About The Author:
Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.
He can be reached at:
Brown, Olson & Gould, PC
2 Delta Drive
Concord, NH 03301
Iowa and Washington Pass Progressive New Energy and Efficiency Laws
by Robert Olson and Maria Reinemann -- Brown, Olson and Wilson, P.C.
(originally published by PMA OnLine Magazine:
Iowa and Washington have enacted progressive
legislation intended to promote and encourage the development and use of
renewable energy sources. The Washington incentive is by far the most
progressive legislation passed in the United States thus far.
On May 6, 2005, the governor of Washington signed Senate Bills 5101 and 5111
into law. Senate Bill 5101 encourages development of small solar, wind, and
anaerobic digester energy projects. The bill establishes production
incentives of between $0.12 per kWh and $0.36 per kWh depending on
technology and whether the equipment used to produce the electricity was
manufactured in the State of Washington. Total yearly payments per project
are capped at $2,000.00. Persons in the “light and power” or “gas
distribution” business are not eligible to receive incentive payments.
The state’s utilities will pay the incentives to their customers and will
receive a tax credit equal to the cost of those payments, not to exceed the
greater of $25,000.00 or 0.025% of a utility’s taxable power sales. Should
the requests for incentive payments exceed a utility’s tax credit, then the
incentive amount will be uniformly reduced. Initially, the incentive will
apply only to off-grid power sources until the state’s utilities adopt
uniform interconnection standards, at which time the incentives will extend
to grid-connected power sources. The incentives apply to power generated
between July 1, 2005, and June 30, 2014.
Senate Bill 5111 supports the manufacturing of solar energy systems through
tax incentives. The bill reduces the business occupation tax rate by 40 %
for state manufacturers and wholesale marketers of solar photovoltaic
modules or silicon components of those systems. Businesses claiming the tax
credit have to file an annual report with the Department of Revenue by March
31 following any year in which the tax credit is claimed. Both bills took
effect on July 1, 2005, and expire on June 30, 2014.
On June 15, 2005, the governor of Iowa signed Senate File 390, a bill
designed to encourage the generation of renewable energy by small energy
producers in the state by providing a production tax credit. The bill
establishes a tax credit for producers or purchasers of renewable energy by
providing a credit of 1.5 cents per kilowatt hour of electric energy, $4.50
per billion Btus of heat used for a commercial purpose, or $1.44 per 1,000
cubic feet of hydrogen fuel. The total eligible name plate capacity is
capped at 100 megawatts. Eligible wind energy cannot exceed 90 megawatts of
name plate capacity with the remainder coming from any eligible energy
source other than wind.
Wind turbine, anaerobic digester, biogas recovery, biomass conversion, and
solar energy systems are eligible for the tax credit. Production must be
located in Iowa and a majority ownership of the facility producing the power
must be by an Iowa resident, farm corporation, limited liability company,
trust, small business, electric co-op, or school district. There must be one
such owner for each 2.5 megawatts of eligible electricity or its equivalent.
The energy must be produced for the power-grid. The credit cannot be claimed
for electricity produced and used solely by the producer. To earn the tax
credit, a producer must have a signed agreement for the purchase of its
energy product which can be in the form of electricity, biogas, hydrogen or
heat for commercial purposes.
The bill applies to new facilities that began operating after July 1, 2005,
and before January 1, 2011 and such new renewable energy facility can earn
tax credits for up to ten years. A purchaser of renewable fuel may receive a
tax credit certificate for ten years after the date of purchase but tax
credit certificates shall not be issued after December 31, 2020. Renewable
energy tax credit certificates may be transferred to any person but may be
transferred only once. The tax credit may be applied toward payment of a
number of state taxes.
The Iowa Utilities Board is charged with administering the tax credit
program. It adopted emergency rules on June 21, 2005 to allow interested
parties to apply for renewable tax credits effective immediately.
Robert A. Olson is a partner in the law firm of Brown, Olson &
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:
Brown, Olson & Gould, PC
2 Delta Drive, Suite 301
Concord, NH 03301
email@example.com | (603) 225-9716