Author Archives Laura Arnold

Replacing Net Metering with Feed-in Tariff (FIT) Could Create Tax Headaches in Arizona; Is this a problem in Indiana?

Posted by Laura Arnold  /   August 21, 2013  /   Posted in Feed-in Tariffs (FiT), Northern Indiana Public Service Company (NIPSCO), Uncategorized  /   No Comments
Indiana already has solar PV projects using voluntary feed-in tariffs (VFITs) with Indianapolis Power and Light (IPL) and Northern Indiana Public Service Company (NIPSCO). Is this causing the type of tax problems described in this article for customers in Indiana? Please share your thoughts with IndianaDG. Email me at Laura.Arnold@IndianaDG.net. 

Attorneys: Using Solar Tariffs to Replace Net Metering Could Create Tax Headaches

An Arizona utility’s plan could make rooftop solar taxable.

HERMAN K. TRABISH: AUGUST 20, 2013

A filing with the Arizona Corporation Commission from a top U.S. tax law firm concluded that tariffs proposed as an alternative to net energy metering could complicate residential solar system owners’ federal tax credits and force them to pay income tax for the electricity their systems produce.

The Alliance for Solar Choice (TASC) was forced into the filing as a result of recent proposals to replace net metering in Arizona, explained TASC President Bryan Miller. The group was reluctant to file because the legal opinion will likely “raise very difficult questions” about feed-in tariffs already in place and proposed around the country.

Arizona Public Service, the state’s biggest electricity provider, last month proposed adding a charge to its net energy metering (NEM) program or replacing it with a “bill credit.”

NEM pays rooftop solar owners retail rates for the electricity their systems send to the grid, up to the point of zeroing out their bills. Zeroed bills allow solar owners to escape the bill’s infrastructure charges. This, APS and other utilities argue, shifts the burden of paying for transmission and distribution infrastructure to non-solar owning ratepayers.

Solar advocates claim systems are a net benefit to the grid, and some studies have verified that. Utilities’ studies show solar owners use the grid as much as other ratepayers and should therefore pay their fair share.

In one of the two APS-proposed alternatives, NEM would stay in place but charges would be added to cover infrastructure costs. Numbers in the APS filing with the ACC show proposed charges ranging upward from $40 per month for normal-sized residential systems, easily high enough to compromise rooftop solar’s value proposition.

NEM would be eliminated in the other APS proposal, but the “total rooftop solar generation is exported to the grid and purchased by the utility.” Solar owners would get a “bill credit” for that amount set by regulators. Customers would also pay retail rates for their “total electrical needs served by the utility.”

This buy-all, sell-all arrangement would essentially be a feed-in tariff or value-of-solar tariff. It seems potentially fair. But an opinion from Skadden, Arps, Slate, Meagher & Flom LLP partners Sean Shimamoto and Emily Lam that was included in the TASC filing suggests that such a tariff could result in tax problems for solar owners.

“The payments received by a taxpayer for the sale of electricity under feed-in tariffs appear to fall squarely within the definition of taxable gross income,” wrote Shimamoto and Lam, whose firm ranks among the most respected in tax law.

“The terms of FITs provide for the sale by the taxpayer to the utility of all electricity generated by the taxpayer's residential solar system,” they added in the memorandum filed by TASC.  “In exchange, the utility compensates the taxpayer with either cash or a credit on the taxpayer's utility bill. Although the taxpayer may also purchase electricity from the utility, under FITs, the two transactions are separate and distinct. The proceeds from the taxpayer's sale of electricity to the utility therefore likely constitute gross income.”

This conclusion, they added, “is supported by Senate Bill 1225.” The bill specifically excludes "any gain from the sale or exchange to the electrical grid" as taxable income.

“The proposed bill creates a clear negative inference that absent the income exclusion proposed,” the attorneys wrote, “gain from the sale of electricity in this context constitutes gross income.”

Shimamoto and Lam also concluded the APS “bill credit” proposal would put solar owners at risk of losing the 30 percent personal federal investment tax credit (ITC).

The system owner has to use “at least 80 percent of the electricity generated” for nonbusiness purposes to qualify for the personal ITC, the attorneys wrote. “Under FITs, 100 percent of the electricity generated is sold to the utility, and thus 100 percent of the use of the residential solar system is for business use.”

Shimamoto and Lam are correct about the income tax issue, agreed a New York tax attorney familiar with renewables tax issues who asked not to be named. The APS “bill credit” is, at best, “not helpful” to rooftop solar owners and could result in taxation if their systems’ output is high enough.

The source disagreed about the 30 percent ITC being at risk. If sale of the electricity to the utility makes system owners ineligible for the residential ITC, he said, they would then be eligible for the 30 percent business tax credit. And that would make them eligible for the benefits of accelerated depreciation as well, he added.

It is correct that the owner can become eligible for the business ITC, Clean Coalition Executive Director Craig Lewis agreed. But most residential system owners cannot take advantage of accelerated depreciation, he explained, so it essentially becomes straight-line depreciation, “which has the equivalent effect of adding about 10 percent to the installed cost of a solar project.”

The clear takeaway is that the APS proposals create tax-related legal difficulties. “FITs are a solution in search of a problem,” Miller said. “NEM is proven. When something is not broken, you shouldn’t try to fix it.”

Tags: alliance for solar choiceapsarizona corporation commissionarizona public service,feed-in tarifffitinvestment tax credititcnet energy meteringresidential solarrooftop solartransmissionvalue of solar tariff

OFA holds climate change rally on Monument Circle in Indianapolis; Is your Member of Congress a climate denier?

Posted by Laura Arnold  /   August 20, 2013  /   Posted in Uncategorized  /   No Comments

Local OFA members joined with representatives from the Sierra Club Beyond Coal Campaign assembled on Monument Circle 8/13/13 to rally around the need to action on climate change. The group heard remarks from various speakers including Indiana State Rep. Ed Delaney and Indianapolis City-County Council Member Zach Adamson.

Here is a listing of Indiana climate deniers as reported in

The Anti-Science Climate Denier Caucus

BY CAP ACTION WAR ROOM ON JUNE 26, 2013 AT 9:44 AM

Climate change is happening, humans are the cause, and a shocking number of congressional Republicans — more than 56 percent — refuse to accept it. CAP Action conducted a fresh analysis of public statements from current Representatives and Senators from the 113th Congress on climate change. Roll over any state on the map below for information on its resident climate deniers, or click on the state to be taken to the full quotes and figures.

 See original article to view interactive map.

 

 

 All told, 158 elected representatives in the 113th Congress have taken over $51 million from the fossil fuel industry that’s driving the carbon emissions which cause climate change. They deny what over 97 percent of scientists say is happening — current human activity creates the greenhouse gas emissions that trap heat within the atmosphere and cause climate change. And their constituents are paying the price, with Americans across the nation suffering 368 climate-related national disaster declarations since 2011.

This list will be updated regularly.

Indiana

Rep. Larry Bucshon (R-IN-08): “The data does not support the premise that carbon dioxide emissions are playing a significant role in the world temperature variations. The temperature of the Earth has been changing over centuries with warmer and colder periods throughout history.” [Campaign Website, 10/28/2010]

Rep. Todd Rokita (R-IN-04): “The link between manmade carbon emissions and measureable harm to the environment is a topic currently under debate. While there may exist a link, the current debate continues.” [Project Vote Smart Issue Position]

Rep. Todd Young (R-IN-09): Mr. Young, the Indiana Republican nominee trying to unseat Mr. Hill for the Ninth Congressional District seat, strongly opposes cap and trade and other unilateral measures to combat global warming. He says he is uncertain what is causing the observed heating of the planet, adding that it could be caused by sunspots or the normal cycles of nature. “The science is not settled,” he said in an interview in his headquarters in Bloomington, Ind. And he said that given the scientific uncertainty, it was not wise to make major changes in the nation’s energy economy to reduce carbon emissions. [New York Times, 10/20/10]

Sen. Dan Coats (R-IN): At a candidate forum Saturday, the Republicans running for the U.S. Senate dismissed the threat of global warming, as well. Former U.S. Rep. John Hostettler called it “junk science.” State Sen. Marlin Stutzman called it a “manufactured controversy.” Former U.S. Sen. Dan Coats discussed this year’s snowstorm in Washington, D.C., ignoring scientists who say global warming causes intensified weather consistent with such a snowstorm. [Evansville Courier & Press, 4/18/10]

POLITICS:

Are 'climate deniers' the new birthers in Obama's playbook?

Elana Schor, E&E reporter
President Obama's strongest supporters are executing a play that feels familiar after four years: Use humor and social media to marginalize Republicans as extreme and out of touch on all fronts, from substantive legislation on topics such as immigration to ephemera on the level of unfounded conservative suspicions that the commander in chief was not born in America.This time, however, the fodder is climate change.The nonprofit created to promote Obama's priorities, Organizing for Action (OFA), put together a climate staff in May and last week launched a campaign that handed out unicorn trophies to 135 congressional Republicans who have raised doubts about humans' role in climate change. These "Denier Awards" made a splashy stage for Obama backers to pre-empt GOP resistance to U.S. EPA emissions rules -- while signaling that the president's team sees a chance to build a national stage for an issue he was savaged as too silent on during his re-election run."You're beginning to hear the Obama team say, 'OK, you're going to attack us? It doesn't make sense for us to ignore it. Let's heighten these distinctions, let's expose these individuals,'" Anthony Leiserowitz, director of Yale University's Project on Climate Change Communication, said in an interview. "It plays into a broader narrative about the distinctions between the two parties."The strategic advantages of the tactic are evident in the green activists' growing more heartened and mobilized since the president's June 25 climate speech at Georgetown University. Obama's relations with his environmentalist base, plagued by a Capitol stalemate on emissions during his first term and questions about his commitment to the cause that predated 2008, are at a notable peak as he takes up their banner (E&E Daily, June 28).

350.org spokesman Daniel Kessler, whose group has pressured Obama for years over the Keystone XL pipeline, described the latest moves from OFA and the White House as a step toward a future where EPA power plant rules are only one piece of a broader climate agenda. "Knowing the president and his party are now willing to take on climate change and use it as a political weapon can only get us closer to the day when we have a comprehensive plan to combat climate change, and that would include a price on carbon," he said in an interview.

Casting climate science as the Obama camp's newest wedge issue would seem to bode well for EPA's prospects of rolling out its emissions limits with a minimum of resistance from conservatives, given that their multiple attempts to defund the implementation of the president's health care reform law have fallen flat. But at a time when the White House still has the opportunity to work with Republicans on immigration reform and must deal with them on keeping the government funded beyond the end of next month, antagonizing about half the GOP conference runs the risk of making climate change even more of a red-meat issue for the right than it is for the left.

For example, while OFA tweeted photos of lawmakers and aides accepting the unicorn Denier Awards, House Energy and Commerce Vice Chairwoman Marsha Blackburn (R-Tenn.) posed with her prize for a combative response. "They killed a tree to give me an award for denying global warming on a 71 [degree] August day,"she tweeted Friday.

Mike McKenna, a GOP energy strategist who lobbies for industry, pointed to reports that one OFA-backed climate rally in the capital drew zero supporters last week as a sign that the newly aggressive push could do little substantively but embolden more Blackburn-esque replies.

"By raising the issue, and then failing on any follow-through," McKenna said via email, "the Obama guys are actually doing their cause a disservice because they embolden folks on the other side. The more elected officials understand that they can raise all kinds of questions (science-based as well as economic) with impunity, the more likely they are to raise questions."

Among the 135 Republicans targeted by OFA is one whom Obama cannot avoid working with: House Speaker John Boehner (R-Ohio), who told USA Today in November that "what has initiated [climate change] has sparked a debate" of a decade or more. Boehner's spokesman later told the Washington Post editorial board that his comments referred to the state of policy discussions, not of climate science.

The speaker's office did not respond to repeated requests for comment on the GOP leader's inclusion on this month's OFA deniers list.

'High-end viral potential'

Another Republican blasting the OFA campaign is Sen. James Inhofe of Oklahoma, a walking, talking symbol of fossil-fuel influence for most green activists, who began on Wednesday to investigate potential coordination between the Obama administration and the White House's nonprofit cavalry (E&ENews PM, Aug. 14).

"There's no better measure of success than when you can get the chief climate denier in Congress to start throwing out conspiracy theories," David DiMartino, a veteran Democratic aide turned strategist who worked closely on the cap-and-trade battle, said in an interview. "The reality is, he's out of touch."

The urgency created by a response such as Inhofe's probe aligns with the general mission of the OFA effort, according to American University associate professor of communication Matthew Nisbet, who studies in depth the tactics used by both sides of the debate.

"What they're doing is socially and morally stigmatizing those political opponents who deny the science of climate change," Nisbet said in an interview.

"So instead of leaving the middle-ground public to be caught in these cross-pressures as the issue gains more salience for them, instead of it just being a 'he said, she said'-type echo chamber, they're sending a very strong message: ... Just like the birther claims were wrong and morally outrageous, and 'death panels' were wrong and morally outrageous, so are climate [deniers wrong] when people's health and safety are at risk."

The "high-end viral potential" of the unicorn-trophies strategy contrasts with the cap-and-trade era during Obama's first term, when "the issue was discussed almost exclusively in technocratic terms," Nisbet added. He and Leiserowitz of Yale University agreed that OFA's new approach is well-suited to engage sectors of the public previously distant from the risks of greenhouse gas emissions, even if it does not pay off at the ballot box against Republicans.

OFA did not respond to a request for comment on the new climate campaign. But the campaign carries an upside for the group specifically as it deals with slower-than-expected fundraising: no expensive TV advertising bills to pay and a simple benchmark for action in the White House-approved hashtag #ScienceSaysSo.

"It's fairly easy to make them a laughingstock," DiMartino said of the 135 Republicans, "because most people believe that what 97 or 98 percent of scientists say is probably right."

Using the term "deniers" rather than the milder "skeptics" reinforces the dichotomy Obama supporters hope to create between defenders of national action on emissions and Republicans pushing to slash EPA funding. Chris Prandoni, federal affairs manager at the conservative group Americans for Tax Reform, argued that the D-word obscures some nuance in GOP views on the matter.

"OFA/Obama present the public with a false choice: Politicians are either knuckle-dragging members of the Flat Earth Society or believe that anthropogenic activity is the driving factor determining present climate (Hurricane Sandy, droughts, etc.) and future climate," Prandoni said via email. "In reality, most people labeled 'climate deniers' would agree that humans influence the climate, to some degree."

Kessler, of 350.org, countered that "using climate change as a blunt object to beat Republicans over the head with" does not preclude the president's team from working with their political opponents on future action so long as lawmakers start with consensus on the need to cut carbon emissions based on scientific evidence.

"The reality of the situation is, right now, there's only one party that's serious about dealing with the problem, and that's the Democrats," he said.

WANE-TV: Video story on Wells County (IN) wind farm approval

Posted by Laura Arnold  /   August 16, 2013  /   Posted in Uncategorized  /   No Comments

Wind turbines are on target to being built in Wells County

  • Updated: Thursday, August 15, 2013, 3:21 PM EDT
  • Published: Thursday, August 15, 2013, 12:15 AM EDT

Wind turbine_22631437

BLUFFTON, Ind. (WANE) - The Wells County Area Plan Commission board voted 6 to 3 to approve the modifications of where wind turbines will be built in the county.

Michael Lautzenheiser, the Area Plan Commission Director, said this isn't the green light for Apex, the company putting up the turbines, to start construction.

"The county commissioner and county councils still have to review the economic development agreement and the decommissioning plans for these projects," Lautzenheiser said.

Many people living in Wells County were very vocal at Wednesday night's meeting showing opposition to the vote. Lautzenheiser said he understands why people are against the vote.

"We have a new ordinance that has a bigger setback requirement, however, it can't apply to these because it was filed first," he said.

Chuck Brooks, a homeowner in Wells County, has been against the plan.

"These projects should be harmonious, they have to be compatible with what's already there, and there's nothing compatible in southern Wells County with a 500 foot wind turbine," he said.

Shane Harris, a representative of Indiana/Kentucky/Ohio Regional Council of Carpenters, is for the project because about bringing jobs to the area.

"We have built ever single wind turbine in Indiana, which has created almost a million construction hours for our workers out there in the field. So, it's been a great economic benefit for us," he said.

Those against the board's vote have 30 days to appeal.

Watch “The Politics of Power” on 8/16/13 at 8 pm ET on MSNBC; Documentary on climate change with Chris Hayes

Posted by Laura Arnold  /   August 16, 2013  /   Posted in Uncategorized  /   No Comments

The Politics Of Power Banner 977x102

http://tv.msnbc.com/politics-of-power-hayes/ Visit to see video.

In his upcoming MSNBC documentary, “The Politics of Power,” Chris Hayes declares: “Climate change is a problem without borders; and developing countries are feeling the heat even more than the first world.” According to a Stanford University report, the planet is undergoing one of the largest climate changes in 65 million years.

The documentary begins after Hurricane Sandy, the 2012 super storm that left at least 147 dead and $65 billion in damages along the east coast of the United States. Affected areas are still digging their way out of the economic and emotional hole brought on by the storm. But was Sandy an aberration? Or should we expect severe storms like Sandy to recur?

The answer is—yes. Without immediate intervention, extreme weather is predicted to continue and even worsen, the documentary reports.  Last year was already the  hottest year ever recorded for the continental United States, according to the National Climatic Data Center at National Oceanic and Atmospheric Administration (NOAA),

Be sure to tune in to “The Politics of Power” to hear Hayes give a comprehensive breakdown of the destructive and unalterable path we’re headed down, and how politicians and large corporations have politicized the issue.

Hayes urges everyone to act quickly: “The price for politics as usual is just too high, our timeline too short…The solution to global warming is just that—global.”

Tune in to “The Politics of Power,” narrated by Chris Hayes on August 16th at 8 p.m. ET on MSNBC.

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Indy Star: IPL penalized $10M by Indiana regulators

Posted by Laura Arnold  /   August 16, 2013  /   Posted in Office of Utility Consumer Counselor (OUCC)  /   No Comments

An IPL manhole cover is seen on Pennsylvania Street, Thursday, June 9, 2011. Kelly Wilkinson / The Star

An IPL manhole cover is seen on Pennsylvania Street, Thursday, June 9, 2011. Kelly Wilkinson / The Star / Kelly Wilkinson / The Star

IPL penalized $10M by Indiana regulators

 

Indiana utility regulators have socked Indianapolis Power & Light Co. with a $10 million penalty for presenting an “overly simplistic” cost/benefit study on major upgrades to two coal-fired power plants.

The Indiana Utility Regulatory Commission on Wednesday said it needed to send “an appropriate message” that utilities need to present a better analysis of capital improvement proposals.

“IPL’s presentation of its case in this proceeding fell below our expectations given the size of the proposed capital investment, time frame in which this Commission was provided to make a decision and the contested nature of the proceeding that should have been anticipated,” the agency order said.

“Merely chastising” IPL would not have sent a clear enough message, the order said. Instead, the agency added $10 million to a credit that IPL must give its customers as part of the project.

“We believe $10 million is material and sends an appropriate message to IPL,” the order said.

IPL officials could not be reached for an immediate comment.

While scolding IPL, the agency approved its proposed environmental upgrade to the Harding Street and Petersburg power plants to meet federal mercury regulations. The upgrades will raise customer rates between 2 percent and 3 percent a year between 2014 and 2017.

Read the order and the Settlement Agreement that was filed yourself.

Download the order here: 44242order_081413

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