Commentary: Tax credits for alternative energy a good move

This editorial appeared in The Anchorage Daily News.

Sen. Lesil McGuire has a promising bill in progress to give power producers tax credits for the kilowatt hours they produce from wind, water, wood, steam or sun. Senate Bill 31 provides 2.1 cents per kilowatt hour in state corporate income tax credits for any new electricity they produce from alternative energy sources after Jan. 1, 2010. The credits could be claimed during the first four years of production from the alternative source.

Depending on the size of the alternative projects, those tax savings could be worth from a few thousand dollars to millions of dollars.

The 2.1 cents figure matches a federal program's tax break for wind, geothermal and biomass electricity production.

Alternative energy producers could sell their state tax credits to any outfit required to pay an Alaska corporate income tax. That's because most of Alaska's power is produced by government utilities or nonprofit cooperatives that are exempt from income taxes.

The idea here is simple: Encourage Alaska energy producers to give us more power from alternative and renewable sources for the sake of energy efficiency, a cleaner environment and reduced costs.

With production tax credits, the state lets the private sector make the upfront investment and assume the risk of failure. If investors build a project that actually produces energy, they get the tax reward. That way the state isn't bankrolling projects that may or may not pan out.

To read the complete editorial, visit The Anchorage Daily News.