Congress is poised to enact a one-year retroactive tax extenders package that would renew a variety of tax incentives—including the production tax credit (PTC) for wind—through the end of 2014. On Wednesday, December 3, the House passed the Tax Increase Prevention Act of 2014 (H.R. 5771) by a vote of 378-46, sending the bill to the Senate for its consideration before the end of the Lame Duck session.
The one-year approach in H.R. 5771 represents a fall-back position for lawmakers who hoped for a longer-term deal. Last week, congressional leadership appeared ready to move a tax extenders package that would have extended many energy provisions for two years but would have extended the PTC for wind on a gradually declining basis into 2017, with a complete phase-out of the wind PTC by the end of 2017. However, the White House quickly issued a veto threat after the details of the package became public.
In response, House Republicans released H.R. 5771. Although some Senate Democrats, especially Senate Finance Committee Chairman Ron Wyden (D-OR), strongly favored a two-year deal, the strong bipartisan House vote in favor of H.R. 5771 leaves little room to maneuver before the end of the year. According to Senate Minority Leader Mitch McConnell (R-KY), a vote in the Senate could come as soon as Thursday, December 4.
Substantively, H.R. 5771 is similar to the Senate Finance Committee’s EXPIRE Act, which generally extended provisions for two years compared to the one-year extension included in H.R. 5771. Notably, H.R. 5771 includes the PTC for electricity from wind and other renewable resources, the election to choose the investment tax credit (ITC) in lieu of the PTC, incentives for biofuels, and numerous other provisions. However, H.R. 5771 would allow these provisions to lapse again on January 1, 2015—creating more uncertainty for the business community.
Although lawmakers appear poised to revive the wind PTC for 2014, the new Republican Congress is likely to oppose any efforts to extend the credit beyond this year. This makes it more important than ever to engage with lawmakers beginning in January.