Senate bill would extend, enhance hydropower incentives

Sen. Maria Cantwell, D-Wash., has introduced legislation that would expand incentives to hydro project owners, operators, and developers, including a long-term extension of the renewables production tax credit and Clean Renewable Energy Bond program.

Under current law, a facility qualified to apply for renewable energy production tax credits must be placed in service by Dec. 31, 2008, to claim a tax credit for electricity produced. Cantwell’s bill, introduced May 11, would extend the in-service date by five years, to Dec. 31, 2013, to encourage investors.

Additionally, all qualifying facilities would be eligible to receive the full rate of credit; current law reduces the credit by half for several technologies, including hydropower, to 0.9 cent per kWh. New and existing facilities could claim the credit for ten years, beginning the date the facility enters service.

�The core of this bill is a five-year extension and modification of the production tax credit,� Cantwell said. �This tax credit is designed to help businesses and utilities diversify their sources of energy and promote energy production using biomass, wind power, hydropower, geothermal power, and other clean, renewable resources.�

The legislation also would make �zero carbon emissions resources� eligible for the production tax credit, including ocean, tidal, and instream kinetic technologies.

Extension, higher cap offered for Clean Renewable Energy Bonds

The bill offers similar provisions for the Clean Renewable Energy Bond program so that public power and consumer-owned utilities that cannot benefit from tax credits receive an extension of the time in which they can invest in renewables facilities, Cantwell said.

Cantwell’s bill would extend the CREB program to Dec. 31, 2013, from Dec. 31, 2008. While bonds issued before Jan. 1, 2009, would have a limitation of $1.2 billion, bonds issued after Dec. 31, 2008, and before Jan. 1, 2014, would have an annual limitation of $5 billion. Cantwell said the higher bond limitation would encourage broader allocation of the bonds for large-scale projects.

Existing dams could be modified for hydro with FERC O.K.

Additionally, the bill would modify existing eligibility restrictions on the addition of hydro generating equipment to existing non-power dams and water resources facilities. Currently, the law states there can be no enlargement of a diversion structure, construction or enlargement of a bypass channel, or any impoundment or withholding of additional water from the stream.

To make addition of generating equipment more feasible, the bill would allow enlargement of a diversion structure or construction or enlargement of a bypass channel if it is done in compliance with a Federal Energy Regulatory Commission hydro license. Additional impoundment or withholding of water from the stream still would be prohibited.

The bill also would extend the in-service date to Jan. 1, 2014, for qualified incremental hydropower due to efficiency improvements or additions of capacity at existing hydropower plants.

Co-sponsors of the bill, the Clean Energy Investment Assurance Act of 2007, include Sens. Gordon Smith, R-Ore., and John Kerry, D-Mass. Cantwell said the National Hydropower Association and American Public Power Association were among 18 organizations that expressed support of the bill.

A number of bills that would provide incentives for production of electricity from renewables are being considered by Congress. Smith and Sen. Lisa Murkowski, R-Alaska, earlier this year sponsored bills that would extend production tax credits to kinetic hydropower and small irrigation hydropower, and would increase the tax credit amount for irrigation and incremental hydropower. (HNN 2/26/07)

Additionally, Senate Democrats said they expect to offer language creating a federal renewables portfolio standard as an amendment to an energy bill sent to the full Senate by the Energy and Natural Resources Committee. (HNN 5/4/07)

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