Renewable Energy Legislation Hangs in the U

Renewable Energy Legislation Hangs in the U.S. House

The Combine Hills wind farm in Oregon

Image: Pacificorp

"...the corporate tax bill is the best - and only - shot at gaining energy tax credits this year."

Washington, D.C. - June 2, 2004 [SolarAccess.com] More than two weeks after Senate passage of a corporate tax bill containing a wind energy production tax credit (PTC) extension (through 12/31/06), House leaders have yet to decide on a path for passing their own version of a corporate tax bill. This week House and Senate members return from their Memorial Day break and will again tackle pending legislation.

"There is a widespread understanding on Capitol Hill that corporate tax legislation is a 'must-pass' bill," said AWEA legislative director Jaime Steve. "At the same time, there is a delay caused by discussions between the House leadership and those attempting to advance the House corporate tax bill over how to secure enough votes to get the bill passed."

Still unclear is whether a package of energy tax items - similar to that passed by the Senate - would be included in the House corporate tax bill. That bill already carries a price tag that is too high in the eyes of some Republicans and most Democrats. Adding the entire Senate-passed energy tax package would tack on an additional $18 billion (over 10 years) to the corporate tax bill. The extended and expanded PTC is estimated to account for $4.4 billion of the $18 billion figure, according to information released by economists working for the Congressional Joint Committee on Taxation.

Final action still requires House passage of a similar bill, a conference committee to hammer out differences between House and Senate versions of the bill, and one last vote in the House and Senate to approve the compromise bill before final legislation would be ready for the President to sign into law.

Key Senators and congressional staff have told AWEA and other energy lobbyists in Washington, D.C. that the corporate tax bill is the best - and only - shot at gaining energy tax credits this year, according to Steve.

The corporate tax bill - to which the PTC is attached - would repeal a tax break for exporters that has been deemed an illegal trade subsidy by the World Trade Organization (WTO). The European Union has imposed a tariff on some U.S. exports now at 7% and slated to increase by 1 percentage point a month, up to a maximum of 17%. This penalty is the key item pressuring Congress to pass the corporate tax bill this year.

The PTC language as contained in the energy tax section of the Senate Corporate Tax bill (S. 1637) would:

-- Extend the PTC through December 31, 2006 (a 3-year extension);
-- Eliminate the PTC inflation adjustment provision starting January 1, 2005;
-- Create an exemption from the requirements of the Alternative Minimum Tax (AMT) for the first four years of turbine operation;
-- Expand the PTC to include solar, geothermal, small irrigation hydro power, municipal solid waste, and additional forms of biomass; and
-- Allow a tradable credit for the following tax-exempt entities only: rural electric cooperatives, state agencies and municipalities, Indian Tribal governments, and the Tennessee Valley Authority (TVA).

The new small turbine investment tax credit proposed in S. 1637 would:

-- Provide a 30% tax credit on the purchase of a small wind system;
-- Cap (or limit) the amount of the credit to $2,000 per system; and
-- Apply to systems rated at 75 kilowatts and below.

With Congress back in session on this crucial legislation, readers are encouraged by AWEA to visit their Legislative Action Web site at http://www.windenergyaction.com to send a pre-written fax letter or your own letter to your Representative.

Information courtesy of AWEA's Wind Power Weekly

For Further Information:

• AWEA

• AWEA's Legislative Action Web Site

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