Production tax credits

Production tax credits

April 01, 2014 | By Keith Martin in Washington, DC

Production tax credits for generating electricity will remain at 2013 levels in 2014, the IRS said in April.

The credits in 2014 will be 2.3¢ a KWh for generating electricity from wind, geothermal energy and “closed-loop” biomass and 1.1¢ a KWh for electricity from “open-loop” biomass, landfill gas, incremental hydroelectric projects and ocean energy.

The credits are adjusted each year for inflation as measured by the GDP price deflator. They run for 10 years after a project is originally placed in service. The IRS said inflation was so low in 2013 that there was no change in the credit amount.

The credits phase out if contracted electricity prices from the particular resource reach a certain level. That level in 2014 is 12.06¢ a kilowatt hour. The IRS said there will not be any phase out in 2014 because contracted wind electricity prices are 4.85¢ a KWh going into the year. It said it lacks data on contracted prices for electricity from the other energy sources.

Production tax credits for producing refined coal are $6.601 a ton in 2014, the IRS said, up 1¢ from 2013.

The IRS said there will not be any phase out of refined coal credits in 2014. The refined coal credit phases out as the reference price for raw coal moves above 1.7 times the 2002 price of raw coal. The 2014 reference price is $56.88 a ton. A phase out would have started at $81.83 a ton and would have been total if the reference price had been $90.58 a ton or higher.