A fortified Oregon business energy tax credit (BETC), which raises the maximum write-off for renewables from 35 percent on $10 million projects to 50 percent on $20 million projects, is all but certain to pass into law as HB 2811 before legislators head home from Salem.
But a new BETC won’t do businesses much good unless lawmakers also close a loophole that devalues tax credits in years such as 2007, when the state will pay out a business tax kicker. As things stand, the kicker lessens corporate tax burdens and, in turn, eats into the value of the credits for would-be buyers – costly both in millions of dollars to the economy and megawatts gone undeveloped.
In 2000, the kicker tax rebate was added to the state constitution by Oregon voters and inadvertently affected the BETC, which has been in place since 1980. The rebate kicks in when state revenues over a two-year period exceed economists’ projections by 2 percent. Oregon corporations are on track to get their largest kicker rebate in history this year.
At issue is whether the kicker is based on tax bills before or after inclusion of tax credits. The situation impacts all Oregon tax credits, not just the BETC.
The confusion could be avoided through an amendment to the original refund bill, says Peter Solomon, executive vice president of Momentum Renewable Energy. “When BETC works it’s a great thing and it’s going to move a lot of business to Oregon. But a developer has to have a way to sell those credits or there’s not much value to them.”
The amendment is widely expected to be signed into law this session.
“Everybody from the governor on down knows how big a deal this is,” says Alan Hickenbottom, northwest regional director of Vermont-based solar distribution firm groSolar. “It’ll tell me what I’m going to be doing for the next four years.” GroSolar recently acquired Grants Pass, Ore.- based Energy Outfitters [see “groSolar goes west,” SI, Dec. 2006].
By Mark Anderson
1 June 2007
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