We are hearing that the energy bill, while close to agreement, still has a few hurdles to cross.

The biggest outstanding issue is what to do with the auto fuel efficiency numbers passed by the Senate, but not included in the House legislation. It seems that negotiators have split the proverbial baby. Rather than take a lower overall number (which had substantial backing in the House), the negotiations have centered on an overall number of 35 miles per gallon, originally proposed by the Senate. The automakers did win a huge concession with an agreement to keep cars and light trucks separate. Also, automakers will be granted credits for flex fuel vehicles; vehicles that get less miles per gallon than conventional autos.

Secondly, it appears likely that there will be no provision for federal-level “renewable portfolio standards” (RPS). Passed by the House, the RPS would have meant difficulties for utilities, especially in southern states where available wind and hydro power is scarce.

Finally, it looks like the chances of including small tax package have increased since initial reports to the contrary. Of course, with pay-as-you-go rules in effect, the Democratic majority might have to be creative to have the tax benefits included in a final package. Still no clarity on what, if anything, will be included, but there is still hope for a Production Tax Credit for 2008.

For further information about this topic, please contact Akin Gump.