Energy bill offers propane incentives

September 1, 2005 By    

What’s left to say about the energy bill? Plenty. What took the U.S. Congress more than 10 years to craft and three sessions to pass overcame partisan wrangling and warfare to finally reach the president’s desk for his signature.

 Lisa Bontempo
Lisa Bontempo

What was different about this session of Congress that made passage possible? Past hurdles that prompted the Senate to filibuster the bill, such as a controversial provision protecting the manufacturers of the gasoline additive MTBE from liability, were removed.

The divisive partisan battle over opening up the Arctic National Wildlife Refuge to oil exploration and drilling was another major stumbling block. The initiative was removed from the bill and punted to a budget bill expected this fall.

Perhaps the most significant reason the energy bill passed this year is that both Democrats and Republicans crafted the bill. In years past, the Democrats said they were shut out of the process.

Where does this leave the propane industry? A step or two ahead, I’d say. The bill includes a $14.5 billion package of energy tax incentives over the next 10 years that include much anticipated CLEAR Act provisions for alternative motor vehicles and refueling infrastructure.

This means that purchasers of new propane powered vehicles (dedicated) may take a credit of 50 percent of the incremental cost of the vehicle, not to exceed $32,000, depending on gross vehicle weight. The new law also permits the taxpayer to claim a 30 percent credit for the cost of installing clean-fuel vehicle refueling property to be used in a trade or business of the taxpayer. In the case of retail clean-fuel vehicle refueling property, the allowable credit may not exceed $30,000. The refueling property must be placed into service before Dec. 31, 2007.

Provisions for improving the energy efficiency of homes and commercial buildings are also included. These tax incentives are geared for the consumer in the form of mostly tax credits (not deductions) and are for items placed in service after Jan. 1, 2006 through 2007.

One of the key provisions allows tax payers to take a 10 percent credit to improve a building’s “envelop” using efficient insulation, roofs, windows, doors, etc. Also included is a list of items, including certain natural gas, propane or oil furnaces or hot water boilers for credits up to $150.

However, there is a $500 maximum consumer credit for all these improvements, which must be made to a primary residence.

Incentives for builders and businesses include a builder tax credit for new energy efficient homes of $2,000 for homes that achieve a 50 percent energy saving over certain industry standards and get one-fifth of their energy efficiency saving from the envelope. For manufactured homes, there is a $1,000 credit if the home gets one-third of its energy savings from the envelope. These provisions are for property placed in service after Dec. 31, 2005 and before Jan. 1, 2008.

The new law also authorizes the LIHEAP funding level from its current $2 billion level to $5.1 billion for fiscal years 2005 to 2007. However, Congress must appropriate the funds first for this federal program that assists low-income consumers with their heating bills and energy needs.

Throughout the energy debate, the propane industry stayed focused, worked hard and passed many of its initiatives. Still, while the bill is signed into law there is tweaking yet to be done in the development of implementing regulations.

All of you who worked to educate members of Congress through your calls, letters and visits are to be commended. No matter what you think of policy-making and policy makers, the reality is that time and persistence are crucial in any fight.

It takes time to explain, cajole, plead and otherwise educate the public and policymakers about the benefits and realities of propane. It can be a full time job in itself. Remember, if you don’t make the time to “work” the issues you can be sure your opposition will.

Lisa Bontempo was a longtime energy lobbyist, including 13 years with the NPGA. She continues to be involved in politics, and can be reached at

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