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In 2011, Governor Branstad signed into law House File 672 (HF 672) and House File 590 (HF 590), which make changes to Iowa Code chapters 476B and 476C. Effective May 26, 2011, the total amount of eligibility under Iowa Code chapter 476B is reduced from 150 MW to 50 MW.
Effective July 1, 2011, the changes to Iowa Code chapter 476C: 1) Increase the total amount of eligible wind generation capacity from 330 MW to 363 MW; 2) Increase the total amount of eligible capacity for “other” renewable energy facilities from 20 MW to 53 MW and within this amount, reserves 10 MW for renewable energy facilities incorporated within or associated with an ethanol cogeneration plant engaged in the sale of ethanol; 3) For facilities seeking eligibility on or after July 1, 2011, allows tax credits for renewable energy produced for on-site consumption, provided the renewable energy facility has a nameplate capacity of not less than 750 kW; 4) For non-wind eligibility applications filed on or after July 1, 2011, limits applications to facilities with nameplate capacities of 60 MW or less, and limits eligible capacity for individual facilities to 10 MW or less; 5) Allows participants to extend their facility’s operational deadline by applying for successive 12-month extensions; 6) Requires facility owners to notify the Board if they discontinue efforts to reach operational status; and 7) Extends the program’s overall facility in-service deadline from January 1, 2012 to January 1, 2015 and also extends the last tax year for tax credit issuance from year-end 2021 to year-end 2024.
On June 22, 2011, the Iowa Utilities Board (IUB) issued an Order Commencing Rule Making, Docket No. RMU-2011-0003, proposing rules for implementing the HF 672 changes related to eligibility (199 IAC 15.19) and tax credit applications (199 IAC 15.21). Comments were accepted through August 2, 2011. A public hearing to receive comments on the proposed amendments was held on August 23, 2011. The Board issued an Order Adopting Rules on August 30, 2011. Those rules become effective October 26, 2011.
Under Iowa Code Chapter 476B, a state production tax credit of 1.0¢ per kilowatt-hour (kWh) is available for energy either sold or generated for on-site consumption by eligible wind energy facilities. The maximum total amount of wind generating capacity eligible for the tax credits is 50 megawatts (MW). The tax credit certificates are transferrable and may be applied toward the state's personal income tax, business income tax, or financial institutions tax.
Under Iowa Code Chapter 476C, a state production tax credit of 1.5¢ per kWh is available for energy sold by eligible wind energy facilities and certain other non-wind renewable energy facilities. For applications filed after July 1, 2011, tax credits are also available for on-site consumption of renewable energy from facilities with a nameplate capacity of not less than 750 kW. Otherwise, for earlier facilities, tax credits continue to be available only for energy that is sold.
For wind energy facilities, the maximum total eligibility is 363 MW. For other non-wind renewable facilities, the maximum total eligibility is 53 MW. For non-wind facilities seeking eligibility on or after July 1, 2011, applications are limited to facilities with a nameplate capacity of 60 MW or less, and total eligibility for each non-wind facility is limited to 10 MW. The tax credit certificates are transferrable and may be applied toward the state's personal income tax, business income tax, financial institutions tax, or sales and use tax.
To qualify for the tax credits, wind and other renewable energy facilities must be approved as eligible by the IUB. IUB rule 199 IAC 15.18 describes the 476B eligibility application process. IUB rule 199 IAC 15.19 describes the 476C eligibility application process. Eligibility applications should be filed using the Board’s Electronic Filing System.
Applications in excess of maximum capacity limits are placed on waiting lists in the order received. Specific details about the 476B and 476C waiting lists and approved applications (updated 02/06/12) are available for viewing or download in MS Excel format. If there is a reduction in capacity for eligible facilities, or if facilities are not operational within the time specified, released capacity will become available to those on the waiting list who either did not receive a full allocation of their requested capacity, or filed an application after capacity limits were fully subscribed. If any capacity is released, applications will be processed in the order received.
Following eligibility, facility owners may apply for wind and renewable energy tax credit certificates over a 10-year period, beginning with their initial production of renewable energy. The IUB will verify the number of kWh produced and sold by the facility. Owners will attest to any on-site consumption. The Iowa Department of Revenue will review the tax credit application and IUB verification, and issue and track the tax credit certificates. Certificates issued under 476C may be transferred or sold only once to a third party. Certificates issued under 476B may be transferred or sold without limit. IUB rule 199 IAC 15.20 describes the 476B tax credit application process. IUB rule 199 IAC 15.21 describes the 476C tax credit application process.
If you have any questions, please contact Brenda Biddle at 515.725.7305 or John Pearce at 515.725.7343.
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