Bipartisan budget deal seen making little difference on energy bill, wind PTC prospects

Source: By By Esther Whieldon, SNL • Posted: Monday, November 2, 2015

A new bipartisan budget deal is not likely to turn the tide in either direction on whether Congress extends wind production tax credits or passes a broad energy bill before the end of the year, according to experts.

Sources believe Congress is likely to wait until next year to pass a comprehensive energy bill — if it does so at all — given that the Senate would need to set aside a couple of weeks for action and Majority Leader Mitch McConnell, R-Ky., has yet to include a comprehensive bill on his list of priorities for the coming months.

Renewables experts continue to foresee a December appropriations deal as the best chance for lawmakers to extend wind production tax credits, considering Congress did just that last winter when it extended those credits through 2014. And it is too soon to tell whether lawmakers will simply extend the PTC through 2015 or give it a two-year bump, according to one source.

President Barack Obama this week reached an agreement with Congressional Republican leadership and key Democrats to increase federal spending a total of $80 billion for two years — by $50 billion in fiscal year 2016 and $30 billion in fiscal year 2017. The increases will be equally divided between defense and nondefense spending. The deal also raises the federal borrowing limit, or debt ceiling, through March 2017.

As one of his last acts before he steps down at the end of October, House Speaker John Boehner, R-Ohio, helped broker the deal, which served as a gift to his expected replacement, fiscal conservative Rep. Paul Ryan, R-Wis. Had an agreement not been struck, Ryan, who has fought against government spending increases, would surely have faced the same uphill battle as his predecessor against hard liner GOP groups. The deal also pushes the budget battle out past the 2016 election cycle. Democrats claim the budget arrangement as a win for their efforts to get GOP members to agree to go beyond spending limits imposed under a 2011 law.

The House of Representatives on Oct. 28 passed the Bipartisan Budget Act of 2015, which is an amended version of H.R. 1314, with a vote of 266-167. All Democrats supported the bill, but only 32% of Republicans backed it. Senate Minority Leader Harry Reid, D-Nev., in a news briefing said the vast majority of House Republicans wanted to default on the nation’s debt.

The Senate could take up the measure as soon as the morning of Oct. 30, according to a majority leader staffer. McConnell on Oct. 28 filed cloture on the budget bill and made motions that effectively prevent any amendments from being introduced on the floor. Reid said he expects that all Senate Democrats will vote in favor of the measure and the bill will need a “nice number of Republicans” as well.

McConnell’s action late Oct. 28 matches Reid’s expectation that GOP members would not attempt to add policy riders that could kill the bill on the Senate floor, such as those that would repeal the U.S. EPA’s environmental regulations, the Dodd-Frank Act or Obama’s health care law. “We’re going to hold hands,” Reid said of Republicans and Democrats. “We’re not going to do vexatious riders.”

While the deal does establish spending increases, Congress will still have to decide how to divvy up the budget to federal agencies in December. An expert recently suggested three possible opportunities for the PTC to be reinstated: when the highway trust fund expires this month, when the federal government would have hit the debt ceiling in November, and during the December appropriations battle.

As part of a larger tax-extenders bill, the Senate Finance Committee in July voted to reinstate the PTC, under which developers would receive a credit of $23 for each megawatt-hour a wind farm generates, through 2016. However, House Republicans would rather select a few of the expired tax breaks and make them permanent. The production tax credit has not been one of them.

Sen. Rob Portman, R-Ohio, who has supported a longer-term extension of the PTC, said in an Oct. 27 interview that he continues to hope Congress will pass a deal this year.

If history is any judge, the PTC extension will be a “December play because they have not obviously been able to move forward on the extenders” thus far, Sierra Club’s Legislative Director Melinda Pierce said.

Keith Martin, a partner at Chadbourne & Parke LLP and co-head of the firm’s project finance group, said he remains “optimistic” but believes the deal “does not help” PTC extenders.

“Congress is still expected to address extenders before year end, but the House will not be under as much pressure to cave into the Senate position on renewable energy tax credits,” Martin said in an email. “The House is more likely to cave when it has its back to the wall on some other big issue, like a government shutdown or debt default, at the end of the session.”

Broad energy bill prospects

As for more general energy legislation, Energy and Natural Resources Committee Chairwoman Lisa Murkowski, R-Alaska, told SNL Energy on Oct. 27 she does not know whether the budget deal increases the chances of the Senate taking up her bill this year.

The Senate energy committee sent the full chamber its bipartisan bill, the Energy Policy Modernization Act, S. 2012, which includes measures meant to promote research and development of power storage, microgrids, hydropower projects, clean coal technology, energy efficiency, LNG exports and electric transmission infrastructure. The bill would also give the U.S. Department of Energy an official role in energy sector cybersecurity.

In the lower chamber, House Energy and Commerce Committee GOP leadership was unable to steer their own energy bill through the choppy waters of partisan negotiations and in late September advanced a bill packed with measures Democrats opposed. The North American Energy Security and Infrastructure Act, H.R. 8, includes measures on gas infrastructure siting, energy efficiency, and electric grid reliability and security.

Pierce said she “fully expects the energy bill won’t be considered until 2016” because of competing legislative priorities. “The urgency just isn’t there,” she said in an interview.

But Tyson Slocum, director of the energy program for consumer watchdog Public Citizen, thinks the bill’s prospects are even worse.

Energy bill discussions have been getting “increasingly politicized,” Slocum said. The odds are “very slim that some form of an energy bill makes its way to” the president’s desk in this Congress, he said. “It faces a very uphill path,” he said in an interview.