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Wyden: US Senate will not be 'potted plant' on Build Back Better negotiations

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Wyden: US Senate will not be 'potted plant' on Build Back Better negotiations

  • Author Molly Christian
  • Theme Energy

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U.S. Senate Finance Committee Chair Ron Wyden, D-Ore., has pushed to include ambitious tax breaks for clean energy in the Build Back Better reconciliation bill.
Source: Drew Angerer/Getty Images News via Getty Images North America

The U.S. Senate could tweak the clean energy tax provisions of a massive social spending and climate change package that the U.S. House of Representatives could vote on in the coming days, the head of the Senate tax-writing committee said Nov. 16.

But the lawmaker emphasized that the Senate and House have been collaborating on the bill for some time and that the proposal's clean energy tax provisions are a combination of their priorities.

"These provisions are a collaborative effort between the chambers," Senate Finance Committee Chair Ron Wyden, D-Ore., said during the GridFWD Virtual Summit. "We've been talking to the House folks all year about this."

The House this week hopes to consider an updated version of the Build Back Better Act, a $1.75 trillion reconciliation package that includes over $300 billion in clean energy tax credits. The bill meshes portions of Wyden's Clean Energy for America Act, which would create technology-neutral credits for clean electricity, clean transportation, and energy efficiency, with extensions of existing clean energy credits included the House's GREEN Act.

But even if the House passes the Build Back Better Act, "the Senate is not just going to be a potted plant," Wyden said. "Senators have strong views."

Among other things, Senate Democrats are looking at ways to eliminate what Wyden called "loopholes" that allow billionaires to avoid taxes on capital gains. "A lot of those issues are going to still be debated and discussed," the Oregon lawmaker said.

And despite enthusiasm over the tax credit extensions, clean energy boosters would like to see changes to the Build Back Better bill's tax provisions.

Regulated utilities want to be able to opt-out of tax normalization rules that require the benefits of clean energy investment tax credits to be spread out over a longer time frame. Currently, only non-utility developers are exempt from normalization rules.

In a recent analysis, think tank RMI estimated that not including a normalization opt-out provision with respect to proposed investment tax credits for transmission and stand-alone energy storage would increase costs for those projects by 15%. Allowing utilities to opt-out of tax normalization could slash carbon dioxide emissions by another 50 million metric tons annually, or about 3% of today's power sector emissions, and save regulated utility customers more than $1 billion annually by 2030, RMI said.

"Unfortunately, the House version does not have utility normalization opt-out associated with it, so that's an open item," Pat Reiten, Berkshire Hathaway Energy's senior vice president of public policy, said during the GridFWD event.

Reiten also referred to potential "unintended consequences" of the Build Back Better Act for clean energy development, including the possible loss of tax breaks such as accelerated depreciation, if Congress adopts a corporate alternative minimum tax.

In a recent interview with S&P Global Market Intelligence, Reiten said Berkshire Hathaway's regulated utility customers could lose $1.5 billion over the next 10 years on carbon-free energy and transmission growth if the alternative minimum tax were enacted.

But Wyden sought to reassure Reiten on the impacts of such a tax, saying Democratic lawmakers have gone to "great lengths to protect the value of the clean energy tax credits" in the bill.

"I wouldn't be working around the clock to overhaul the energy tax code if I thought that imposing a minimum tax on big companies would undo that work," Wyden said. "But we'll continue these discussions and continue to listen to arguments."