Senate Finance passes renewable energy provisions

Renewable energy groups praised an Aug. 2 vote by the Senate Finance Committee to extend the production tax credit (PTC), which is due to expire later this year.

The committee voted to approve legislation addressing a range of expiring tax provisions, including the PTC, according to a news release from the Geothermal Energy Association (GEA).

The committee approved legislation that would extend the deadline for new wind projects by one year, to Dec. 31, 2013, and modify the provision for geothermal and other eligible technologies in a significant way, the GEA said. Instead of having to have power on-line by the end of 2014, the bill would qualify new projects for the PTC, or a 30% investment tax credit (ITC), if they are “under construction” by Jan. 1, 2014.

“Today’s vote is a critical step towards the establishment of a sustainable and robust offshore wind industry,” Offshore Wind Development Coalition President  Jim Lanard said in a statement. Offshore wind projects have been operating in Europe for years but the United States has yet to install its first offshore wind project, Lanard said.

“The support the Senate Finance Committee gave today to the nascent U.S. offshore wind industry moves us one important step closer to being able to compete with Europe and China” in this emerging industry, Lanard said.   

The committee, chaired by Sen. Max Baucus, D-Mont., passed dozens of tax-cuts known as “extenders” that either have expired or are scheduled to expire. The bipartisan 19-to-5 vote also prevents many middle class families from being hit by the alternative minimum tax (AMT) for two years.

“People need certainty to plan their finances, and businesses need certainty to hire, invest and grow,” Baucus said in a statement.

While there has been fear that many energy subsidies might fall victim to fiscal constraints in congress. Many energy officials have increasingly predicted extension of the PTC, even if it occurs after the election.

Wind power subsidies are “increasingly controversial” FBR Senior Energy Analyst Benjamin Salisbury said in an Aug. 2 policy update. An aide to Gov. Mitt Romney has suggested that Romney might let the credit expire if he is elected president.

“The wind credit is increasingly controversial as the growth of the industry raises the cost to the Treasury of extending it each year,” Salisbury said. “Additionally, the acute focus on deficit reduction and the backlash against the Obama Administration’s environmental agenda in the House of Representatives raise the risk that the credit will be allowed to expire,” Salisbury said.

‘We continue to believe that the bulk of expiring tax provisions will be extended as part of a larger year-end deal centered around the Bush tax cuts and other provisions,” Salisbury said. “However, we expect significant uncertainty and brinksmanship that could force expiration with Congress potentially addressing the issue retroactively in 2012.”

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.