In This Issue:
- Trans-Pacific and Trans-Atlantic Treaties: Opportunities and Challenges for LNG Exports
- Suit Against Chinese Solar Firms Seeks Nearly US$1 Billion in Damages
- Major Energy Bills Get Started in Congress, But Enactment Unlikely
- Excerpt from Energy Highlights:
- The US Internal Revenue Service (IRS) has updated its guidance for “advanced nuclear power facilities” that can claim the 1.8 cents per-kilowatt-hour production tax credit. The rules describe the allocation method for the national megawatt capacity limit for the credit and the application process, which has been streamlined so taxpayers need only apply to IRS. As initially set forth by IRS in 2006, the application had to be sent to the IRS and the US Department of Energy (DOE) for certification. IRS will now get DOE’s approval in lieu of the taxpayer. The new guidance clarifies the rules for facilities that are owned directly or indirectly by more than one party. It also allows that the electricity can be sold to a related person if thereafter it is sold to an unrelated party. The IRS says the credit will not be reduced even if the facility claims other grants, tax-exempt bonds, subsidized energy financing and other credits. An “advanced nuclear facility” is defined as being designed and approved by the Nuclear Regulatory Commission after December 31, 1993, and placed in service before January 1, 2021. The production credit applies to electricity produced during the first eight years of service.
- On October 17, 2013, the US Federal Energy Regulatory Commission (FERC) issued a clarifying order requiring sellers of reactive power to file a rate schedule with FERC for such service, even where there is no compensation for the service. The new rate schedule order would likewise apply for the provision of reactive power within the reactive power deadband set forth in the applicable interconnection agreement. FERC said this new filing requirement will only be enforced on a prospective basis. To assist those affected by the new rule, FERC has directed its staff to conduct a workshop “to explore the mechanics of public utilities filing reactive power rate schedules for which there is no compensation.” At press time, the date for this workshop had not been finalized. FERC opened Docket No. AD14-1-000 for purposes of the workshop.
- The nonpartisan Joint Committee on Taxation (JCT) has provided a revenue estimate for legislation introduced by Senator Chris Coons (D-DE) that would expand the types of entities that qualify as master limited partnerships (MLPs). The bill (S. 795), which would allow certain renewable energy businesses to qualify for MLP tax treatment, would reduce federal revenues by US$1.3 billion over ten years, JCT says. Specifically, the bill would amend section 7704 of the Internal Revenue Code to expand the definition of “qualifying income” for MLPs to include income and gains from renewable and alternative fuels (in addition to fossil fuels), including energy derived from thermal resources, waste, renewable fuels and chemicals, energy-efficient buildings, gasification, and carbon capture in secure geological storage. Income from nonrenewable natural resources currently qualifies for MLPtreatment, which has led to a concentration of MLPs in the oil and gas sectors, particularly pipelines. Senator Coons argues that expanding MLPs to renewables will provide “parity” between green energy and energy from hydrocarbons. Senators Mary Landrieu (D-LA) and Susan Collins (R-ME) recently joined Senators Jerry Moran (R-KS), Lisa Murkowski (R-AK) and Debbie Stabenow (D-MI) as cosponsors of the bill.
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