Tax depreciation for power plants should be shortened, the Edison Electric Institute urged the US Treasury.
Most coal- and gas-fired power plants are depreciated over 15 or 20 years. The trade association said in a letter to the Treasury in early November that the disparity between these lives and the 5-, 7- or 10-year tax depreciation allowed to most other industries has the effect of directing capital investment away from the utility sector. It pointed to a number of anomalies in the depreciation tables, including that a computer used to run a nuclear power plant must be depreciated over 20 years while the same computer used to run a cigarette factory or a textile mill can be depreciated over seven years. EEI did not recommend any particular lives. The Treasury Department is under orders from Congress to do a study of depreciable lives to determine whether they require changing.
The Treasury Department went through a similar exercise in the late 1980’s, but Congress never acted on its report.