Senators Jerry Moran (R. KS), Lisa Murkowski (R. AK) and Debbie Stabenow (D. MI) are also co-sponsors. Coons explains on his website how an MLP works:Senator Chris Coons plans to unveil a bill later this week that would allow US wind farms, solar energy facilities and other renewable energy projects to form tax-advantageous publicly-traded business structures.
Coons, a Delaware Democrat, plans to introduce the Master Limited Partnerships Parity Act on Wednesday, according to Ian Koski, a Coons spokesman.
The bill would allow renewable energy structures to form as MLPs, which are taxed as a partnership, but have ownership interests -- usually known as units -- that are traded like corporate stock on a market.Forming a renewable project under such a structure would stop profits from being taxed at both the corporate and shareholder level since it would be treated as a partnership for tax purposes.
Oil and gas projects can currently be structured as MLPs, which they have been doing since the 1980s, but renewables projects cannot.
Coons introduced a similar bill in 2012, but it languished in committee.The bill to be introduced Wednesday would allow more renewable energy projects to be structured as MLPs, according to Koski. In addition to solar and wind projects, waste-heat to power, carbon capture and storage, biochemicals, and energy-efficient building projects could be structured as MLPs under the bill, according to Koski. - Platts, 4/22/13
An MLP is a business structure that is taxed as a partnership, but whose ownership interests are traded like corporate stock on a market. Whereas profit from publicly traded C corporations is taxed at both the corporate level and the shareholder level, income from MLPs is taxed only at the shareholder level because it is treated as a partnership for tax purposes.What makes this bill different from the last bill Coons and Moran introduced last time? Coons spokesman, Ian Koski, explains:
An MLP consists of limited partners (investors) and general partners (managers). The limited partners — who can number in the thousands — provide capital and receive quarterly required distributions generally equivalent to shareholder dividends in a C-corporation. They play no role in the operation of the MLP, while the general partners manage the MLP's daily operations. General partners can take the form of another company or a group of individuals, typically holding a 2 percent ownership stake.Writing in the New York Times on June 2, Dan Reicher and Felix Mormann of Stanford University's Steyer-Taylor Center for Energy Policy and Finance described the appeal of MLPs: "Master limited partnerships carry the fund-raising advantages of a corporation: ownership interests are publicly traded and offer investors the liquidity, limited liability and dividends of classic corporations. Their market capitalization exceeds $350 billion. With average dividends of just 6 percent, these investment vehicles could substantially reduce the cost of financing renewables."
Because MLPs are so attractive to investors, they have been proven to bring new capital into American energy projects. This is especially important in the case of renewable-energy generation, where it is harder for investors to see as quick a return as compared to fossil fuel-based energy generation, for which much of the processing and transportation infrastructure was built decades ago. Constructing the same level of critical infrastructure for renewable energy sources will take time and investment, so the MLP Parity Act levels the playing field and helps address that problem.
An MLP must generate at least 90 percent of its income from qualified sources, such as real estate or natural resources, including crude oil, natural gas, petroleum products, coal, timber, and other minerals. Section 613 of the federal tax code specifically requires qualifying energy sources to be "depletable" resources – meaning we are working against our own goal of an "all of the above" energy strategy that includes additional homegrown renewable energy sources.
The Master Limited Partnerships Parity Act has been endorsed by NRG Energy, Third Way, Solar Energy Industries Association, Biomass Power Association, Advanced Biofuels Association, Natural Resources Defense Council, Covanta Energy, Offshore Wind Development Coalition, Advanced Ethanol Council, Environmental Entrepreneurs, American Council On Renewable Energy, American Wind Energy Association and DuPont. If you'd like to read more about the bill, you can do so here:Koski said the bill is more mature than the one Coons and Moran sponsored last session, adding that he thinks it has a better chance of becoming law.
With Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, on board, and the concept attracting attention from the White House, the bill has a bit of momentum.
The prospect of overhauling the tax code might also bring oil-patch lawmakers behind the bill, the legislation’s proponents have said.
Senators at a bill introduction for last year’s effort said they wanted to convince lawmakers from such states to offer master limited partnerships to renewable energy projects as a concession to keep the mechanism in the tax code. - The Hill, 4/22/13
And if you have questions about the legislation, you can contact Coons office here: