Oct 19 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - Patty Henetz The Salt Lake Tribune

If the Legislature takes to heart the governor's energy policy plans released Wednesday, individual Utahns will no longer be able to deduct the cost of renewable energy systems.

Currently, individuals who build or retrofit their homes with solar, wind or other renewable energy systems can take 25 percent of the cost off the bottom line of their state tax returns, up to $2,000.

For businesses, the credit is equal to 10 percent of the system costs, up to $50,000.

But Laura Nelson, energy policy adviser to Gov. Jon Huntsman Jr., recommended in her first annual report since being named to her position that only the business credit be extended, citing Huntsman's advocacy of a "flatter" income tax as the reason.

"It's the greater interest of the state to move toward that flat tax," Nelson said after explaining her report to the Natural Resources, Agriculture and Environment interim committee.

At a separate meeting, lawmakers considered legislation to extend the individual credit through 2012 for developing wind, geothermal and solar energy.

A similar bill stalled during this year's general legislative session amid debate over eliminating most tax credits. Now, some lawmakers on the Revenue and Taxation Committee advocate also giving the energy credit to large commercial generation plants.

Alternative energy businesses that use the tax credit as a sales tool for home heating or power systems could perhaps receive other types of incentives, Nelson said.

Meanwhile, a flatter tax would leave more money for people to spend, she said.

But with households likely only to receive approximately $40 to $70 under Huntsman's tax proposal, the cost of solar retrofits on single-family homes could become further out of reach.

"If we're not offering individual tax credits, we're deterring business," said Sara Baldwin, spokeswoman for the nonprofit group Utah Clean Energy. "The industry's interest lies at the individual level."

Janelle Hyatt, co-owner of In Hot Water, an alternative energy business in Eden, was upset to hear the governor's office doesn't want to extend the individual credit, especially since the solar energy industry started with and continues to rely on homeowners.

The individual tax credit "is really a way to get solar [energy] into the hands of ordinary people," Hyatt said.

The state's energy portfolio so far is shy on renewables, and no quantifiable targets have been set.

However, Nelson said she has organized a new working group to look at energy from sources other than hydrocarbons.

Nelson's 25-page report, required under the state's Energy Policy Act passed last year, suggested lawmakers develop an alternative energy incentive program that would include development of large-scale commercial wind and solar photovoltaic projects.