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The recent appointment of Sen. Max Baucus, D-Mont., as ambassador to China will delay tax reform talks - and along with it, a revival of the recently expired production tax credit (PTC) - according to Sen. Chuck Grassley, R-Iowa.

Speaking exclusively to NAW, Grassley explains that until Sen. Ron Wyden, D-Ore., settles in as chairman of the powerful Senate Finance Committee, talk about the PTC is just that: talk.

"Now that Sen. Baucus is moving on to China, tax reform is more up in the air than at any time in the past year," Grassley notes, adding that Wyden will likely need a period of adjustment.

The change at the top of the Senate Finance Committee slows some early progress the committee had made about tax reform.

On Dec. 18, the Baucus-led committee unveiled a sweeping energy proposal that sought to overhaul energy tax breaks offered by the government and consolidate or extend many of the provisions promoting renewable energy that are currently only temporary.

For clean energy, the proposal would keep all current incentives, such as the PTC for wind, in place until 2016. Wind projects placed in service in 2017 and later would be eligible for either a 20% investment tax credit (ITC) - down from the current 30% - or a $0.023/kWh PTC for 10 years, adjusted for inflation.

However, the outspoken Grassley, considered the father of the modern-day PTC, characterizes Baucus' proposal as "convoluted" and "complicated."

"The Baucus proposal attempts to reform all existing renewable energy and renewable fuel incentives with a technology-neutral proposal," Grassley says. "The incentives for some renewable energy and renewable fuels under this proposal will be better, some will be worse off, some will be the same. It is a fairly complicated proposal that - in some cases - may or may not reflect current realities."

With legislators likely putting off tax reform until 2015, another viable alternative for reviving the PTC would be through extenders comprising a group of 55 tax incentives that expired at the end of last year.

"There are indications that Wyden will want to do extenders," Grassley notes.

One scenario involving extenders - and by extension, the PTC - could involve changing the 2013 expiration date to 2015, for example. However, no decisions have been reached.

"Our side of the aisle would like to see a markup of extenders to allow the [Senate Finance Committee] to do its work," Grassley says, adding that Wyden could put together a package by himself or with Sen. Orrin Hatch, R-Utah, that goes directly to the floor.

Complicating matters, Grassley adds, is where House leadership, such as Rep. Dave Camp, R-Mich., who chairs the Committee on Ways and Means, stands on the issue.

"More likely than not, the Senate will take a strong look at getting extenders done, but how Camp and the House will proceed remains more uncertain."



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