Wind Energy Tax Credit Bills Clear Committees
(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.
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.
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