On Wednesday, leaders from both the U.S. House of Representatives (“House”) and the U.S. Senate (“Senate”) finished reconciling all of the major provisions of the American Recovery and Reinvestment Act (“Stimulus Bill”), estimated to cost $789 billion. While some of the energy provisions passed by the House and Senate (see January 23 and January 30, 2009 edition of WER) have changed, the majority remain intact. All told, the Stimulus Bill contains about $43 billion for direct energy and energy efficiency programs, and another $20 billion in energy tax provisions.

Among the biggest beneficiaries of the Stimulus Bill are developers of renewable energy. These developers will be allowed to exchange tax credits for grants to be awarded by the Treasury Department, providing immediate cash for projects. Additionally, the production tax credit (“PTC”) for renewable energy was extended for three years. Thus, the PTC will be available for wind energy products through 2012 and other types of renewable energy projects, including geothermal, biomass, and hydropower, until 2013. For entities that cannot use PTCs, such as state and local governments, public power, and cooperatives, the Stimulus Bill provides $4 billion in bonds for clean renewable energy and energy conservation projects.

Some renewable energy funding was cut from the versions passed by the House and the Senate. The final version of the new loan guarantee program provides $6 billion for loans; $2 billion less than the House’s version and $3.5 billion less than the Senate’s version. Additionally, the $50 billion loan program in the Senate’s version that was to be added to Department of Energy’s loan guarantee program for nuclear power plants, advanced coal plants, and other technologies with little or no greenhouse gas emissions, was removed completely. Instead, the nuclear industry receives a 30% investment tax credit for clean energy technologies to be awarded by the Treasury Department.

Also included in the Stimulus Bill is a “decoupling” provision that is softer than that passed by either the House or the Senate. The bill now permits grants to be awarded to states where the Governor has notified federal authorities that the state regulatory commission will adopt a general policy aligning financial incentives with helping customers to use energy more efficiently. This may comfort critics of the original decoupling provision who claimed that previous versions provided too much rate-making input from governors, would not necessarily lead to improved efficiency, and included ambiguous language that would cause confusion and delays.

Several other provisions are designed to promote energy efficiency, including $6.5 billion in conservation grants, $5 billion for states to help weatherize eligible homes, $4.5 billion to upgrade energy efficiency in federal buildings, and $1 billion to improve energy efficiency for alternative fuel trucks and buses, transportation-charging infrastructure, and energy efficient appliances.

As of press time, the House had approved the Stimulus Bill and the Senate was expected to pass the Stimulus Bill by either Friday evening or Saturday morning. If passed by Saturday, Congress will have met the President’s deadline to have a stimulus bill on his desk before President’s Day. The President is expected to sign the bill early next week.