Washington, 2 August (Argus) — Senate tax code writers today voted to modify and extend a key incentive for wind energy as part of a broader package of tax credit extensions.
The Senate Finance Committee by a 19-5 vote approved legislation to extend about 50 tax incentives, including about a dozen for alternative energy, and send the package to the full Senate.
Committee chairman Max Baucus (D-Montana) added an extension of the production tax credit (PTC) for wind to the legislation prior to the vote, after several committee members protested its exclusion from the original bill.
Baucus said the overall legislation would provide certainty to business looking to “hire, invest and grow”
“These tax cuts will reassure families, help spur job growth and boost the economy,” he said.
The bill extends the wind credit through next year and modifies its eligibility criteria for the broader renewable energy PTC. Facilities would qualify for the credit if they begin construction before the end of 2013. The PTC currently requires facilities to be in service before the credit expires. The wind credit, which pays developers 2.2¢/kWh of electricity produced over 10 years, is set to expire at the end of 2012. A similar credit for several other renewable energy sources, including solar, biomass and geothermal, expires at the end of 2013.
The Senate proposal is projected to cost $12.1bn over the next decade.
Baucus also added a provision allowing renewable generation eligible for the PTC to opt for a 30pc investment tax credit instead for facilities that begin construction by the end of 2013, at a cost of $135mn.
The legislation also includes several other energy-related tax credits, mostly for biofuels and energy-efficient homes and appliances.
Baucus' decision to include the PTC in the final bill was welcome by Democrats and Republicans on the committee who were not pleased that it was left out of the original bill he and senator Orrin Hatch (R-Utah) announced on 31 July. Several had planned to offer amendments to extend the credit but dropped them once Baucus revised his legislation.
The main industry group also praised the committee's action. “This was an extremely important step to provide critical certainty to keep people at work in wind energy manufacturing and construction,” American Wind Energy Association chief executive Denise Bode said.
But if the extension is enacted by Congress, the future of the PTC may be limited. During today's debate, committee members suggested the credit could be up for elimination next year as part of a broader effort to overhaul the tax code. One of the amendments approved by the committee, authored by senator John Thune (R-South Dakota), calls for phasing out the wind credit and other alternative energy incentives “in a manner that allows these technologies to function without a reliance on federal subsidies.”
The bill is not likely to pass before the fall elections. Congress will be in recess for a month starting next week, and only a few legislative days are on the calendar before lawmakers leave town to tend to the fall campaign.
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