Sheet Metal & Air Conditioning Contractors’ National Association

Capitol Hill Update: SMACNA Endorses and Urges Action on Master Limited Partnership Parity Act

The recently introduced Master Limited Partnership Parity Act (H.R. 4118), would greatly expand financing options for energy-saving performance contracts (ESPCs), building retrofits, industrial market efficiency projects, and combined heat and power/waste heat to power (CHP/WHP) systems.

Master Limited Partnership Parity ActThis balanced legislation would level the playing field for energy-efficient facility rehabilitation and renewable and clean-energy technology while encouraging investment in ESPCs and needed energy infrastructure projects.

This bipartisan Master Limited Partnership Parity Act (MLP) reform will expand the definition of “qualified” sources for MLP investments to include ESPCs, clean energy resources, and a variety of infrastructure projects . Specifically included are energy technologies that qualify under Sections 45 and 48 of the tax code, including wind, closed and open loop biomass, geothermal, solar, municipal solid waste facilities, hydropower, fuel cells, and CHP/WHP, to name a few.

The legislation also allows for a range of substantial building efficiency investments to qualify including energy-efficient upgrades for buildings, electricity storage, carbon capture and storage, industrial retrofits, and ESPCs. The bipartisan legislation was introduced by Reps. Ted Poe (R-2nd-Texas) and Mike Thompson (D-5th-Calif.) with key bipartisan co-sponsors. An identical bill, S. 2005, was also introduced in the Senate by Sens. Chris Coons (D-Del.) and Jerry Moran (R-Kan.) with more than a dozen bipartisan co-sponsors. 

There are approximately 140 MLPs currently being traded on major exchanges, primarily focused on energy-related industries and natural resources. Of the estimated $565 billion in MLP capital currently in the market, about $467 billion (more than 80 percent) has gone into qualifying energy and natural resources. Of that, 85 percent has been restricted to midstream oil and gas pipeline projects. 

If enacted, the MLP Parity Act will balance the federal tax code to specifically allow MLP qualifying energy sources to include a long list of renewable energy sources and currently allowed investments. While the legislation narrowly failed to make the tax extender package passed earlier this year, it is one of the tax options favored to make it onto upcoming tax legislation expected by the end of the year. 

Members can show their support for this legislation by contacting their members of Congress through SMACNA’s Take Action web page.