Wind Energy Tax Credit Bills Clear Committees

The wind energy production tax credit (PTC), which many consider essential to continue wind power’s rapid growth in the United States, has moved a step closer to being extended beyond 2003.

Washington D.C. – April 11, 2003 [SolarAccess.com] Two versions of an energy tax bill that include a modified three-year extension of the PTC, through January 1, 2007 were passed by the U.S. Senate Finance Committee and House Ways and Means Committee. Senate Finance Committee chairman Charles Grassley (R-Iowa) and ranking Democrat Max Baucus (D-Montana), introduced Senate bill S.597 that was approved by a vote of 18 – 2. The House Ways and Means Committee approved its version of the energy tax bill (HR 1531) by a vote of 24-12. While each bill is accompanied by an assortment of energy legislation, it’s an extension of the PTC that many in the wind industry has their eyes on. The current PTC expires on December 31, 2003 and many developers are scrambling to get their blades spinning before the expiration in order to qualify for the current PTC tax credit of 1.5 cents/kWh. “Securing a multi-year extension is central to the wind industry’s agenda in 2003,” said Randy Swisher, executive director of the American Wind Energy Association (AWEA) when he addressed the industry’s 2002 progress in January. “Congress has allowed the PTC to expire twice before renewing it – in 1999 and 2001 – and each time the impact on our industry has been devastating,” Swisher said. Both bills call for a three-year extension of the PTC, but they differ slightly in their approach and contain other Renewable Energy provisions according to Tom Gray, AWEA’s deputy executive director. The Senate bill would do away with the annual inflation adjustment that is a part of the current PTC. Every project built after the bill’s enactment would receive 1.8 cents/kWh for the 10-year period of the credit. In a move that will reward more than just the wind energy industry, the Senate bill would extend the PTC to other Renewable Energy technologies such as solar, geothermal, some biomass and others. This bill won’t leave out small wind installations either as it includes a small turbine investment credit for both residential and business that would cover 30 percent of a small wind system’s cost, with a cap of US$2,000 per system. Public power systems and rural electric cooperatives that cannot qualify for the current PTC since they are tax-exempt, would be able to benefit from a Renewable Energy “tradable tax credit” as well. According to Gray, the House version does leave in place annual inflation adjustments for the PTC. It does not contain a small turbine investment credit or tradable tax credits for public power, but it does offer an exemption from the alternative minimum tax for tax credits generated under the law. The PTC last expired December 2001 but Congress later voted to extend it two more years to December 2003. The house approved the extension by a margin of 417-3 and the Senate by a vote of 85-9 expressing widespread bi-partisan support for this wind energy incentive. Gray believes the measure will garner the same support as in past years but getting it through Congress amidst everything else on its agenda may pose the greatest challenge. “There is pretty strong support but it’s not a big enough ticket item for congress to take it up as a specific issue,” Gray said. Both bills, however, are designed with this in mind, said Gray. Each one is expected to get folded into a broader energy debate but if that debate were to get bogged down they could each be pulled out and addressed separately. Gray said this is built upon lessons learned in 2001 when there was a breakdown in the congressional process and the PTC missed its extension since it was tied to other major energy legislation. “Both the last time and this time, there is plenty of support for passing this, it’s just a question of how that gets done,” said Gray. “I feel like it’s a good approach that gives us a chance. We’re part of this larger legislative game, so we’ll just have to watch it move forward. Jesse Broehl can be reached at jesse.broehl@solaraccess.com

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