Over the last few years, the MLPA has heard from time to time that other energy industries — solar, wind, electric transmission — were interested in amending section 7704(d), the qualifying income provisions, to allow them to use MLPs. Section 7704(d) currently includes in qualifying income only activities with respect to oil and natural gas and their products, coal, and other minerals. Renewable energy sources such as solar and wind are specifically excluded. The MLPA has generally taken a noncommittal stance towards such efforts.

In 2012, the effort to expand section 7704 to include additional energy sources became more serious. On June 7, Senator Chris Coons (D-DE), along with Senator Jerry Moran (R-KS) and five other cosponsors introduced “The MLP Parity Act,” S. 3275. The MLP Parity Act would amend section 7704(d)(1)(E) to include wind, closed and open loop biomass, geothermal, solar, municipal solid waste, hydropower, marine and hydrokinetic, fuel cells, and combined heat and power, and electricity generated using those energy sources. It would also bring in alternative transportation fuels such as cellulosic, biodiesel, and algae-based fuels (transportation and storage of biofuels has been included in section 7704 since 2008).

The legislation has been endorsed by a number of alternative energy groups, including the American Wind Energy Association, Third Way, Solar Industries Association, Biomass Power Association, Biotechnology Industry Association, Ocean Renewable Energy Association, American Council on Renewable Energy, Natural Resources Defense Council, Advanced Biofuels Association, Offshore Wind Development Coalition, Advanced Ethanol Council, and Environmental Entrepreneurs.

None of the bill’s cosponsors is a member of the Senate Finance Committee. Rep. Mike Thompson (D-CA), a member of the House Ways and Means Committee, has expressed an interest in introducing the bill in the House, but has not yet found a Republican cosponsor.

The MLPA has not taken a position on this legislation at this time, beyond noting that it is pleased that the value of MLPs as a means of financing energy infrastructure has been recognized.

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