basis because it represents a rare bit of bipartisan agreement and would advance broader goals of expanding clean energy development and boosting private investment in that sector.
“If it gets in a bigger bill, great,” Poe said. “If it doesn’t, this is something we agree on” and could enact independently.
‘Nothing but good things to say about it’ — Wyden
Dozens of companies, think tanks and trade associations are supporting the bill, and the idea to expand MLPs to renewables won support from the oil industry’s top lobbyist earlier this week.
“MLP is a perfect example of an investment vehicle that can facilitate renewable energy,” American Petroleum Institute President Jack Gerard said yesterday at the Bloomberg New Energy Finance Summit in New York, according to a Bloomberg news article aides distributed at today’s press briefing.
Senate Energy and Natural Resources Chairman Ron Wyden (D-Ore.), also a senior member of the Finance Committee, praised the idea earlier this week, although he said he is holding off on co-sponsoring the bill until the broader tax reform picture becomes clearer.
“What I like about the concept … is it says renewables would in effect get parity with these other parts of the energy economy, which is one of my principles,” Wyden told reporters earlier this week. “I have nothing but good things to say about it.”
It also remains to be seen how the MLP bill could coincide with efforts to extend the production tax credit and other temporary incentives that expire at the end of this year. Those, too, are expected to be addressed in the context of tax reform if it happens, but clean energy lobbyists are beginning to gear up for another potential year-end fight over “tax extenders” legislation to provide another lifeline for the credits.
Coons said he does not view MLPs as a replacement for the PTC or similar measures, which he said should be extended for at least a few more years. However, those credits are attracting increasing fire from conservatives, especially in the House, who view them as wasteful government spending through the tax code.