David Burton Quoted on Wind Financing Opportunities

For its article “Blowing in the wind: MLPs, MACRS and the PTC,” FierceEnergy spoke with Akin Gump tax partner David Burton and discussed the production tax credit (PTC) and other financing possibilities for utilities.

Among the topics Burton covered were:

  • the benefits to utilities of the rush by developers to start construction on wind projects by the end of 2013 to ensure they were eligible for the PTC: “Those wind developers will be anxious to obtain power purchase agreements (PPA) for their projects to ensure the projects are financeable. Utilities may be able to obtain favorable PPA rates from developers in that position.”
  • timing for project completion: “There is no statutory deadline for completing construction, but the IRS safe harbor requires the project to be ‘placed in service’ by the end of 2015. Going beyond 2015 requires the developer to be able to prove that completion of the facility was continuously pursued from the end of 2013 through the placed in service date. Seeking to prove that could be inviting a fight with the IRS.”
  • the advantages and disadvantages of master limited partnerships (MLP): “If the MLP bill [the Master Limited Partnership Parity Act] is enacted, it will have the advantage of being a ‘permanent’ provision of the tax law; thus, it will not have the on/off problems that plague the PTC, [investment tax credit (ITC)] and bonus depreciation. However, the tax benefit from MLP status is far less than the tax benefit from PTC and ITC. Therefore, utilities that have renewables targets should not think of MLP as a fair trade for PTC or ITC.”