Lawmakers gave first-round approval April 22 to a bill that would increase the state’s production tax credit for renewable electric generation facilities.
Currently, renewable generation facilities can apply for a tax credit of .05 cent per kilowatt-hour. LB423, introduced by Omaha Sen. Jeremy Nordquist, would increase the available credit. Nordquist said the bill would incentivize renewable energy producers to invest in the state.
“There is no doubt that utilities across the country are moving their portfolios toward renewable energy,” he said. “This [tax credit] is necessary to help us compete with so much transition happening right now in the utilities industry.”
The current tax credit would be increased to 1.5 cent per kilowatt-hour of electricity generated by an eligible facility. The bill also would add a second method of calculating the tax credit: a one-time credit equal to 30 percent of the total cost of construction of an eligible facility, not to exceed $2 million.
The method used to calculate the credit would be decided by the producer earning the credit.
A Revenue Committee amendment, adopted 29-2, eliminated the proposed 1.5 cent per kilowatt-hour credit and instead would establish a sliding scale credit. The scale would begin at 1 cent per kilowatt-hour during the first two years of operation and reduce by .01 cent every two years until the 10-year tax credit expiration.
The amendment retained the 30 percent tax credit calculation method. It also reduced from seven years to five the time period a tax credit could be carried forward.
Hyannis Sen. Al Davis supported the bill. He said that it represents an investment in Nebraska.
“Economic development in rural Nebraska needs to be done and it needs to be done now. This is one tool that will benefit [the state] in a significant way,” Davis said.
Renewable energy producers with a nameplate capacity of 20 megawatts or less could transfer or sell tax credits to any person or entity. Columbus Sen. Paul Schumacher introduced an amendment to this provision that would have placed a 3-percent limit on the amount of commission a producer could earn on the sale of tax credits.
Schumacher said that the provision could result in the sale or transfer of production tax credits to non-producers, so it should be limited.
The amendment failed on a 13-25 vote.
Sen. Jim Smith of Papillion opposed the bill, saying it is not the economic boon to the state that people are hoping for.
“I think we’re seeking to compete with other states that receive federal tax credits,” he said. “I don’t think we’re able to do that effectively. Any amount of money we ask our taxpayers to throw at this is not going to make us competitive.”
Omaha Sen. John McCollister ultimately opposed LB423, but did bring an amendment to strengthen accountability provisions in the bill.
“If we are going to pass this bill, we ought to at least understand what we’ve gotten ourselves into,” he said.
The McCollister amendment, adopted 31-0, placed a sunset date of Dec. 31, 2021 on the increased tax credit. It also assigned annual reporting duties to the state Department of Revenue on the number of facilities receiving the credits and the amount of credits earned and claimed.
Senators advanced the bill to select file on a 25-3 vote.