EXCLUSION OF HYDRO FROM TAX CREDIT SHORTCHANGES RENEWABLE ENERGY GOALS by Mark R

EXCLUSION OF HYDRO FROM TAX CREDIT SHORTCHANGES RENEWABLE ENERGY GOALS

by Mark R. Stover, Director of Government Affairs & Media Relations

May 12, 2004, WASHINGTON, DC: The exclusion of incremental hydropower from a renewable energy production tax credit (PTC) adopted yesterday by the United States Senate as part of corporate tax legislation, S. 1637, will leave undeveloped as much as 4,300 megawatts of domestic renewable energy, the National Hydropower Association (NHA) said today.

Incremental hydropower is new electricity generation achieved at existing hydropower facilities by increasing plant efficiency or adding capacity.

"NHA is extremely disappointed that our calls for including a substantive role for hydropower in policies designed to encourage new renewable energy growth in the United States largely fell on deaf ears," said Linda Church Ciocci, executive director of NHA.

"By failing to include incremental hydropower in the Section 45 production tax credit, we have left off the table a proven resource that provides numerous power, environmental and societal benefits to millions of energy consumers in the United States. Without financial incentives, a large amount of hydropower potential will continue to sit unused at a time when we clearly need more clean, domestic energy," she added.

The Senate last night adopted S. 1637 by a vote of 92-5. Included in the bill is a $14 billion energy tax package that was stripped from comprehensive energy legislation earlier this year. An amendment by Senator John McCain (R-AZ) to remove the energy tax package from S. 1637 was strongly defeated earlier in the day by a vote of 85-13.

The Section 45 PTC provides a 1.8 cent per kilowatt hour production tax credit for wind, solar, biomass, geothermal, irrigation power and other "renewable" sources. S. 1637 now waits for final House action before a House-Senate conference can begin, where the energy tax package faces an uncertain future.

The Department of Energy identified in 1999 approximately 4,300 megawatts of potential power that could be developed at existing hydropower facilities. This later became known as "incremental hydropower" in various versions of Section 45 PTC legislation introduced in Congress since 2001.

If developed, the nation's incremental hydropower capacity could provide enough power to meet the electricity needs of the states of New Hampshire and Vermont. Put another way, it is enough yearly power for 1.4 million homes.

A 2002 poll found that 74 percent of registered voters support incentives from the federal government to further develop the nation's hydropower infrastructure . 2004 regional focus group polling validated those numbers.

"The vast majority of Americans support hydropower as an energy resource and believe we should encourage its continued development at existing sites," said Ciocci.

"While we are disappointed, we remain hopeful that as Congress continues to debate the issue of providing incentives for new renewable energy, they will understand the short-sighted nature of excluding incremental hydropower and find a way to include it, or even a portion of it, in the Section 45 PTC. Without question, it's the right thing to do in terms of energy security, electric grid reliability and clean air," closed Ciocci.

For Further Information:

• http://www.hydro.org/pdf/PTCExcludesHydro.pdf

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