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Strong budget stand by Clinton -- Fiscal year 2001 proposal

In his last annual budget proposal, President Bill Clinton is not only seeking more money for wind for the next fiscal year as part of a broad effort to fight global warming. He is also asking Congress to extend wind's Production Tax Credit (PTC) by another two and a half years -- until July 1, 2004. It is set to expire on January 1, 2002. The wind hikes are part of a broad package of funding and incentives to combat climate change, a crusade Clinton hopes will be continued by the election of his vice president, Al Gore, as his successor.

Clinton, who must leave office in January of next year after two terms in the White House, is asking for a wind budget of $50.5 million for fiscal year 2001, almost one-tenth higher than his request for $45.6 million a year ago. The wind request, which is almost always higher than the final budget figure hammered out in the US Congress, is $18 million above the spending level approved last year.

Clinton is calling for overall funding for the Office of Energy Efficiency and Renewable Energy -- which includes the wind budget -- to be hiked by 30% to $1.4 billion. Much of Clinton's emphasis is on backing bioenergy.

An additional $48 million is to be set aside for distributed power, transmission, reliability, energy storage and high temperature superconductivity for improving power delivery systems. The president's budget request is effectively a starting point for negotiations on Capitol Hill which -- especially since this is the year of a presidential election -- may well take until the fall to complete. The budget was formally sent to the US Congress on February 7. The new fiscal year starts on October 1.

Of the $50.5 million for wind, $5 million is specifically earmarked for Wind Powering America (WPA), the initiative announced last June by Energy Secretary Bill Richardson (Windpower Monthly, July 1999), says WPA project director Phil Dougherty. The Renewable Energy Production Incentive (REPI) for municipal utilities will be funded at $4 million, twice the amount approved in FY 2000.

Tax credit package

The extension of the PTC -- originally $0.015/kWh in 1992 but currently at about $0.017/kWh to keep pace with inflation -- is part of a $4 billion tax credit package over the next five years, and $9 billion over the next decade. The PTC was last extended in late 1999. Clinton's tax credit package includes credits for buying energy efficient cars and trucks, homes and appliances as well as credits for the production of other renewable energy technologies.

Under Clinton's plan the PTC, a credit for the first ten years of a project's life, would apply to wind developments installed by July 1, 2004. The $4 billion package, says the White House, is to help reduce greenhouse gas emissions by spurring the use of renewables and the buying of energy efficient products.

Breaks for distribution

Tax code rules for municipal utilities are also to be changed, according to the Dow Jones news wire. Currently, if municipal utilities participate in state-sponsored retail competition programs, the tax-exempt status of bonds they issue, estimated to be worth about $70 billion, is threatened. The bonds in question are issued to finance the generation or distribution of electricity, which in some cases is wind or other renewables. The Clinton proposal bars any future tax-exempt bond offerings for generation or transmission facilities, but tax-exempt bonds for distribution will continue.

Also important for wind is a proposed simplification of the depreciation system for distributed power by the introduction of a broad 15-year recovery period. People or businesses getting the depreciation may not sell or pass on more than 50% of the electricity to a third party: if they write off the generation equipment they must also use at least 50% of the power, rather than making a profit by selling most of it.

Clinton also proposes making clean energy technology more readily available to the developing world. He asks for a $3 billion increase in the "Twenty-First Century Research Fund," which encourages private research in science and technology. To promote the export of US technology, his budget suggests an International Clean Energy Initiative. The initiative includes an increase of more than 100% in money for promoting the export of clean energy technologies to the developing world. The amount proposed is $200 million.

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