Renewable Energy Memo

September 22, 2009

Producers Applaud (Mostly) for S.B. 1589

Filed under: Biofuels,Energy Blog — Tags: , , — Jonathan B. Wilson @ 7:11 am

After several weeks to review the bill, producers are responding with mixed, but mostly positive, praise for S.B. 1589, according to Biodiesel Magazine

As industry leaders responded to Biodiesel Magazine’s questions about the proposed changes, some strongly disagreed with NBB’s applause of the measure in Washington to convert from a blender excise tax credit to a producer excise tax credit. “I don’t understand their wanting to change that,” said one NBB member, who asked not to be named. “I don’t see the sense or the advantage in it.”

The source indicated that producers who sell B100 are able to keep their books clean because they don’t file any claims with the Internal Revenue Service. This allows them to bill the $1 per gallon credit into their sale price and let distributors, who blend the fuel, deal with the paperwork. “It usually takes about 10 days for us to get paid by our customers,” said the source. “When you’re dealing with the federal government, 45 days is good.”

Delays in repayment impact producers who must tie up more of their own capital while they wait for cash.  “I understand that it’s a cash flow issue,” said Bobby Heiser of Bulldog Biodiesel. “But most of the time we’re the blender of record anyway, so we’re already dealing with the IRS. The way that this change will make it easier for us will be by eliminating B99.”

Management at Lake Erie Biofuels, a plant with a 45 MMgy capacity in Erie, Pa., agreed. “We sell maybe a couple of truckloads of B100 while B99 makes up almost 90 percent of our total sales,” said Michael Noble, director of operations at LEB. “Changing the excise tax will be better for our customers, but it doesn’t change our position.”

Most analysis was positive, however, with the only constant criticism being that the extention (at five years) was too short.

Powered by WordPress