The American Public Power Association on Nov. 19 said it supports the Growing Renewable Energy and Efficiency Now (GREEN) Act for ensuring that all utilities can benefit from incentives intended to encourage critical energy investments.
House Ways and Means Subcommittee on Select Revenue Measures Chairman Mike Thompson, D-Calif., and Committee Democrats released a discussion draft of the GREEN Act.
According to a news release from Thompson’s office, the GREEN Act extends current renewable energy tax incentives and creates new models to increase the use of green energy while reducing greenhouse gas emissions.
The GREEN Act extends current renewable energy tax incentives and creates new models to increase the use of green energy while reducing greenhouse gas emissions.
Thompson’s office said the bill will:
- Promote the use of green energy technologies and incentivize the reduction of greenhouse gas emissions through new and existing tax benefits;
- Increase energy efficiency and green energy use in both residential and commercial buildings;
- Support the use of zero-emission transportation and supporting infrastructure;
- Invest in a green workforce through energy credits for manufacturers;
- Advance environmental justice through tax credits for research and academic programs; and
- Require the Treasury Department to analyze the feasibility of a price on greenhouse gas emissions, using the Environmental Protection Agency’s Greenhouse Gas Reporting Program.
“Allowing public power utilities to directly benefit from energy tax incentives makes those incentives more effective and more fair,” said Delia Patterson, the Association’s general counsel and senior vice president, advocacy and communications.
The Association noted that federal tax expenditures are the primary tool Congress uses to incentivize energy-related investments. However, such incentives do not work for tax-exempt entities including public power utilities.
“That explains why tax-exempt entities – which serve nearly 30 percent of the nation’s retail electric power customers – own less than 3 percent of the nation’s non-hydropower renewable energy generating capacity,” the Association said.
Public power utilities would like to own such assets, but given the current tax credit regime, the only economic way to access these resources is through power purchase agreements with merchant generators, which own more than 80 percent of the nation’s non-hydropower renewable energy generating capacity.
While some of the value of tax credits flow through to public power customers in the form of lower rates, the Association estimates about half of the value is retained by merchant generators to pass back to their investors. “This is both inefficient and unfair,” the Association said.
While details of the bill are still emerging, it is the Association’s understanding that the GREEN Act addresses this problem by allowing for the direct payment of energy production and investment tax credits to whatever entity owns the project.
For public power utilities, this would mean that none of the value of these credits would be diverted to outside investors. Instead, the full value would directly benefit our customers. This will make these tax credits both more effective and more fair.