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Bloomberg: House Poised for Energy Vote; Senators Will Fight (Update2)

By Tina Seeley

Dec. 6 (Bloomberg) — The U.S. House is poised to vote today on legislation aimed at boosting alternative energies such as wind and solar power at the expense of the oil and gas industry. It faces a tough battle for Senate approval and a presidential veto threat.

The bill toughens car fuel-economy standards, mandates an increase in the use of gasoline alternatives such as ethanol, boosts efficiency measures, requires that utilities get 15 percent of their power from renewable sources and includes a $21 billion tax package. Congressional action comes two weeks after crude oil futures prices hit a record $99.29 a barrel on Nov. 21.

Senate Republicans are promising to fight House Speaker Nancy Pelosi’s proposal, singling out the tax package and so- called renewable portfolio standard, or RPS, which is opposed by utilities such as Atlanta-based Southern Co.

“I don’t think it has a chance because of the tax package and the RPS,” Republican Senator David Vitter of Louisiana said yesterday. Vitter says he is “confident” the legislation won’t get the 60 votes it needs to proceed in the Senate.

The legislation includes $10 billion worth of taxes over 10 years on the five top oil and natural gas companies — BP Plc, ConocoPhillips, Chevron Corp., Royal Dutch Shell Plc and Exxon Mobil Corp.

Part of the money raised by that tax and others would fund an extension of tax credits for wind, solar and biomass power providers, as well as credits for hybrid cars.

Veto Threat

“The bill contains several highly objectionable provisions that would impose higher costs on American taxpayers, electricity consumers and businesses,” the Bush administration said in a statement issued today. President George W. Bush’s advisers would recommend a veto if it comes to his desk in the current form.

The oil and gas industry also opposes the legislation.

“The bill’s tax provisions take direct aim at companies’ ability to expand oil and natural-gas production and refining capacity,” Red Cavaney, president of the American Petroleum Institute, wrote in a Dec. 5 letter to all House members. It “likely would consequently tighten supplies in a time of rising demand.”

The renewable power requirement is “simply a tax on electricity,” said David Ratcliffe, Southern’s chief executive officer.

“My customers wind up paying significantly more for electricity” because his region cannot support enough renewable resources to meet the requirement, he said in an interview yesterday. Over a 10-year period, it would add more than $10 billion to power costs, Ratcliffe said.

Promises

Vitter and New Mexico Senator Pete Domenici, the senior Republican on the Energy and Natural Resources Committee, said Democratic leaders broke promises to keep those measures off the legislation.

“Harry Reid made a commitment to keeping those provisions off the bill and now he has completely reneged on that,” Vitter said.

The legislation is an attempt to reconcile differing measures approved earlier by the House and Senate. A final vote on the measure is expected in the House at about 1 p.m. local time, Crystal Chiu, a spokeswoman for Pelosi, said in a telephone interview today.

`Sweeping’ Legislation

It is “the most sweeping energy efficiency — and therefore climate — legislation of the past three decades,” Kateri Callahan of the Alliance to Save Energy said in a statement yesterday.

A report by the American Council for Energy-Efficient Economy said the RPS would reduce carbon dioxide emissions by 100 million metric tons in 2030 and save consumers a cumulative $60.5 billion.

The bill is also sprinkled with provisions that have little to do directly with energy policy.

Among other things, the measure revives a proposal that stalled in Congress last year that would allow paper-products companies that harvest their own trees, such as Federal Way, Washington-based Weyerhaeuser Co., to pay a top tax rate of 15 percent on profits attributable to that timber instead of the 35 percent corporate rate. That would equalize the tax treatment of forestlands owned by companies and investment trusts, which already have a 15 percent burden.

The measure also would offer tax incentives to Alaskan fishermen whose livelihoods were hurt by the 1989 Exxon Valdez oil spill, direct federal resources to rural schools, and use tax credits to subsidize transportation projects in New York City.

Stock-Purchase Prices

To help pay for these provisions, the measure also would raise $3.4 billion in taxes from investors by requiring brokers to report stock-purchase prices to the Internal Revenue Service beginning in 2009 and the price of all other types of securities beginning in 2011. The move is designed to reduce false reporting of transactions by taxpayers.

Democratic Representative Edward Markey has said the aim is to have the legislation on the president’s desk by the end of next week.

“The prospects for the bill’s passage in the Senate — 60 votes will be needed to break a promised filibuster — remain cloudy,” Christine Tezak, senior analyst at Stanford Group Co., said in a note issued today. The Senate could take the measure up next week, she wrote.

The Senate was unable to get the 60 votes it needed in June to include a renewable power requirement or attach a tax package to energy legislation it approved.

To contact the reporter on this story: Tina Seeley in Washington at [email protected]

Last Updated: December 6, 2007 11:08 EST

http://www.bloomberg.com/apps/news?pid=20601103&sid=aLPCo_OZZwvM&refer=us

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