Fiscal Cliff, Tax Credit Extension, and more…
Early this week the 112th Congress approved and the President signed into law legislation to address a portion of the fiscal cliff mostly focused on expiring tax provisions, including the Production Tax Credit (PTC) for renewable energy. Although the PTC for Marine Hydrokinetics (MHK) was not due to expire for another year (end of 2013), the new legislation benefits the MHK industry by allowing developers of projects larger than 150kw that begin construction in 2013 to qualify for the investment tax credit (ITC) which represents 30 percent of eligible project costs. This modification could amount to an additional 9-12 month extension of tax credit eligibility for qualified projects and serves to better reflect the complexity of construction of ocean energy projects.
OREC and industry lobbyists have been working with the American Council on Renewable Energy and sister renewable energy trade associations on a variety of tax policy initiatives. We will continue to lobby the House Ways and Means and Senate Finance Committees on 5-year depreciation language for MHK and Master Limited Partnership qualification. There will likely be a new energy tax package considered by the new 113th Congress over the next few months.
Text of Tax Extender Legislation is here.
Regarding funding levels for the FY13 DOE Water Power Program, OREC and industry lobbyists were successful last fall to secure $44 million for MHK R&D in the FY13 Senate Energy and Water Appropriations bill and $25 million in the House bill. Unfortunately, Congress wasn’t able to enact any appropriations bills prior to the start of the fiscal year so they passed a Continuing Resolution (CR) to get through the election. A CR allows the government to operate usually at prior fiscal year funding levels. This CR currently lasts through March 2013. As one of many “Fiscal Cliff” issues, the budget sequester will likely reduce the DOE Water Power Budget approximately 8% or $5 million from the FY12 appropriated level of $59 million. Congress delayed the Sequester yesterday by two months. FY13 appropriations bills will also have to be re-introduced in the new 113th Congress and passed by March, otherwise Congress will have to pass another Continuing Resolution.
MHK support in the 2013 Defense Authorization Act
The FY13 Defense Authorization bill was passed by Congress and has now been signed into law. The measure includes specific language requiring the Secretary of Defense to study and provide a report on current and future MHK investments. The Senate FY13 Defense Appropriations bill has similar language.
“Marine Energy Technologies – The committee is aware of the Navy’s efforts to develop and test wave marine and hydrokinetic energy technologies as one of many technology solutions helping the Navy meet its shore energy goals and mandates, as well as to potentially power maritime security systems, and support at-sea surveillance and communications systems. The committee directs the Secretary of Defense to provide a briefing to the congressional defense committees by October 31, 2012, on the current and future investments in test wave marine and hydrokinetic energy technologies, the payback associated with this investment, the future of the program, and a map of possible locations in proximity to military installations for employing this technology.”
FY13 Defense Authorization Act – Page 122 – http://www.gpo.gov/fdsys/pkg/CRPT-112hrpt479/pdf/CRPT-112hrpt479.pdf
Marine Renewable Energy Promotion Act
We continue to work with Senate Energy and Natural Resources Committee Members and staff on the bipartisan Marine Renewable Energy Promotion Act, to ensure inclusion in any upcoming energy legislative package. Incoming Senate Energy Committee Chairman Senator Ron Wyden (D-OR) and Senator Lisa Murkowski (R-AK) will re-introduce the MREPA bill and provide leadership on MHK issues in the new Congress. There was an effort in December to move a small package of Senate committee-passed energy bills, including S.630, but Senator Rand Paul (R-KY) put a hold on them citing the authorized amounts as “excessive.” Please let our government relations team know if you have any suggested edits to the existing S. 630 language: http://www.gpo.gov/fdsys/pkg/BILLS-112s630rs/pdf/BILLS-112s630rs.pdf . We have been told that our re-authorization bill will be one of the first pieces of legislation to be considered by the Senate Energy Committee in the coming weeks.
Additionally, the team at SMI is cultivating new Congressional relationships in the House to potentially offer the Marine Renewable Energy Promotion Act in the next session of Congress. They are meeting with the House Science committee staff in January and hope to find several potential sponsors for our legislation.
Please contact us if you have any questions or need additional information.