Adding a key piece to the major energy bill awaiting congressional floor action, congressional conferees have approved tax incentives for oil and gas, electric utilities, nuclear power and conservation that total $14.6 billion through 2015.

In the tax agreement, which was reached on July 26, House and Senate conferees also included several revenue-raising measures, reducing the tax package's net cost to the Treasury by $3 billion.

The entire energy conference committee report, which spans 1,725 pages, was filed in the House and Senate on July 27. View conference report at
http://energy.senate.gov/public. The lead Senate conferee, Energy and Natural Resources Committee Chairman Pete Domenici (R-N.M.), said, "I am reassured by the commitment from leadership this morning that the Senate will pass this conference report before we start the August recess."

The tax provisions are a key part of the overall energy package. Senate Finance Committee Chairman Charles Grassley (R-Iowa) says the tax section is "well-balanced among renewable energy, conservation and traditional energy sources." A summary table of the tax provisions and estimated costs is available at
http://www.house.gov/jct/x-59-05.pdf.

The incentives include accelerating depreciation for natural gas distribution lines, and electricity transmission and distribution facilities, allowing companies to write off such costs over 15 years, compared with 20 years now.

The measure extends for two years the current credit for electricity produced by wind, geothermal biomass and other renewable sources. It adds hydropower and Indian coal to the list of sources qualifying for the credit.

It also establishes new tax credits for clean-coal facilities--integrated gasification combined cycle projects would be eligible for a 20% investment tax credit, while other electricity-producing clean-coal projects could get a 15% credit.

Nuclear power would receive a new tax credit for energy produced by new nuclear facilities. The credit equals 1.8 cents per kilowatt hour produced over eight years. There also would be changes in funds to pay for decommissioning nuclear facilities, including allowing pre-1984 contributions to such funds to qualify as deductible expenses. The Nuclear Energy Institute says that re-classification would last for a nuclear powerplant's remaining life.

In the energy conservation area, the agreement includes a deduction for commercial buildings that cut annual energy and power consumption by 50% compared to the American Society of Heating, Refrigerating and Air Conditioning Engineers standards. A summary of the bill from the Senate Finance Committee says, "The deduction would equal the cost of energy-efficient property installed during construction," up to a cap of $1.80 per sq ft. There would be a deduction of 60 cents per sq. ft. "for building subsystems," it adds.