House Passes PTC/ITC But Final Approval Unlikely
The Senate had passed a bill earlier this week that had the support of the White House and would have extended the PTC for wind energy by one year and by two years for biomass, geothermal, mini-hydro and marine power. The bill also would have extended the ITC for solar and fuel cell energy by eight years. The bill had the support of key Senate Republicans because of its oil and gas tax breaks and its limits on additional tax revenue, which only partially offset the legislation’s non-energy tax breaks.
When the Senate passed the bill, it warned the House that any changes to the bill would set it up for eventual failure when sent back to the Senate for final passage. However, instead of passing the Senate’s bill the House chopped the legislation into four smaller pieces and passed each as standalone bills. This move appears to have doomed the PTC/ITC for now. The two credits are due to expire at the end of 2008.
The Senate will likely pass the three other standalone bills, including an unfunded $64 billion Alternative Minimum Tax patch, unfunded disaster relief for Louisiana and Texas, and a mental health bill. Unfortunately for the US renewable energy industry, the House added additional tax ‘pay-fors’ to offset non-energy provisions of the PTC/ITC standalone bill and stripped it of key oil and gas tax breaks. As a result, Senate Republicans have said they will not pass the standalone PTC/ITC bill and the White House has said it would veto the legislation, should it somehow pass the Senate.
The PTC/ITC extensions will have one last shot at passage before the November 4 elections. Congress was scheduled to adjourn Friday until after the election but the Senate is now planning to stay in session until the end of the month to continue work on a potential $700 billion bailout package for the financial sector. The House has also said it will stay in session as long as is needed to sort out the bailout package. A few senators are hoping to take advantage of the extended session to try to squeak its original tax package through the House or forge some kind of compromise.
With the future of the PTC/ITC extensions on shaky ground until at least after November 4, solar stocks were off between 5-10% in early afternoon trading on September 26, helping to bring down the NEX by 2.6%.