A Senate Democratic leadership aide has indicated that the upper chamber's top energy priority for the post-election period is passing a bill to retroactively reinstate and extend a series of lapsed federal incentives, among them the wind energy industry's crucial production tax credit.

While that is good news for the wind turbine manufacturers and installers, questions loom about how other legislative priorities and the outcome of the Nov. 4 elections will affect the final push by Senate Majority Leader Harry Reid, D-Nev., to enact tax extenders, as packages renewing the nearly 60 temporary incentives are called, before a slate of newly elected — and potentially more conservative — lawmakers come to the Capitol in 2015.

"The major energy related piece will probably be the tax extenders bill," the aide, who requested anonymity to discuss Senate Democrats' energy strategy, said in an email. "There's an emphasis on trying to get that done before the end of the year."

A spokesman for Senate Minority Leader Mitch McConnell did not respond to a request for comment about the GOP's plans for the final two months of the 113th Congress following the election, a period known as the lame duck. But the Kentucky Republican expressed support for renewing the lapsed incentives as recently as Sept. 16.

"Hopefully we can agree to do some things together that need addressing," McConnell told reporters, according to Politico. "The extender package I think is one of them. And we'll talk about how to put that together once we've got the election behind us and while we're talking about what to do for the balance of the year."

McConnell's comments, however, suggest that he is still not ready to support the already-assembled Expiring Provisions Improvement Reform and Efficiency Act of 2014, or S. 2260. The EXPIRE bill — as sponsor Sen. Ron Wyden, D-Ore., refers to it — cleared the Finance Committee that he leads on April 3 and was brought to the Senate floor on May 15. But Reid pulled the $85.3 billion package from consideration after the legislation was unable to overcome a Republican filibuster McConnell spearheaded over a procedural dispute.

Corporate inversions would complicate tax extenders push

"I think that's what Reid plans to use as a vehicle again in late November," said Keith Martin, a leading tax attorney and partner at the law firm Chadbourne & Parke, referring to Wyden's bill. But, he added, "The effort will go nowhere if Senate Democrats try to attach extenders to a bill to block corporate inversions."

Democrats in both houses of Congress have introduced legislation to block corporate inversions, which are an increasingly popular strategy pursued by U.S. companies to reduce their tax burdens by reincorporating abroad. Since January 2013, 19 corporations have announced inversion plans, and 14 of them have already done so this year alone, The Wall Street Journal reported July 14.

The odds of Republicans opposing tax extenders due to the corporate inversion debate seems "to be receding now that the [U.S. Department of the] Treasury is tackling them through regulations," Martin noted. Treasury Secretary Jack Lew announced a series of steps Sept. 22 that the department will take with the IRS intended to make it more difficult for companies to invert and to reduce the tax benefits for doing so.

"But if [inversions] get thrown into the mix, then it's hard to see how" any tax extenders package can pass before 2015, Martin added. "I don't think the Republicans will tolerate addressing inversions outside of corporate tax reform," he explained.

Wyden has pitched his EXPIRE bill as a final extension of the temporary tax incentives before they are all reconsidered in a comprehensive overhaul of the tax code. The legislation's grab bag of incentives currently includes energy provisions such as the PTC, a two-year extension of which is expected to cost more than $13.3 billion over 10 years, as well as similar extensions of subsidies for residential energy efficiency improvements and coal production on Indian reservations that would cost over $1.6 billion and $76 million, respectively, over the same period.

If GOP wins Senate, extenders decision could be delayed

Another complicating factor for advocates of a 2.3-cents-per-kWh PTC and other lapsed incentives is that Republican senators may prefer to incorporate elements of the Jobs for America Act, or H.R. 4, into a new extenders package. That legislation includes a $156 billion provision, which the Obama administration opposes, to make the research and development tax credit permanent without any spending offsets or revenue increases. H.R. 4 was one of the energy-focused bills the House passed in spite of a veto threat shortly before lawmakers returned home to campaign for re-election.

The EXPIRE Act and PTC could be more at risk if Republicans can pick up the six seats they need to win control of the Senate, according to Martin. "Then Senate Democrats will have little bargaining power," he said. In such a scenario, House and Senate GOP leaders "could refuse to deal at all and push the entire debate into early 2015, when Republicans will be in control of both houses."

Postponing votes on tax extenders until then would be effectively ignoring an Oct. 8 letter from IRS Commissioner John Koskinen that urged lawmakers to decide on them "no later than the end of November." Punting on the issue "could force the IRS to postpone the opening of the 2015 filing season and delay the processing of tax refunds for millions of taxpayers," he warned.

It would not, however, be the first time U.S. lawmakers had disregarded IRS advice. Prolonging the debate would "certainly complicate things further," Martin said. "But Congress has done that in the past, where they've waited until early the next year to make decisions."

The top wind industry trade group is more worried about the current delay than the likelihood that the GOP will take over the Senate, according to Rob Gramlich, the American Wind Energy Association's senior vice president for public policy. "Our major concern is all of the uncertainty — that always been the issue for wind and PTC," he said.

PTC delay 'a big problem' for wind industry

Questions about the status of the PTC seem to be holding back the wind industry. AWEA announced Oct. 20 that about 13,600 MW of wind is under construction, much of it in Texas, but work on all of those projects began before the end of 2013, thus making them eligible under the last extension of the PTC. Any future projects would need a new extension of the PTC to qualify.

"There's not really any new activity beyond what's already been started for qualification for the tax credit that is expired at the end of 2013," Gramlich said. "There's a lot of activity now, but there's no new activity or deals, so things are drying up on the front end and will dry up throughout the industry over time without an extension."

As a result, delaying discussion of the PTC past the lame duck "would be a big problem" for AWEA and other groups that rely on the extenders package, he said. And lawmakers are no more likely to tackle the thorny issue of tax extenders in January — regardless of which party controls the Senate, Gramlich suggested: "Everyone knows it's very rare and difficult to actually pass something at the beginning of a Congress."

In the end, though, tax experts still think the extenders package and PTC will be renewed. "It will come down to a negotiation between the Senate and the House, and the election in November will determine how strong of a hand the Senate Democrats have," said Martin, who does work for many wind industry clients. "Overall, I'm optimistic."

Government funding bill on the docket, not much else

One other item certain to be on the congressional agenda in the coming months is how to keep the government funded. "We'll also need to work on a continuing appropriations bill," the Senate Democratic aide said. A spending bill passed by lawmakers shortly before they headed home to hit the campaign trail only funds the government through Dec. 11.

But besides that, the aide added, there is "probably not enough time for other pieces" of energy legislation. That means efforts such as the popular energy efficiency legislation promoted by Sens. Jeanne Shaheen, D-N.H., and Rob Portman, R-Ohio, or the Senate's bipartisan nuclear waste storage bill will have to be reintroduced in the 114th Congress and start the committee markup process all over again.