Originally posted on Troutman Sanders’ Washington Energy Report 

On April 2, 2018, FERC denied a complaint alleging that the interconnection process under Midcontinent Independent System Operator, Inc.’s (“MISO”) tariff was unjust and unreasonable because certain wind generators were experiencing delays in the process, such that those customers would not receive a Generator Interconnection Agreement (“GIA”) in time to receive Federal Production Tax Credit (“PTC”) benefits.  In doing so, FERC found that there was no evidence that MISO was not making reasonable efforts to meet interconnection deadlines, as required by its tariff.  FERC added that prior precedent does not require MISO to ensure wind generators receive their GIA in time to receive full PTC benefits. Continue Reading FERC Holds that MISO Interconnection Process Need Not Ensure that Interconnection Customers Receive PTC Benefits

Originally posted on Troutman Sanders’ Washington Energy Report

On March 13 and March 15, 2018, FERC took actions to address tax law changes resulting from the Tax Cuts and Jobs Act of 2017 for electricity, natural gas, and oil companies.  In addition, on March 15, 2018, in response to a federal court remand, FERC stated that master limited partnership (“MLP”) interstate natural gas and oil pipelines will no longer be allowed to receive an income tax allowance in cost of service rates.

The Tax Cuts and Jobs Act of 2017, among other things, lowered the federal corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018.  FERC addressed this tax rate change by issuing separate orders for electricity, natural gas, and oil companies.  First, the Commission issued two show-cause orders, pursuant to section 206 of the Federal Power Act, for 48 electricity companies whose current transmission tariffs include fixed rates that may have been based on the outdated tax rate.  Both orders direct the electric companies to propose tariff revisions to adjust their transmission rates in accordance with the new tax rate or otherwise, show why they should not be required to do so. Continue Reading FERC Addresses Impact of Tax Cuts on Rates for Energy Companies and Eliminates Income Tax Allowance for Master Limited Partnerships

Originally posted on Troutman Sanders’ Washington Energy Report

On March 8, 2018, President Donald Trump signed an order that enacts tariffs on steel and aluminum imports from all overseas countries, while exempting Canada and Mexico from such tariffs for now.  The proclamations signed by the President will institute a tariff of 25% on steel and 10% on aluminum imports.  The tariffs are expected to become effective March 23, 2018.

The Trump administration’s efforts to levy tariffs on steel and aluminum imports came after a nine month investigation under Section 232 of the Trade Expansion Act of 1962, led by the Secretary of Commerce Wilbur Ross (see March 5, 2018 edition of the WER).  The investigations were initiated in April 2017 and designed to determine whether such imports “threaten or impair the national security.”  When the Section 232 reports were finalized on March 1, 2018, the Commerce Department determined that import competition harms the domestic production of aluminum and steel, and tariffs would strengthen the economic footing of steel and aluminum corporations. Continue Reading Trump Orders Steel and Aluminum Tariffs

As part of the Bipartisan Budget Act of 2018 (the “Act”), Congress extended and increased the 45Q tax credits for carbon capture and storage (“CCS”) projects. The Act increased credits for enhanced oil recovery from $10 per ton to $35 per ton and increased the credits for geological carbon storage from $20 per ton to $50 per ton. Raising capital for CCS projects has long been an issue, and developers of CCS projects often do not have the tax appetite to take full advantage of the tax credits available. The extension of the 45Q credits would allow large CCS projects to generate hundreds of millions of dollars a year, incentivizing tax equity investors to step in and provide funding for projects in order to reap the considerable tax benefits, similar to the tax equity deal structures seen in the renewable energy sector. While the 45Q credits makes CCS projects more viable, CCS technology is still very expensive and cost-cutting advances will likely need to be developed before a CCS project market is able to thrive.

 

The Bipartisan Budget Act of 2018 signed by President Trump on February 11th, included a package of tax credits that may be a boost for renewable energy development and storage projects. The deal extends tax credits for the so-called “orphan” renewable energy technologies along with nuclear power production. Continue Reading “Orphaned” Energy Tax Credits Included in Budget Deal

U.S. Trade Representative Robert Lighthizer announced that President Trump has implemented tariffs on imported solar cells and modules. The tariffs will be in effect for four years and include 30% tariffs on imported solar cells and modules for the first year, with the tariffs decreasing to 15% by the fourth year. Also, the first 2.5 gigawatts of cells imported each year will be exempt from the tariffs. The U.S. International Trade Commission (USITC) previously determined that increased imports of crystalline silicon photovoltaic cells were a substantial cause of serious injury to the domestic industry producing competing articles. The USITC later issued remedy recommendations, including tariffs, to be considered by President Trump. For more information about the President’s decision, please see the Office of the U.S. Trade Representative fact sheet here.

The House and Senate Conference Committee reached agreement on the Tax Cuts and Jobs Act (TCJA) last Friday, December 15, 2017. The text of the bill (the Conference Agreement) is available here. Prior coverage of the House bill and a prior version of the Senate bill is available here and here, respectively.

PTC and ITC

The Conference Agreement, following the Senate bill, will not change the PTC or ITC from the current law phase-down.

Corporate Tax Rates

The Conference Agreement will lower the highest corporate tax rate to 21% beginning in 2018.

Continue Reading Conference Committee Reaches Agreement on Tax Reform Bill

Yesterday the Joint Committee on Taxation released a description and revenue estimate of the Senate Finance Committee Chairman’s mark up of the Tax Cuts and Jobs Act. The Senate Finance Committee has not released bill language yet but may do so as early as next week. The Senate bill differs in significant respects from the House bill, which we summarized here.

PTC and ITC

Unlike the House bill, the Senate bill would not change the PTC or ITC.

Corporate Tax Rates

Like the House bill, the Senate bill would lower the highest corporate tax rate from 35% to 20%. However, the Senate bill would not reduce the rate until tax years beginning after 2018, one year later than the House bill. Continue Reading Impact of Senate Tax Reform Bill on Renewable Energy Projects