Push is on to Restore Clean-Power Credit

Nov 16 - Deseret News (Salt Lake City)

The push is under way to restore a state tax credit for producers of alternative energy, a credit that could make or break a proposed wind farm at the mouth of Spanish Fork Canyon.

The 2007 Legislature is still more than two months away, but proponents of restoring the tax credit are trying to get a head start so it doesn't meet the same fate it did this year, when it was pushed aside in the final hours of a furiously busy session.

In recent years, the alternative energy tax credit has been a mainstay in Utah's tax code. The tax credit has been in place since 1981. It was last authorized in 2001, for a five-year period to end at the end of this year.

A bill to re-authorize it through 2011 was proposed in the last session, was passed by the House and favorably recommended by a Senate committee, but it did not make it to the Senate floor for a vote.

Sen. Howard Stephenson, R-Draper, is working on a bill for the upcoming session to re-authorize the credit.

"This is a very high priority for me, because I believe we need to be focusing on clean energy generation," Stephenson said.

Stephenson's bill likely would alter the way the credit is applied, however. In the past, the tax credit was a one-time benefit available at the construction of a new system for alternative energy production. The amount available depended on the system's capacity.

Though he is still hammering out the details, Stephenson said his bill would change the credit so that it is based on the amount of energy that the system actually produces, and the credit would be distributed over the first four years of the project's life.

"The real benefit to our economy and to our society is when power is actually generated. ... It's clear to me that our past credit was rewarding the wrong thing," Stephenson said. "It was rewarding capital expenditure rather than energy created. I want to change the paradigm."

Stephenson's proposal is based on the model for the federal tax credit, which gives alternative energy producers a credit of 1.9 cents per kilowatt hour of power produced. Stephenson's bill would extend a credit of 0.35 cents per kilowatt hour of power produced. The bill was passed Wednesday by the Legislature's Revenue and Taxation Interim Committee.

Representatives from Wasatch Wind, which hopes to begin construction on a $30 million wind park in Spanish Fork in 2007, are depending on the credit's reauthorization in order to move forward with their project and favor the proposed new version of the credit.

"We're glad (the last reauthorization) didn't get passed, because the way that law was written, we wouldn't have been able to take advantage of it," said Christine Watson-Mikell, an engineer for Wasatch Wind. "We were discouraged at first when it didn't pass, but when we went back and read it carefully, we realized it wouldn't have applied to us. But this one will help us."

A separate bill, by Rep. Sheryl Allen, R-Bountiful, would keep in place the existing renewable energy tax credit, allowing business entities to claim 10 percent of the costs of a renewable system, up to a maximum of $50,000. On Wednesday, Allen's bill was passed by the Public Utilities and Technology Interim Committee.

"(Allen's) bill wouldn't benefit any wind developer as it stands," Watson-Mikell said. "Wasatch Wind is in favor of the Senate bill."

But Rep. Michael Noel, R-Kanab, questioned the wind subsidy.

"This is an expensive cost for this power," Noel said. "Why should we tell our consumers that they should buy this power except for the fact that it is clean?"

Kevin Boardman, manager of government affairs for Rocky Mountain Power, said the Salt Lake-based utility was supportive of the renewable energy tax credit last year and continues to support it.

At present, more than 18,000 individuals and businesses in Utah voluntarily pay an additional $1.95 for every 100 kilowatt hours of power. The money is used to purchase additional wind energy and support renewable energy development, according to Jeff Hymas, a spokesman for the utility.

Fears that the credit would not be restored led some investors in the Wasatch Wind project to withdraw, but Watson-Mikell said the company is working on an agreement with a new investor and hopes to have a deal in place by the end of the week.

Wasatch Wind already has signed a purchasing agreement with Rocky Mountain Power, which will buy all the power the 18.9-megawatt project produces over the first 20 years.

E-mail: jtwitchell@desnews.com; danderton@desnews.com