Wednesday, March 16, 2005

Legislation Introduced to Extend Production Tax Credit to 2010

As promised earlier this month, Senator Byron Dorgan (D-ND) introduced legislation last week to extend the federal production tax credit (PTC) five more years - from the end of 2005 (when it is currently due to expire) to 2010. The bill, S.542, seeks to provide some long-term stability to the renewable energy sector, which has suffered in the past several decades from the short-term, on-again/off-again nature the PTC. As Senator Byron noted in his speech introducing S. 542:
The bottom line is that short-term extensions of the renewable energy tax credit creates a boom and bust cycle of short-term planning, painful layoffs and higher than necessary project costs. Financial lenders stop providing the capital needed for wind energy projects about 4 to 6 months before the credit is scheduled to expire because of the uncertainty surrounding the future availability of the credit. This uncertainty inevitably leads to a rush to complete projects at higher costs, and those costs are passed along to consumers.
The bill also proposes to expand the current PTC program to allow non-profit cooperative and municipal utilities to take advantage of the tax-credit. Non-profit Cooperatives and municipalities are currently only eligible for the Renewable Energy Production Incentive (REPI) program, which historically has been dramatically under-funded.

S.542 has been referred to the Senate Finance Committee.

For more on current federal renewable energy legislation, check out our previous post on the topic.

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