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Analysis of Five Selected Tax Provisions of the Conference Energy Bill of 2003
 

Preface

On January 29, 2004, Senator John Sununu requested that the Energy Information Administration (EIA) provide an assessment of certain tax provisions of the Conference Energy Bill (CEB) of 2003 (also known as the Energy Policy Act of 2003). He requested that five specific tax provisions be assessed regarding incremental energy production, changes in petroleum imports, and tax revenue losses. The five provisions are as follows:

  • Section 45 Credit for Electricity Produced from Certain Sources
  • Credit for Electricity Produced from Advanced Nuclear Power Facilities
  • Amortization of Geological and Geophysical Expenditures Over 2 Years
  • Extension and Modification of Section 29 for Producing Fuel from Nonconventional Sources
  • Enhanced Oil Recovery Tax Credits

This report responds to that request. Some of the tax provisions can be analyzed using the National Energy Modeling System (NEMS). In those cases, the impacts of the provisions are estimated by comparing the results of those provisions to the Reference Case of the Annual Energy Outlook 2004 (AEO2004). Where the provisions are not amenable to modeling using NEMS, a qualitative analysis is provided.

The legislation that established EIA in 1977 vested the organization with an element of statutory independence. EIA does not take positions on policy questions. It is the responsibility of EIA to provide timely, high-quality information and to perform objective, credible analyses in support of the deliberations of both public and private decisionmakers. This report should not be construed as representing the official position of the U.S. Department of Energy or the Administration.

The projections in the Reference Case used in this report are not statements of what will happen but of what might happen, given the assumptions and methodologies used. The Reference Case projections are business-as-usual trend forecasts, given known technology, technological and demographic trends, and current laws and regulations. Thus, they provide a policy-neutral starting point that can be used to analyze policy initiatives. EIA does not propose, advocate, or speculate on future legislative and regulatory changes. All laws are assumed to remain as currently enacted; however, the impacts of scheduled regulatory changes, when defined, are reflected.