Renewable electricity, refined coal production inflation factors, reference prices (2016)

Renewable electricity, refined coal production

The Treasury Department and IRS today released for publication in the Federal Register a notice that provides the 2016 inflation adjustment factors and reference prices used in determining the availability of the credit for renewable electricity production and refined coal production under section 45.

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Credit rates

Today’s notice [PDF 187 KB] provides:

  • The 2016 credit rate for wind, closed-loop biomass and geothermal facilities claiming the renewable electricity production credit is unchanged at 2.3 cents per kilowatt hour.
  • The 2016 credit rate for open-loop biomass, landfill gas, trash, qualified hydropower and marine and hydrokinetic facilities is also unchanged at 1.2 cents per kilowatt hour.

Reference prices

  • The 2016 reference price for electricity produced from wind is 4.5 cents per kilowatt hour (unchanged from 2015).
  • The reference prices for fuel used as feedstock within the meaning of section 45(c)(7)(A) (relating to refined coal production) are $31.90 per ton for calendar year 2002 and $53.74 per ton for calendar year 2016.
  • The reference prices for electricity produced from open-loop biomass facilities, small irrigation power facilities, landfill gas facilities, trash combustion facilities, and qualified hydropower facilities have not been determined for 2016.

Also, the credit is not phased out for 2016 because the reference price does not exceed the beginning of the phaseout threshold.

Notice 2016-34

The IRS on May 20, 2016, released Notice 2016-34 [PDF 29 KB] providing the same information as in the Federal Register notice, but for publication in the Internal Revenue Bulletin.

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