OK. I’m still trying to report this out. What I have for now comes from environmental advocates, off-the-record conversations, and, for what it’s worth, my own speculation. The situation is very fluid, and can change at any time (as in, by the time you read this). Near as I can tell, though, this is how things look going into tonight:

I’ve learned from concerned advocates that Democratic congressional leadership is considering stripping the production tax credits for wind and solar, along with the federal renewable portfolio standard, from the conference bill. Losing the RPS and the PTC would mean jettisoning basically every measure that the White House has complained about. Apparently, Reid and Pelosi may have decided that a bill with a Renewable Fuel Standard (i.e., monstrous subsidies for ethanol) and a boost in CAFE standards is enough to secure Democratic bragging rights on energy.

If this happens, it will mean there’s bupkis in the energy bill for renewable electricity, imperiling probably billions of dollars in solar and wind contracts that have been written with the expectation that the production tax credits will lower costs to investors and consumers.

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Also, as David mentioned earlier this evening, behind closed doors Sen. Pete Domenici (R-N.M.) is attempting to knife the energy bill by introducing an even more horrible RFS amendment to the farm bill, thereby rendering the energy bill’s much improved RFS obsolete and losing crucial support from midwestern Republicans. Reid, apparently, is threatening to block that change using a tactic called filling the amendment tree.

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The details can get ugly, but basically it means that he will use his prerogative as leader of the Senate to fill all available amendment openings with amendments restating the existing language of the bill. After that, it can’t be changed, but it can still be filibustered. Even if Republicans filibuster, though, the farm bill has more than enough support to get to the 60 votes needed for cloture. So Reid can prevent this change if he’s willing to play hardball.

Taking all of this together — and considering Pelosi’s vocal support for renewables — it seems very much like Reid is desperately trying to pass something. Renewable energy polls through the roof, but the obvious risk is that if he doesn’t knife renewables he might run into a veto. There are rumors — very much unconfirmed — that Reid wants to move forward on a divided energy bill next week, with RFS and CAFE in one and RES and PTC in the other. But that would strip away a lot of his leverage on renewables, and frankly, this is a fight he should be willing to have.