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Senators Sponsor Renewable Energy Bill by Christine Dorsey, Knight Ridder/Tribune Las Vegas Review-Journal - October 24, 2001

Utilities could get more tax breaks

WASHINGTON — Public utilities and rural utility cooperatives would become eligible for renewable energy tax breaks under legislation introduced by Sen. Harry Reid, D-Nev., and Sen. Gordon Smith, R-Ore.

Though they don't pay federal taxes, public utilities would be allowed to trade tax credits to reap financial benefits from producing energy from wind, solar, geothermal, or other renewable sources, Reid said.

The bill revises an earlier version of tax relief the Nevada senator introduced in February that targeted renewable energy industries. That measure would give companies producing energy from wind, sun, small hydropower, geothermal, or animal waste a permanent tax credit to help make them competitive with traditional energy sources like oil and natural gas.

The new bill expands the benefit to public utilities and rural cooperatives, which could trade or sell the credits to power plants that use coal or other nonrenewable power sources.

"Our legislation encourages the use of renewable energy and signals America's long-term commitment to clean energy, a healthy environment, and energy independence," Reid said.

Glenn Hamer, executive director of the Solar Energy Industries Association, said the bill will add an important sector — public utilities — to the mix of power producers who will seek alternative energy sources. "It's a very intelligent addition," Hamer said. "If you're trying to expand renewables, why wouldn't you extend (the tax credit) to those utilities interested in producing greener energy as part of the mix?"

Reid said he hopes the legislation will spawn more renewable energy plants in Nevada and elsewhere where clean, renewable resources are available.

The Bureau of Land Management has seen a sharp increase this year in applications by companies wanting to search for geothermal energy on federal land, where researchers believe the majority of resources reside.

Wind also is a growing resource. Nevada's first wind farm is being constructed by MNS Wind Company at the Nevada Test Site, where owners hope to generate 260 megawatts of wind energy, enough to power 260,000 homes. Under current law, wind producers qualify for a tax credit allowing them to take a 1.8-cent tax credit on each kilowatt-hour of energy generated.

Joe Nipper, senior vice president for the American Public Power Association, said the tax break is a new concept for public utilities. "There's a fair amount of risk in this for us," Nipper said. "We believe it will act as an incentive [to build renewable power projects], but we won't know for sure until it becomes law." He said a survey of public utilities taken this summer by the association indicates a growing interest in generating power from renewable sources.

Reid said the bill could get folded into a larger energy package being crafted by Senate Democrats, but if that measure gets stalled, he will push the renewable bill on its own.