Today, the U.S. House of Representatives’ Ways and Means Committee is marking up a bill that includes a one-year tax extension of the wind production tax credit (PTC).
In December 2015, the U.S. passed an omnibus spending bill that included a provision to extend the then-expired PTC for five years until 2020, offering wind developers a credit of $0.023/kWh for electricity generated to the grid. The PTC was retroactively extended for 2015; maintained its level through 2016; and began phasing down to 80% in 2017, 60% in 2018 and 40% in 2019.
Bree Raum, vice president of federal affairs at the American Wind Energy Association, explains that the new “general tax extenders package” focuses on “all expired credits or credits expiring this year moving forward another year.”
“As Congress considers clean energy tax policy,” Raum says, “we encourage parity between technologies to boost competition and meet consumer demand for clean energy at the lowest possible cost. Accordingly, we would support tax extender policies that move toward that level playing field.”
H.R.3301 – The Taxpayer Certainty and Disaster Tax Relief Act of 2019 – was proposed by U.S. Rep. Mike Thompson, D-Calif., who says, “For far too long, Congress has not extended important tax provisions in a forward-looking basis, resulting in confusion and uncertainty for taxpayers. This week, we take the first step forward in untangling this mess. The Taxpayer Certainty and Disaster Tax Relief Act of 2019 extends a number of provisions that expired at the end of 2017 and 2018 and that will expire at the end of this year, and the bill is a critical piece of doing right by the taxpayer.”
According to Gregory Jenner, energy partner at law firm Stoel Rives and former head of the U.S. Department of Treasury’s Office of Tax Policy, the legislation, although it will likely pass the House, “stands no chance in its present form in the Senate.”
“There also is substantial doubt as to whether any extender bill will pass this year or next,” he notes.
Jenner points out “serious – and so far, unproductive – negotiations ongoing between the Hill and the [Trump] administration about budgets, spending caps and debt ceiling.”
“So we should be talking about ‘if’ anything finally passes,” he explains. “An extenders bill in any form likely only gets through if it’s included as part of an omnibus bill that represents a grand bargain between the branches and the parties. We have a long way to go before we know.”
When it comes to the PTC in particular, Jenner says, “it will depend on the particular language.”
“A one-year extension only would apply to projects for which construction began in 2017,” he adds. “It’s far from clear that it would have any incentive effect since those projects are already in the works. As for the [investment tax credit], I could see it being added either in Ways and Means markup or in a Senate version.”
Gregory Wetstone, president and CEO of the American Council on Renewable Energy, calls the proposed bill “a modest start to a really important near-term opportunity” but notes the importance of focusing on storage, as well.
“While an extra year of the wind PTC and renewal of the orphan renewable technologies are to be welcomed, this year’s extenders process should not conclude without the inclusion of a tax credit for energy storage and other critical measures to help combat climate change and decarbonize the grid.”
In April, U.S. Rep. Mike Doyle, D-Pa., proposed a bill that would create an investment tax credit for energy storage.