Reid vows 2016 fix for tax glitch

Source: Geof Koss, E&E reporter • Posted: Monday, January 4, 2016

Senate Minority Leader Harry Reid (D-Nev.) pledged to revisit the extension of a key tax credit in the omnibus spending deal that also lifted the ban on crude oil exports, saying it was “inadvertently” applied only to solar, when other renewables should have received the same treatment.

Under the agreement, the 30 percent investment tax credit was extended for five years, with its value shrinking in 2020 and 2021. The phaseout language was also included in the five-year extension of the renewable production tax credit, which is most commonly associated with wind (E&E Daily, Dec. 16).

Significantly, the agreement changed the terms for facilities to qualify for the ITC based on when they break ground, rather than when they begin to produce power, a modification that makes the credit more attractive to investors.

But as written in the omnibus, the ITC is extended only for solar, leaving out other qualifying sources, including combined heat and power systems, geothermal, small wind, and fuel cells.

Senate Democratic sources say the discussions about extending the ITC were always meant to include the other qualifying sources, but House Ways and Means Chairman Kevin Brady (R-Texas) said last week that his understanding was that those talks were limited to solar. Brady said he plans to continue conversations about the ITC with advocates next year but noted that the ITC actually does not expire until the end of 2016, so there’s no harm in those sources being left out of the omnibus deal until 2017 (E&E Daily, Dec. 18).

In a statement included in Friday’s Congressional Record, Reid said the omnibus “inadvertently only extends the credit for solar energy technologies, rather than all of the technologies currently eligible to receive the credit.”

“The intention of the agreement that I reached with the Majority Leader was to extend the Section 48 Investment Tax Credit for all of the eligible technologies for five years and to treat each technology eligible for a 30 percent credit the same with respect to a phase down in the years 2020 and 2021,” Reid said. “The permanent 10 percent credit for eligible technologies under Section 48 will remain in place. The Majority Leader and I hope to address this early next year in an appropriate legislative vehicle.”

Critics of the renewable tax breaks are unlikely to allow the ITC fix to slip through without a fight.

American Energy Alliance President Thomas Pyle criticized the omnibus agreement on crude exports as a “lopsided deal” and “an enormous giveaway to big business and special interests.”

“Eliminating the ban on oil exports is an important policy that will benefit the economy in the long run, but Republican leadership paid too high a price, capitulating on nearly every demand from the Left,” Pyle said in a statement last week. “Extending corporate handouts to the wind and solar industry will cost taxpayers tens of billions of dollars and hike electricity prices on middle class Americans, all while putting a down payment on Obama’s climate agenda.”