The Energy Tax Incentives Act of 2005 contains a wide array of tax incentives for the oil, gas, coal, and nuclear industries. Aimed at increasing energy production, the incentives generally consist of cost recovery changes and tax credits. Here's a summary of the Act's incentives for energy production:

• 15-year writeoff for natural gas distribution lines (instead of current law's 20 year writeoff), generally effective for lines the original use of which commences with the taxpayer after Apr. 11, 2005 and before Jan. 1, 2011. There's also a 15-year writeoff (instead of current law's 20-year writeoff) for certain assets used in the transmission of electricity for sale and related land improvements, generally effective for property placed in service after Apr. 11, 2005.
• Two-year writeoff of geological and geophysical expenses paid or incurred in tax years beginning after the enactment date.
• Expensing of 50% of the cost of certain capacity-increasing refinery investments, generally effective for property placed in service after the enactment date and before 2012. The original use of the property must begin with the taxpayer.
• For purposes of the small refiner exception to the oil depletion deduction, the current 50,000-barrel-per-day limit for independent producers is increased to 75,000 barrels a day, and is based on average daily production for the tax year (instead of actual daily production). These changes are effective for tax years ending after the enactment date.
• Seven-year recovery period for natural gas gathering lines, generally effective for lines the original use of which commences with the taxpayer after Apr. 11, 2005.
• A new production tax credit for qualifying advanced nuclear power facilities (certain facilities that produce electricity), effective for production in tax years beginning after the enactment date.
• Elective five-year carryback of net operating losses for certain electric companies of up to 20% of the cost of electric transmission capital and pollution control expenses. This applies to NOLs arising in 2003, 2004, and 2005; the election may be made during any tax year ending after Dec. 31, 2005, and before Jan. 1, 2009.
• Two-year extension (through Dec. 31, 2007) of the placed-in-service date for wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation power, landfill gas, and trash combustion facilities that produce electricity for which the renewable electricity production credit under Code Sec. 45 may be taken. The Act does not extend the placed-in-service date for solar facilities (Dec. 31, 2005) or refined coal facilities (Dec. 31, 2008). The Act also adds two new qualifying energy resources: hydropower and Indian coal, and equalizes the credit period over which the credit may be taken at ten years for facilities placed in service after the date of enactment of the Act.
• New tax credits, effective for periods after the enactment date, for investments in clean coal facilities producing electricity (20% for industrial gasification or integrated gasification combined cycle, 15% for other advanced coal-based projects that produce electricity).
• 84-month amortization for the cost of power-plant air pollution controls, generally effective for air pollution control facilities placed in service after Apr. 11, 2005.
• Inclusion of the Code Sec. 29 tax credit for fuel produced from non-conventional sources in the "general business credit," resulting in 1-year carryback, 20-year carryforward for unused credits, for tax years ending after Dec. 31, 2005. Also the tax credit is extended to coke and coke gas from qualified facilities placed in service before Jan. 1, '93, or after June 30, '98, and before Jan. 1, 2010. The credit applies to production during a four-year period beginning on the later of Jan. 1, 2006, or the date the facility is placed in service.
• Expands the small ethanol producer credit to producers with annual production capacity of 60 million gallons (up from 30 million gallons under current law), effective for tax years ending after the enactment date; and adds to the biodiesel fuels credit a small agri-biodiesel producer credit, effective for tax years ending after the enactment date, with a sunset after 2008.
• Extends the tax incentives for biodiesel (e.g., income and excise tax credits) through Dec. 31, 2008, and effective for fuel sold or used after Dec. 31, 2005, allows producers of "renewable diesel" to claim similar income and excise tax credits at the $1.00 rate applicable to agri-biodiesel.