Wind Energy Lobby Willing to Phase Out Tax Credit
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Date: 2012-12-14
In an unusual move a trade group, the American Wind Energy
Association (AWEA), said it is willing to accept a gradual phase-out
of a major tax incentive.
In a letter to Capitol Hill lawmakers dated December 12, AWEA CEO
Denise Bode said her group could accept a six-year phase-out of the
Production Tax Credit (PTC).
AWEA envisions keeping the tax credit at the current 2.2 cents per
KWH for projects started in 2013, and be phased down to 90% of that
value for projects placed in service in 2014; 80% in 2015; 70% in
2016; and 60% in both 2017 and 2018, ending after that.
"We're already showing we're a leader in innovation. Now we're
showing we're a leader in addressing the country's fiscal issues,"
Bode said in a news release. "At the same time, our number one
priority right now is not putting the wind industry over its own
fiscal cliff.”
Bode restated the AWEA position that unless the tax credit is
extended to projects that start next year “an entire U.S.
manufacturing sector” and 37,000 jobs could be put at risk. Bode
also noted that the Senate Finance Committee endorsed PTC extension
on Aug. 2, on a bipartisan 19-5 vote.
Earlier this year AWEA kicked out one of its member generators,
Exelon (NYSE: EXC) after it publicly called for an end to the PTC,
saying the wind industry can now survive without it.
Wind power installation in the U.S. exceeded the 50,000 MW level
this summer, AWEA reported earlier this year.
Sen. Lisa Murkowski, R-Alaska, the top Republican on the Senate
Energy and Natural Resources Committee has said she would favor a
gradual phase-out of the PTC.
In the letter, AWEA makes a plug for some other type of
congressional support for renewable power, which it does not
specify.
“In coordination with any phase down of the credit, we would urge
Congress to consider additional policy mechanisms to encourage a
diverse portfolio that includes renewable energy,” Bode said in the
letter.
Bode lauds success of wind tax credit
As for Bode, she credits the PTC for succeeding in helping spark
$15.5bn a year in private investment in U.S. wind farms over the
past five years. Phasing out the PTC gradually, rather than
abruptly, makes sense.
AWEA announced the policy position following analysis and high-level
discussions with industry leaders. The move was approved by the AWEA
board of directors, Bode noted.
AWEA sent its letter to Sen. Max Baucus, D-Mont, Chairman of the
Senate Finance Committee; Sen. Orrin Hatch, R-Utah, ranking
Republican on that committee; Rep. Dave Camp, R-Mich, Chairman of
the House Ways and Means Committee; and Rep. Sander Levin, D-Mich.,
ranking Democrat on that committee. Copied are House Speaker John
Boehner, R-Ohio, and Minority Leader Nancy Pelosi, D-Calif; and
Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch
McConnell, R-Ky.
The letter says in part, "The wind industry recognizes that our
country is facing significant fiscal challenges and is supportive of
all energy technology incentives being reviewed and even phased down
when Congress considers tax reform. However, the PTC has supported
the wind industry in its efforts to significantly reduce the cost of
producing electricity, and its continued availability for a
reasonable period of time will allow the industry to invest in the
cost-saving technologies required to finish the job."
Bode said that the letter addresses separate parallel conversations
that have been going on between the industry and Capitol Hill, about
extending the PTC in the short term, and the vision for the
long-term future of the PTC.
"With the policy certainty that accompanies a stable extension," the
letter says, "the industry believes it can achieve the greater
economies of scale and technology improvements that it needs to
become cost-competitive without the PTC,” AWEA said in the letter.
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