Legislative Glitch Delays Iowa Wind Energy Incentive

This is just not the year for renewable energy production tax credits. SolarAccess.com reported last week that Iowa Governor Tom Vilsack (D) had signed into law a provision that was projected to double previous estimates of new wind power capacity to be installed in Iowa over the next three years, but now, according to the American Wind Energy Association (AWEA), a minor technical glitch is expected to delay the development schedule by at least one year.

Des Moines, Iowa – June 3, 2004 [SolarAccess.com] This is just not the year for renewable energy production tax credits. SolarAccess.com reported last week that Iowa Governor Tom Vilsack (D) had signed into law a provision that was projected to double previous estimates of new wind power capacity to be installed in Iowa over the next three years, but now, according to the American Wind Energy Association (AWEA), a minor technical glitch is expected to delay the development schedule by at least one year. The law establishes a tradable Iowa state production tax credit of US 1 cent/kWh of electricity produced for the first 10 years by an Iowa-based wind project installed between July 1 of this year and June 30, 2007, and if the state’s projections were to come to fruition, there would be nearly 1,400 MW of wind capacity installed in the state by 2007. The credits earned by the wind projects can be transferred once to a third party. However, any project of 1 MW or more will have to forego the state’s current exemption from the state sales tax and reduced wind energy property tax payments if it accepts the tax credit. Furthermore, the local county, though it would receive nearly the full property tax payment from wind projects receiving the credit, would be required to immediately remit that payment back to the state to help offset the cost of the tax credit for the first 12 years of operation. The counties opposed the law because of this provision. However, the intended value of the tax credit was effectively negated by an oversight in the final law. Drafters intended to cap the credit at the first 2.8 million kWh produced per year for each megawatt of installed capacity (a 32% capacity factor). However, the law as adopted fails to multiply by the numbers of hours in a year, mistakenly limiting the eligible production to only the first 320 kWh, or a tax credit of $3.20, per year for each megawatt of installed capacity. Gov. Vilsack acknowledged the error when he signed the bill, but rather than negate the work of the legislature by deleting the offending portion of the tax-related bill, he made a commitment to establish a study committee to address this and other state energy policy issues this summer and to proposed corrective legislative action for consideration in 2005. The bill was championed by wind advocates Tom Wind and Ed Woolsey, among others. Wind said he expects the Governor to appoint either himself or Woolsey to the Committee, where he believes it may be possible to gain even more favorable treatment for Iowa projects. Courtesy of AWEA’s Wind Energy Weekly
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