| FREQUENTLY ASKED QUESTIONS |
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| Changes in the Business Energy Tax Credit (BETC) Program |
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Why are there new rules for the BETC program?
The Oregon Department of Energy (ODOE) implemented temporary rules for the BETC program on May 27, 2010. The temporary rules were necessary in order to implement legislatively-mandated changes found in HB 3680 (2010) as well as other measures.
Which applications are subject to the new administrative rules?
The May 27th rules apply to all applications pending as of May 27th, 2010 and to projects where the applications for preliminary or final certifications were received by ODOE on or after July 1, 2009.
What are the application fees for the BETC program?
The temporary rules change the fee structure for renewable energy project applications that fall into Tiers II and III. All preliminary certification applications submitted for Tier II or III review must include a $500 payment to ODOE for the initial application review costs. Applicants who are notified that their application has advanced to step two of the application review process will be required to submit a final review fee of 0.006 (0.6%) of the project’s eligible cost up to $35,000. This does not include sustainable building facilities or renewable resource manufacturing facilities.
Requests for extensions of preliminary certifications must include an extension fee that is the lesser of $300 or the preliminary certification application fee for the project. Requests for amendments of preliminary certifications must include an amendment fee that is the lesser of $300 or the preliminary certification application fee for the project. If a request to amend results in facility re-certification with increased eligible costs, then additional application fees may be owed to ODOE.
How does the new tiered system work for renewable energy applications?
Projects fall into three tiers that are based on estimated facility (project) costs. Applications with projected facility costs of less than $500,000 fall under Tier I. Tier I applications for preliminary certification must be submitted before the owner begins physical construction and applicants must receive final certification before July 1, 2012. ODOE has up to $10 million in tax credits ($20 million in eligible project costs) available on a first come basis for Tier 1 facilities using or producing renewable energy resources through December 31, 2010. Applications will be processed in the order they are received and may be rejected once all available tax credits have been issued for this tier.
Tiers II and III must go through a competitive review process. Applications with projected facility costs equal to or greater than $500,000, but less than $6,000,000, may be eligible for a BETC under Tier II. For the June 1st – August 2010 2010 BETC opportunity announcement period, there is a total of up to $10 million in tax credits available ($20 in eligible project costs) for Tier II facilities using or producing renewable energy resources. Tier II applications are subject to a competitive evaluation process.
Applications with projected facility costs equal to or greater than $6,000,000 are eligible for consideration for BETC preliminary certification under the Tier III opportunity announcement period. Tier III applications are reviewed under a competitive process and may be subject to third party review. For Tier III, there is a total of up to $30 million in tax credits ($60 million in eligible project costs) available for the funding cycle of June 1 – December 31, 2010.
How much money is available for tax credits?
The 2010 Legislative Special Session created a $300 million cap on the amount of potential Business Energy Tax Credits available for renewable energy projects during the current biennium that ends June 30, 2011. As of May 12th, ODOE has already issued preliminary certificates totaling about $218 million in tax credits. The BETC program still has funds available for projects using or producing renewable energy.
ODOE implemented a new tiered priority system on June 1, 2010 with $60 million in cap available for a funding cycle beginning June 1, 2010 and running through December 31, 2010. The $60 million in funds released June 1, 2010 will cover:
- Tier I: $10 million in tax credits ($20 million in project costs) available for applications requesting less than $500,000 in project costs, processed on a first come basis.
- Tier II: $20 million in tax credits ($40 million in project costs) available for applications of $300,000-5,999,999 in project costs. These will be subject to a competitive review with two funding periods of $10 million each (June 1-August 31, 2010 and October 1-December 31, 2010).
- Tier III: $30 million ($60 million in project costs) available for applications of $6 million or more in project costs, subject to a competitive process and independent third-party review.
Where do I find more information about the renewable energy project application process and how can ODOE staff help me with questions about my tax credit application?
More information on the changes to the BETC renewable energy application process can be found by reading ODOE’s website at: http://www.oregon.gov/ENERGY/CONS/BUS/tax/BETC-Renewables.shtml. On the main BETC page, there is a link to “Renewable Resources” that directs the user to more information and the requisite application forms. Be sure to read the Opportunity Announcement for detailed information about the processes for Tier II and Tier III applications.
Due to the competitive application model that is being used for all Tier II and III applications, all questions about Tier II and Tier III projects must be submitted and answered via email to ensure transparency and fairness. Questions about Tier II and Tier III projects can be submitted via email to betcoa@odoe.state.or.us. Answers to questions submitted will be posted every few days up to the final due date of June 11, 2010 at 5 pm.
For a comprehensive understanding of the BETC program, refer to the program’s Administrative Rules (OAR 330-090-0105 – 330-090-0450) found on the ODOE website http://www.oregon.gov/ENERGY/CONS/BUS/BETC.shtml.
What are the deadlines for applying for a tax credit?
Tier I applications are processed on a first come, first served basis. ODOE has up to $10 million available for Tier I applications through December 31, 2010.
Tier II applications are accepted from June 1 – June 30, 2010 and Tier III applications from June 1 – July 30, 2010. Any applications submitted after 5 pm on the final day of the acceptance period will be rejected. No Tier II or Tier III applications will be opened until the end of their individual acceptance periods, so there is no advantage to submitting an application ahead of others during that time.
What if I need to amend my application?
All requests for amendments to preliminary certifications must be submitted in writing to ODOE. Requests for amendments to preliminary certifications issued for renewable energy projects after July 1, 2009 will only be considered for equipment modifications within 10% of the approved specification. All requests for amendments must include the lesser of $300 or the preliminary certification fee for the project.
What are the changes to the Pass-through Program?
The Pass-through program’s “pass-through rates” have changed under the temporary rules. There are no longer separate rates for “public” and non-public” projects. There are different rates for 5-year tax credits and 1-year tax credits. The rate for a 5-year tax credit is determined by taking the total tax credit amount and dividing it by 1.3579. The rate for a 1-year tax credit is determined by taking the total tax credit amount and dividing it by 1.0309.
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