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Industrial Customers Urge One-Time Extension of CHP Investment Tax Credit

May 11, 2016 By Cheryl Kaften

A letter sent by the Industrial Energy Consumers of America (IECA) to U.S. Representative Patrick Meehan (R-PA-7) on May 10 supports passage of new national legislation that would extend, but eventually phase out,  the energy investment  tax credit (ITC) for combined heat and power (CHP) facilities.

Meehan is a co-sponsor, along with Representative John Carney, Jr. (D-DE-At Large), of H.R. 5172, To amend the Internal Revenue Code of 1986 to extend and phase out the energy credit for certain property, which was referred to the U.S. House Committee on Ways and Means on May 6.

We support passage of H.R. 5172 to amend the Internal Revenue Code of 1986 to extend and phase out the energy credit for certain property,” said IECA President Paul Cicio on behalf of the membership of the manufacturing trade group.

The bill would extend the CHP ITC another five years by providing a one-time tax credit that “supports investment in highly energy efficient technology,” Cicio said.

He noted a host of CHP advantages, stating, “Industrial CHP facilities improve U.S. manufacturing competitiveness by lowering steam energy and electricity operating costs. CHP can produce power at up to 80 percent more efficiently than stand-alone power generation technology (which is at about 35 percent). As a distributive resource, CHP improves grid reliability in the event of a weather-related disaster. Also, CHP runs 24/7, which means it provides a higher quality of power, including power production when it is needed the most – at peak demand periods.”

However, Cicio said there also is a major drawback that would be solved by using other types of energy production. “Because building a CHP facility is a more expensive alternative than generating steam in a standalone boiler, the ITC encourages use of a more efficient alternative.”

Thus, after considering the pros and cons, the group has given the bill its go-ahead. “The industrial sector does not build CHP facilities to sell power. CHP helps to keep energy costs as low as possible to support global competitiveness and maintain/create middle class jobs. Thank you for your leadership on this important issue.” Cicio said.

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