New Temporary BETC Rules Issued by ODOE
The Oregon Department of Energy (ODOE) has issued new temporary BETC rules. The purpose of these rules, according to ODOE, is to clarify how the Section 1603 Grant will be deducted from BETC project costs. In an apparent reversal of ODOE’s recent position during the Tier Two and Tier Three application phases, the temporary rules appear to exclude from the definition of a “federal grant” any Section 1603 Grant that was obtained before April 18, 2011. However, the Section 1603 Grantwill be deducted from “certified” costs for projects that receive preliminary certification and that start construction after April 18, 2011 (the issuance date of these temporary rules). The temporary rules define certified costs to be the “costs certified in the final certification issued pursuant to ORS 469.215.” To see ODOE’s news release and a copy of the new temporary rules follow the links below.
http://oregon.gov/ENERGY/CONS/BUS/docs/TempBETCrules18APR11withedits.pdf [rules]
http://www.oregon.gov/ENERGY/news/1133BETCFedGrant.shtml [news release]
Energy Tax Law Alert: ODOE Issues Final Administrative Rules
On November 24, 2010, the Oregon Department of Energy (“ODOE”) issued final permanent administrative rules (the “Permanent Rules”) relating to the Business Energy Tax Credit (“BETC”). For a description of the BETC generally, see our previous alerts on November 5, 2009, February 27, 2008, and July 2, 2007.
The Permanent Rules finalize and make some changes to temporary rules that ODOE issued on May 21, 2010 (the “May Temporary Rules”). ODOE issued the May Temporary Rules after the Oregon legislature passed HB 3680 (2010), which made significant changes to the BETC and granted ODOE substantial rulemaking authority. For a complete description of HB 3680, see our previous alert on March 24, 2010. Prior to finalizing the Permanent Rules, ODOE held one public hearing as well as interactive public meetings.
Overall, the Permanent Rules are very similar to the May Temporary Rules. ODOE did, however, incorporate many of the changes requested during the public meetings. Notably, the Permanent Rules clarify when a final application is considered complete (which addresses a potential “disappearing BETC” issue of concern to some taxpayers), relax the rules for amending a preliminary certificate, and add a safe harbor deadline to file an application for final certification prior to the June 30, 2012 sunset of the program.
Upcoming BETC Deadline--July 30, 2010
Pursuant to recently issued temporary regulations, the Oregon Department of Energy has imposed a July 30, 2010 deadline for projects seeking a BETC that have projected facility costs of $6 million or greater. See the link below for specific details.
HB 3680 Passes Oregon House
On February 10, 2010, the Oregon House passed HB 3680, which if enacted would substantially curtail the BETC for certain renewable energy projects. HB 3680 would impose an overall statewide cap, on the amount of potential tax credits that the Department of Energy could certify. The statewide cap would be $300 million for the 2009-11 biennium, and $150 million for the year beginning July 1, 2011 and ending June 30, 2012. HB 3680 would also authorize the Department of Energy to write rules relating to the priority to be given if applications for preliminary certification exceed those caps. In addition to the overall cap discussed above, HB 3680 would also impose the following cutbacks for large wind facilities (more than 10 megawatts):
- For facilities that obtain preliminary certification between January 1, 2010 and January 1, 2011, the BETC would be limited to $3.5 million
- For facilities that obtain preliminary certification between January 1, 2011 and January 1, 2012, the BETC would be limited to $2.5 million
- For facilities that obtain preliminary certification after January 1, 2012, the BETC would be limited to $1.5 million
HB 3680 would adopt several criteria implemented by the Department of Energy in the Temporary Rules adopted in November 2009, and would modify the definition of a “transportation facility” to include efficient truck technology for commercial motor vehicles. These provisions would apply retroactively to July 1, 2009. HB 3680 would also allow the Department of Energy to suspend or revoke a final certificate if a facility is no longer operating. This provision would apply retroactively to January 1, 2009. Finally, HB 3680 would extend the sunset date to January 1, 2014, for renewable energy resource equipment manufacturing facilities, but would not extend the sunset date for other facilities.
Governor Kulongoski's Climate Change Agenda Unveiled
Earlier this week, I attended Climate Solutions’ Business Briefing on the Governor’s Proposed Climate Change Policy. Hosted by Gerding Edlen, the briefing offered a snapshot of the Governor’s legislative agenda for 2009 and beyond, and gave the sustainable business community the opportunity to offer feedback on what needs to happen to move the plans forward.
The Governor’s Climate Change Agenda (the “Agenda”) covers four major areas: greenhouse gas (“GHG”) reductions, renewable energy, sustainable transportation, and energy efficiency. Some highlights follow.
Greenhouse Gas Reductions
There are three major components to the GHG reduction plan: a cap and trade program, an emissions performance standard, and an authorization of the development of Environmental Quality Commission (“EQC”) regulations. Included in the proposed 2009 legislation is the authorization for Oregon’s participation in a regional cap and trade program. Once authorized, the plan calls for a statewide public process to gather input on how best to structure the program. The program design recommendations will be brought back to the 2011 Legislature for approval, with the regional program scheduled to go into effect in 2012.
Renewable Energy
In the renewable energy realm, the Agenda includes a solar feed-in tariff, a beefed-up Business Energy Tax Credit (“BETC”), and initiatives to help the state meet the Governor’s goal of 100% renewable energy for state government. Following Germany’s lead, which has had amazing success with the solar energy incentive program known as a “feed-in tariff”, the Governor’s proposed legislation will create a production incentive pilot program to help pay for the electricity produced by a solar project.
The Governor also plans to create a BETC Energy Fund to offer up-front project funding. As with the Cultural Trust program, this proposal will enable citizens to donate money into the fund and take a tax credit on the donation.
Sustainable Transportation
Thinking about buying a Prius? If you are hoping for a state tax credit, you may want to revise your wish list. The Governor’s plan calls for a shift toward vehicles that produce less carbon and that have not yet permeated the market, such as plug-in hybrids and all-electric vehicles. In addition, the Agenda would authorize the EQC to develop and phase in a low-carbon fuel standard, that will require fuel providers to lower the average carbon intensity of fuels sold by 10%. The plan also includes an Expanded Transportation Options program and the development of a least carbon planning model.
Energy Efficiency
Because energy efficiency investments are such a cost-effective way to reduce both our energy demand and GHG emissions, a large chunk of the Agenda is devoted to this area. The Governor has put forth several proposals, such as the creation of energy performance certificates, the expansion of the BETC for energy efficiency investments, and the authorization of bonding authority for local governments to finance energy efficiency projects.
Proposed legislation seeks to establish a goal of net-zero emissions homes and buildings by 2030. As a start, the legislation seeks to increase energy efficiency in commercial and residential building codes by 30 percent and 15 percent, respectively. The Agenda also calls for expanding the BETC for industrial energy efficiency projects from 35 percent to 50 percent of the total project costs, up to $20 million.
The various pieces of the Governor’s Agenda will add teeth to existing state programs aimed at addressing climate change, and help keep Oregon at the forefront of innovation and entrepreneurship in the sustainable business realm.
