Wednesday, November 09, 2011

Renewable Energy Law News from week of November 9

Photo via Jasmic

Bill to extend U.S. wind energy tax credit goes to committee 

U.S. Representatives Dave Reichert (R-WA) and Earl Blumenauer (D-OR), members of the tax-writing House Committee on Ways and Means, on Nov. 2 introduced the American Renewable Energy Production Tax Credit Extension Act (H.R. 3307). This bipartisan bill extends the tax incentive for the production of wind power, geothermal power, hydropower, and other forms of renewable energy through 2016. The bill is currently in the House Ways and Means Committee.

H.R. 3307 provides a clean, 4-year extension of the existing production tax credit for wind, biomass, geothermal, small irrigation, landfill gas, trash, and hydropower. It was created in the Energy Policy Act of 1992 and has frequently been extended in year-end packages of expiring tax provisions, as well as in the Energy Policy Act of 2005. The current incentive is set to expire next year for wind and in 2013 for other renewable energy forms. Advocates note that historically, at least six to eight months before the tax credit expires, financial lenders hesitate in providing capital for projects because of the uncertainty created by the pending expiration of the credit, stalling projects from coming online. The rush to complete projects as the PTC nears expiration also reduces projects and adds costs, resulting in higher electricity prices. 

Virginia, like many states, allows grid-connected electricity customers to use customer-sited generation to offset its electric bill. This practice is called net metering.

Virginia regulators are now considering a proposal by utility Dominion Virginia Power to impose two “standby” charges on net-metered solar photovoltaic systems larger than 10 kW. The policy questions raised by this case appear in other contexts where incentives for clean, distributed generation run up against utility ratemaking considerations. Utilities typically argue that they need to allocate costs fairly among their customers, while customer-sited generation advocates point to both the value of distributed generation and the array of incentives promoting customer-sited generation.

Ontario’s FIT Being Reviewed

Ontario’s Ministry of Energy has launched a comprehensive review of its renewable energy Feed-In Tariff (FIT) program. The review is mandated by the province’s Green Energy Act, the two year old legislation which originally established the FIT subsidy.

Project developers expect Ontario Premier Dalton McGuinty’s Liberal government to cut the subsidy, but questions remain as to the extent of the cut. Currently the FIT subsidy for large-scale solar power plants is priced at around C$443 ($435) a megawatt/hour.

The declining cost of solar and wind power generation and anger from Ontario residents over rising electricity bills may influence the review. During last month’s provincial elections Progressive Conservative candidate Tim Hudak tried to harness ratepayers’ anger by blaming the rising cost of electricity on the FIT program. Hudak promised to kill large portions of the Green Energy Act if elected.

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