PTC Positioned For Extension

Posted by SI Staff on December 12, 2006 No Comments
Categories : New & Noteworthy

The 109th Congress approved the Tax Relief and Health Care Act of 2006 (H.R.6111), a bill that extends a package of tax cuts that promote the production of renewable energy for another year. This step clears the act for President Bush's signature.

On Friday, Dec. 8, the House approved the act in a 367-45 vote – the next day, the Senate approved it with a 79-9 vote. If President Bush does sign the bill, the renewable energy production tax credit (PTC) will be extended until Dec. 31, 2008.

According to Randall Swisher, the American Wind Energy Association's executive director, this is the second time that Congress approved an extension of the PTC.

The bill allows for a tax credit to be given to facilities that generate electricity from wind, closed- and open-loop biomass, geothermal, solar and hydropower projects. In order to receive a tax credit, the joint committee on taxation says a taxpayer must own the facility and sell the electricity to an ‘unrelated party.’ In turn, the PTC will provide a 1.9 cent/kWh tax credit for electricity generated over the first 10 years of a project's operation.

By extending the act, Congress will allow an extra $400 million of clean renewable energy bonds to be issued, which will finance the construction of facilities that produce renewable energy. In addition, the act extends the tax credit for construction of energy-efficient homes and energy-efficient commercial buildings.

Jaime Steve, AWEA's legislative director, says this extension will benefit the economy as well as the renewable energy industry.

‘This timely action by Congress will boost significant upward growth and investment for wind energy, spurring thousands of new jobs and millions of dollars in rural economic development while also bringing cleaner air to all Americans,’ says Steve.

Rhone Resch, the Solar Energy Industries Association's president, adds, ‘While this bill does not constitute a long-term solar growth policy, it does provide some breathing room for solar projects in the 12- to 18-month pipeline. It ensures that the solar industry will continue to grow at a record rate in 2007.’

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