Project Finance NewsWire

June 2006


REC market update

State programs to promote the development of renewable energy continue to multiply and evolve, presenting challenges, opportunities and some unexpected consequences for the US power market.

FERC ruling frustrates wind developers

Wind farm owners and other independent power suppliers in the United States are troubled by a ruling by the Federal Energy Regulatory Commission in late February that let a utility charge a toll f...

Ethanol from a lender perspective

We participated in a briefing about the US ethanol market in New York in March hosted by WestLB. The following are edited excerpts from the briefing ...

Environmental update

The US Environmental Protection Agency eliminated a requirement in May that gasoline must include an oxygenate fuel additive like ethanol and ETBE made from ethanol.


A tax reconciliation bill

A tax reconciliation bill that President Bush signed into law on May 17 makes a number of changes in US tax laws that will affect the project finance community ...

Wind credits

Wind credits remain unchanged at 1.9¢ a kilowatt hour during 2006, the IRS said in mid-April.

Matching power contracts

Matching power contracts are not “section 197 intangibles” but rather a financial play, the IRS said. The IRS made the statement in a private letter ruling that it made public in April...

State tax incentives

State tax incentives that encourage companies to build wind farms, ethanol plants, factories and other facilities dodged a constitutional challenge.

Ethanol credits

Ethanol credits cannot be claimed by a company that hires out the actual work of producing the ethanol to a factory under a contract manufacturing or tolling arrangement, the IRS said...

Shareholder debt

Shareholder debt passed muster in court. Several members of the family that owns a small manufacturing company made advances to the company periodically to cover working capital requirements ...

Nuclear power plant

Nuclear power plant owners qualify potentially for tax credits of 1.8¢ a kilowatt hour on the electricity they produce, but must apply to the US government for an allocation.

A California tax

A California tax on limited liability companies has been declared unconstitutional. Companies need to file refund claims...


Michigan declined to take into account the fact that an independent power plant is a “QF” project when assigning a value to it for property tax purposes.

Foreign companies

Foreign companies that invest in the United States through joint ventures are chafing at US withholding taxes...

Construction costs

Construction costs can sometimes be allocated largely to the part of a project that a company will sell at completion to a third party, even though the company will retain part of the project for ...

Coal supply contracts

Coal supply contracts were not taxed when transferred as part of a swap of mining properties. Peabody Natural Resources Company exchanged its gold mining business with Santa Fe Pacific Mining Co...

Minor memos

The US Treasury Department told a congressman from North Carolina in March that it lacks authority to bar biodiesel tax credits ...