Monday, September 13, 2004

Extension of the Production Tax Credit for Wind Energy Before Nov. 2?

Ever since Congress allowed the Production Tax Credit (PTC) to expire last year, reports have focused on the significant number of wind turbine projects that have stalled awaiting reenactment of the 1.8 cents per kilowatt hour federal tax credit. According to the latest American Wind Energy Association (AWEA) market report more than $2 billion in new wind power projects are in the development pipeline awaiting extension of the PTC. Without the credit, only 30 megawatts of new wind power generation has been brought on-line in 2004, compared to over 1600 megawatts in 2003.

Language to re-enact and extend the PTC has been inserted into several pieces of legislation, but passage of these bills before the Nov. 2nd elections has appeared bleak at best. Everyone seems to agree that there is little hope that the PTC extension contained in the un-reconciled House and Senate Federal Energy Policy bills will be passed at any time in the near future. A more promising avenue may be legislation aimed at changing corporate tax laws recently determined by the WTO to be illegal. Both the House and Senate have passed bills to address the offending corporate taxes, and avoid the associated European sanctions - and both bills contain language extending the PTC. Senate bill S. 1637, the "Jumpstart Our Business Strength (JOBS) Act", contains a 3-year extension (to Dec. 31, 2006), and H.R. 4520, the corporate tax bill passed by the House of Representatives on June 17, 2004, contains a 2-year extension (to Dec. 31, 2005).

Given the importance of these corporate tax measures, and the extra incentive of the continually increasing trade sanctions on a range of US-manufactured tobacco products if Congress and the President fail to act, some sources, including this report out of the Cape Cod Times, are beginning to speculate that passage before the end of the November term may not be as long a shot as once assumed. Both bills are now in a joint House-Senate conference.

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