A full 3-year Production Tax Credit (PTC) extension (through 12/31/06) may advance through the U.S. Senate as part of a package of energy tax incentives now attached to a corporate tax bill (S. 1637).
Momentum began to pick up on Wednesday, April 7, when Senate Republican leaders chose to separate the energy tax provisions from long-stalled energy policy legislation (S. 2095) and attach them to the corporate tax bill.
"This is a significant step forward," said AWEA legislative director Jaime Steve. "It creates a realistic opening for the PTC to be in effect again, possibly as early as June of this year."
The corporate tax bill-seen by Republicans and Democrats as legislation that must pass this year-would repeal a tax break for exporters that has been deemed an illegal trade subsidy by the World Trade Organization (WTO). The European Union has imposed a 6% penalty payment on some U.S. exports, and the penalty is set to increase by 1 percentage point a month, up to a maximum of 17%. The penalty would be removed when the bill becomes law.
An agreement announced late on Thursday, April 8 between the Senate's Republican leader, Bill Frist (R-Tenn.), and its Democratic leader, Tom Daschle (D-S.D.), could allow the full Senate to vote on the bill containing the PTC shortly after Congress returns on April 19 from its spring break.
The House's corporate tax bill (HR 2896) has been blocked by disputes over its balance between tax cuts for domestic manufacturers and benefits for multinational corporations. House leaders have been hoping for Senate action that could help propel their version of a corporate tax bill. The House bill currently does not contain any of the energy tax items grafted to the Senate's corporate tax bill.
Once the Senate and House pass their own versions of corporate tax legislation, the bills would go to a conference committee responsible for hammering out their differences and forging a compromise bill for the president to sign into law.
The PTC language as contained in the energy tax section of the Corporate Tax bill calls for:
– Extending the PTC through 12/31/06 (a 3-year extension from the previous expiration date of 12/31/03);
– Eliminating the PTC inflation adjustment provision starting January 1, 2005 (in other words, the inflation adjustment provision of current law would apply to any wind project placed in service on or before 12/31/04);
– Creating an exemption from the requirements of the Alternative Minimum Tax (AMT) for the first four years of turbine operation;
– Expanding the PTC to include solar, geothermal, small irrigation hydro power, municipal solid waste, and additional forms of biomass; and
– Allowing a tradable credit for only the following tax exempt entities: rural electric cooperatives, publicly-owned utilities, Indian Tribal governments, and the Tennessee Valley Authority (TVA).
AWEA's consistent goal is to gain the longest possible PTC extension at the earliest possible time. In addition, AWEA is working to fully restore the inflation adjustment factor contained in current law.
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