THE WALL STREET JOURNAL/DOW JONES NEWSWIRES: UPDATE: Tax Bill Approval Means Boost For Wind Energy Cos: “The tax credit should also push forward projects sponsored by companies like Shell Wind Energy, which is owned by Royal Dutch/Shell Group” (ShellNews.net)
DOW JONES NEWSWIRES
Posted 24 September 2004
By Maya Jackson Randall
WASHINGTON -- Approval of a multi-billion dollar tax bill is likely to boost the development of wind power projects sponsored by companies such as Florida Power & Light (FPL).
Several utilities invested in wind energy projects in 2003 but this year placed those projects on hold until legislators agreed to extend a federal tax credit for wind energy production.
A provision reauthorizing the expiring credit is part of the $146 billion tax bill, poised for approval in the House and Senate on Thursday.
"A number of projects are likely to take place if the production tax credits are approved," said Standard and Poor's credit analyst Terry Pratt. "That credit helps to make these projects more economically attractive."
Florida Power & Light subsidiary FPL Energy is the largest owner of wind plants in the U.S. and likely to benefit from the provision, said Pratt.
The same goes for Iowa utility MidAmerican Energy Co., which has a $323-million wind power project on hold, he said.
Pratt also noted that Danish turbine suppliers Vestas and NEG Micon would also benefit. "Any expansion of the U.S. market is definitely good for them," he said. The tax credit should also push forward projects sponsored by companies like Shell Wind Energy, which is owned by Royal Dutch/Shell Group (RD,SC), and American Electric Power (AEP), said American Wind Energy Association spokeswoman Kathy Belyeu.
"Really, all wind power companies stand to benefit," she said.
Aside from the tax credit for wind energy production, the tax bill extends a variety of individual tax breaks, such as the $1,000 per child tax credit.
The bill also includes a one-year extension of nearly two-dozen corporate tax breaks, which carry a $13 billion price tag over the next decade.
Other elements include a tax credit for qualified electric vehicles, worth $5 million through 2014 and deduction for clean-fuel vehicles, worth $72 million.
Other energy related breaks include extension of the taxable income limit on percentage depletion for oil and natural gas produced from marginal wells. This would cost $94 million through 2014.
Still, for the energy industry, the most significant is the extension of the tax credit to produce electricity from wind and burning of farm waste such as poultry litter. The one-year extension of the tax break would cost $1.2 billion through 2014, according to Congress' Joint Committee on Taxation.
-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9263; Maya.Jackson-Randall@dowjones.com