News & Insights

Washington Energy Update

With fewer than ten business days until the end of the year, fiscal cliff discussions between President Obama and Speaker Boehner continue. Speaker Boehner (R-1-OH) reportedly offered to increase taxes for those Americans earning more than $1 million in exchange for significant cuts to entitlements. He has also offered a one year extension of the debt ceiling. These new positions represent progress in the discussions. Regardless of the fiscal cliff discussion outcome, Congress is unlikely to pass any of the fiscal year 2013 bills with the end of the calendar year approaching. While many in Washington had anticipated, similar to previous years, the passage of an omnibus spending bill, policy makers’ focus on fiscal cliff discussions and the consideration of the emergency supplemental spending bill as a result of Hurricane Sandy make this unlikely. Instead, Congress is likely to clear another Continuing Resolution (CR) that will fund the government for the remainder of the FY 2013 year. The current six-month CR (Public Law 112-174), set to expire on March 27, cleared Congress earlier this year.

Energy Extenders Fate On Hold; Wind Industry Publicly Supports PTC Phase Out

At this point, it is unclear whether energy tax incentive extenders, including the one year extension of the wind production tax credit (PTC), will be renewed before the end of 2012. In a recent letter to Congress, the American Wind Energy Association (AWEA) urged Congress to immediately extend the PTC “allowing projects that commence construction by the end of 2013” to remain eligible for the credit. Importantly, the wind industry also laid out its blueprint for the phase out of the production tax credit, asking for the one year extension and afterwards a 10 percent reduction of the credit to 60 percent, and then “60 percent of the current level for projects that are placed in service in years 2014 through 2018, with no PTC in 2019 or afterwards.” Various policy makers, including Senate Committee Finance Chair Max Baucus (D-MT), have expressed support for the phase out. The wind PTC phase out has been the focus of House staff-level discussions in exchange for the tax credit extension. A coalition of entities opposed to the wind PTC also circulated a letter to close to 160 policy makers urging Congress to allow the wind PTC to expire entirely.

Master Limited Partnerships Potentially Part of Tax Code Overhaul

In other tax-related news, some in Washington believe the current Master Limited Partnership (MLP) tax structure will come under scrutiny as part of overall tax reform. Washington chatter points to MLPs being a target to increase revenue with some in town assuming it is a foregone conclusion and focused more on whether any MLP elimination will be retroactive or prospective. Separately, Sen. Coons (D-DE) and Sen. Jerry Moran (R-KS) continue to work to increase support for their legislation, the Master Limited Partnerships Parity Act (S.3275). The bill would expand the definition of qualified income sources under Master Limited Partnerships to include clean energy sources and infrastructure projects. Congressional support for the legislation has tripled since its introduction earlier this year. H.R. 6247 is the House companion bill. Southern Methodist University’s Maguire Energy Institute concluded earlier this year that the MLP expansion to the renewable energy sector could boost spending on renewable energy by almost $6 billion.

Other Items Worthy of Mention:

Particulate Matter National Ambient Air Quality Standards Rule (PM NAAQS) Finalized: As anticipated, the Environmental Protection Agency (EPA or Agency) complied with its court ordered deadline and finalized the PM NAAQS rule designed to limit the amount of particulate matter (PM 2.5)—or soot—that can be emitted into the atmosphere. The final rule reduced PM 2.5 from the current level of 15 micrograms per cubic meter to 12 micrograms per cubic meter. Final designations are expected in December of 2014. States will have until 2020 when they will be required to meet the PM standards.

Seven Offshore Wind Projects Receive Department of Energy (DOE) Grants: On December 12, 2012, DOE announced that it would provide up to $4 million to seven individual wind projects off the shores of Maine, New Jersey, Oregon, Texas and Virginia and in Lake Erie. The purpose of the grants is to facilitate project engineering, design and permitting. Three of the aforementioned projects are to be selected for follow up. Permitting and other logistical problems, among other issues, have stymied the construction of offshore wind farms.

Senate Environment & Public Works (EPW) Chair Looks to Form Climate Change Caucus: Citing “a tremendous appetite on our side to do that,” the Chair of the Senate EPW Committee, Senator Barbara Boxer (D-CA), indicated that she intends to form a climate change caucus. The reported objective of such a group would be to work with relevant committees to advance legislative measures that would result in reduced carbon emissions and also help adjust to climate change. Boxer cited Hurricane Sandy as an impetus for various Members to approach her regarding the issue. She indicated that despite outreach to Republicans, none has expressed interest yet in joining the group. The Senate Environment and Public Works Committee has jurisdiction over the Clean Air Act.

For more information regarding this Washington Energy Update, please contact Rick Boucher (202.736.8290,, Roger Martella (202.736.8097,, Sean Moran (213.896.6057,, or Catherine Karen (202.736.8368,

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