David Burton Quoted on Impact of Cash Grant Payment Cuts and Production Tax Credit Extension
In two recent articles, Akin Gump tax partner David Burton discusses how developments in Washington are affecting renewable developers and utilities.
In the SNL Financial article “Sequestration could cut cash grant payments for renewable developers by 9%,” Burton estimates the annual reduction in grants could be between 5.1 and 5.3 percent. Since the cuts would be compressed over the remaining seven months of the fiscal year, this could equate to an actual cut of roughly 9 percent. Burton also points out that the sequestration would affect developers of all sizes, including those of larger utility-scale projects.
Speaking with FierceEnergy for the article “Utilities could feel pain from PTC extension,” Burton says the extension of the production tax credit (PTC) “creates an advantage for utilities with tax appetite versus utilities without tax appetite,” since some can “buy wind projects outright and use the PTCs themselves.” Burton notes that if the PTC comes to an end, “utilities will need to pay higher purchase agreement rates, manufacturers will need to accept lower profit margins and developers will need to accept lower [internal rates of return].”