September 2009 Archives

Renewable Energy-Related Legislation and Loan programs in Montana

According to Energy Conservation Investment (MCA 15-32-103), a taxpayer in Montana can avail a deduction in his total expenditure for an investment in a building which promotes the use of renewable energy sources. Individual, corporation, partnership or small Business Corporation is eligible to avail this corporate tax deduction. The investment made must be of amount $5000 or more and qualified under section 48(a) of the Internal Revenue Code of 1986. The property or building must not be financed by State, federal or any other private grant funds for energy conservation. According to MCA 15-32-106, this tax treatment needs to be approved by the revenue department. The revenue department has the rights to refer to the department of environmental quality for advice and the later should correspond within a period of 60 days. The same goes for the department of labor and industry. If the department of revenue finds a deduction or credit impractical or ineffective, it has the right to deny the deduction. Under this tax deduction scheme the taxpayer can deduct from his total corporate income up to $1800 if it's a residential investment and in case of a non-residential building up to $3600 can be deducted.

According to Alternative energy investment tax credit (MCA 15-32-401), any commercial investment of amount $5000 or more promoting alternative energy industry in Montana is eligible for this tax credit. The main purpose of introducing this alternative energy tax credit is to attract more alternative energy manufacturing industries in the State. It is desirable to for the industry to sale alternatively generated electricity on a direct contract basis without affecting the rates charged to other electricity users. Commercial and net metering investment is eligible to avail up to 35% tax credit against corporate tax on the income generated by the investment. This credit will be given only on gross income produced by the qualified energy equipment. The credit should be availed on the same year in which the equipment is installed. Ay exceeded amount of tax credit can be carried over next year and can also be applied against State tax liability for the following 7 years. A project of 5 MW having an employment agreement with the tribal government can carry the tax credit for a period of 15 years. While availing this alternative energy tax credit, the taxpayers is needed not to avail any other State energy or State investment tax benefits. Normally the tax rate is 6.75. The credit can be availed on an existing facility and as well as on a new one also.

According to MCA § 15-6-157 enacted in May 2007, all new renewable energy production facilities, renewable research and developments equipment and renewable energy manufacturing facilities are eligible for property tax abatement. All these facilities and equipments will be assessed at 50% of their gross taxable value. The allowed list renewable technologies include solar space heat, solar water heat, solar thermal process heat, wind, photovoltaic, solar pool heating, fuel cells using renewable energy fuels etc. All these renewable manufacturing facilities must have a total production of renewable energy equipment equal to at least half of its total annual production. This tax abatement is provided for the period of construction of the renewable energy equipment and also the first 15 years of its service. Eligible facilities must have begun the production after June 2007. All production and manufacturing facilities must get approved by the department of Environment Quality in order to avail this tax abatement.

According to M.C.A. §15-32-109, all individual Montana taxpayers are eligible to avail tax credit of 25% of the total cost of any investment made to promote the use of renewable energy resources in building against their tax liability. Under this tax credit a maximum amount $500 can be credited. The investment must be made in physical attributes of a building like water, heating or cooling system. The type of investment must be for energy conservation purposes. This tax credit should be claimed in the same year the investment is made.

According to MCA 15-32-201, all Montana taxpayers are eligible to claim a tax credit if they install an energy system recognized as a standard non-fossil form of energy system to provide heat for his main dwelling. The amount of tax credit can be equal to the total cost of the energy system including the installation costs. But the maximum amount is capped at $500. This tax credit can also be carried over for the next 4 taxable years.

Any Montana resident taxpayer or a person constructing new residence with the installation of a geothermal system is liable to claim a tax credit against his tax liability. The amount which can be claimed through this tax credit can be a portion of the total cost involved in the construction, but it cannot exceed $1500. If the amount of the tax credit exceeds the total liability of the taxpayer in the year of the installation then it can be carried over for the next 7 years. The amount which is not used in the year it is earned should be carried first to the earliest tax year in which it can be applied and then it can be carried over the following years.

The Northwest Solar Cooperative (NWSC) is managed by the Solar Oregon and through arrangements with the Bonneville Environmental Foundation and Three Degrees Group it offers various grant programs to the owners of the small photovoltaic (PV) power generating systems. Customers can purchase the rights to the "Green Tags" or environmental attributes at the rate of $0.02 per KW through December 2009. All the residential and non-residential owners of PV systems can take participation in the Green Tag Program if the system is installed after June 2002. There is no fixed period involved in the contract terms and regulation. The renewable of the contract for another 3 years after December 2009 will mainly depend on the status of 3 Degrees Energy. All interested PV system owners are required to sign an agreement with the NWSC to sell Green Tags and to report any system failures.

According to MCA 15-24-1402, any generating plant in Montana are eligible for the Corporate Property Tax Reduction for New/Expanded Generating Facilities if its production is 1 MW or more and it must use an alternative renewable energy source for the production. After a construction permit is issued, for the first 5 years any qualifying improvements or modernized process representing new industry or expansion of any existing industry must be taxed at 50% of the total taxable value. Each year thereafter the tax amount is increased by equal percentage till the 10th year to attain the full taxable value. After 10 years the system must be taxed at the 100% taxable value. This property tax assessment must be approved by the local governing authority of the affected county or the incorporated city or town.

Under the State Buildings Energy Conservation Bond program projects on state owned buildings can be financed for the use of improved renewable energy resources. The whole program is administered by the Montana department of Environmental Quality. Normally bond proceeds are used for the funding of the projects and in return energy savings to pay the bonds back. All government agencies are encouraged to take participate in this program for various benefits involved. Buildings constructed under energy projects have less drafts and it's more comfortable. Projects eligible for this program are tune-ups, lighting upgrades, HVAC system upgrades, insulation and infiltration control etc.

Rebate Programs

Black Hills Power - Commercial/Industrial Energy Efficiency Programs
Under this utility rebate program Black Hills Power provides various rebates to its commercial customers using energy efficient systems. Eligible efficiency technologies include heat pumps and water heaters. Various renewable geothermal heat pumps using air and ground sources are eligible for this utility rebate. New heat pump owners or owner who wants to replace the existing ones can avail this rebate. The incentive amount depends on various factors. Along with the rebate come various technical customer assistance programs. Moreover upon request rate comparison, voltage monitoring, account analysis, power factor, harmonic measurements are also available. The maximum amount is capped at $7500 for new heat pumps, $800 for replacing the old heat pumps and $800 for water heaters. The incentive amount is $150 per ton for new heat pumps, $50 per ton for replacement heat pumps and $1 to $2 per gallon for water heaters.

Flathead Electric Cooperative - Commercial Lighting Rebate Program
Under this utility program Flathead Electric Cooperative together with the Bonneville Power Administration encourages it commercial and residential customers to use various energy efficient resources. The incentive amount is available under two parallel rebate programs - commercial lighting retro fit rebate program and new construction lighting rebate program. If any customer makes the purchase of a new high-efficient fixture or replacement fixtures then he will be provided rebate to offset the cost. Mostly a significant amount of the total cost of the equipment is covered in the rebate amount. The system must get approved by the Flathead Electric Cooperative before beginning any new project installation. The incentive amount cannot exceed 70% of the total project cost.

NorthWestern Energy - Commercial Energy Efficiency Rebate Program
Under this utility rebate program and other available ones, NorthWestern Energy encourages its industrial and commercial customers to use various renewable energy resources in their business. Rebate is available for the replacement of any old or less efficient lighting products with new high efficiency technologies under E+ Commercial Lighting Rebate Program. This program is developed mainly to aim retrofit projects. The minimum incentive amount is $50. Similarly the E+ Premium Efficiency Motor Rebate Program provides incentive for motor retrofits and new construction. Owner of the motor must apply for this rebate within 90 days of motor purchase. Normally motors with in between 20 HP and 500 HP are eligible for this rebate program.