CITIZEN POWER ALLIANCE

WASHINGTON -(Dow Jones)- The U.S. Senate on Thursday voted to extend tax credits for wind-power and solar-energy projects, but the measure is unlikely to become law in its current form due to concern it would add to the nation's deficit.

By 88-8, the Senate added the renewable-energy tax credits to a major housing bill. Companies such as utility XCel Energy Inc. (XEL), the largest U.S. seller of wind-generated energy, have been calling on Congress to act quickly. The tax credits expire at the end of the year, but executives are making decisions now about whether to invest in renewable projects beyond this year.

The U.S. House of Representatives has hardened its opposition to this version of the tax-credit extensions, which are estimated to cost $6 billion over 10 years. House leaders have strong objections to deficit-financed tax breaks, and with few exceptions offset lost tax revenue with tax increases or spending cuts elsewhere.

"I doubt that the House will accept these extensions without some corresponding offsets," said Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, D-N.M., on the Senate floor. "This leaves the administration with a key role to play in developing a compromise that will be acceptable to both chambers."

The warning to the White House came amid negotiations with Bingaman and Senate Finance Committee Chairman Max Baucus, D-Mont., about a compromise measure that would offset the budget shortfall created by extending the renewable-energy tax credits. While the Senate Democrats have reportedly given ground by dropping plans to finance the renewable-energy tax breaks by taking away tax breaks from oil companies, the talks appear to have reached an impasse.

The White House "rebuffed our request to identify any acceptable offsets," Bingaman said. He called on the Bush administration "to work with Congress in good faith to find a way to pay for these incentives."

A Treasury Department spokeswoman referred calls to a Treasury tax aide, who declined to comment.

Details Of Senate Measure

Under the Senate measure, put forward by U.S. Sens. Maria Cantwell, D-Wash., and John Ensign, R-Nev., companies would be able to continue taking a tax credit equal to 30% of the cost of buying solar equipment through the end of 2016.

Companies would be able to take a tax credit for starting up through next year new projects that produce electricity from renewable sources such as solar and wind power.

A host of other tax credits would be extended, including those for producing energy-efficient dishwashers, washing machines and refrigerators, and for residential purchases of solar hot water heaters and solar panels used to generate electricity.

Solar energy company stocks and options surged last week on optimism that Baucus was working on a compromise bill. Stocks in companies including Evergreen Solar Inc. (ESLR), First Solar Inc. (FSLR), SunPower Corp. (SPWR), Energy Conversion Devices Inc. (ENER), and Suntech Power Holdings Co. (STP) all rose at least 7% on Friday.