January 7 2013

Wind Industry Hits Setback After Fiscal Cliff

Emily Wismer

 

The Wind Production Tax Credit (PTC) may have been extended in the fiscal cliff deal, but the wind lobby received significant setbacks that will carry over into the new Congress.

The grand bargain that allegedly avoided the fiscal cliff contained a provision to extend the PTC, which provides a 2.2 cent tax break per kilowatt-hour of energy produced, through 2013.  Instead of lowering the federal deficit, the PTC cost an estimated $12.1 billion and used taxpayer dollars to support an industry that already makes up 90 percent of renewable resources developed under non-federal programs, and thus plays a dominant role in the renewable energy sector.

The PTC distorts energy markets and debate to extend the credit divided traditional wind supporters. National Journal reports that the battle left the wind industry bruised:

Xcel Energy, which is among the top 10 biggest utilities in the country and had the largest wind capacity of any utility in 2011, is reviewing its membership in American Wind Energy Association largely because of how the trade group handled the tax credit debate…

O’Donnell [Xcel’s lobbyist] doesn’t think extending the PTC, which is a tax credit that goes to wind-energy developers, benefits customers paying electricity bills or the utilities buying wind from renewable-energy generators. He went so far to say that because Congress extended the PTC without any additional policies to benefit customers, the Minnesota-based Xcel may not buy more wind.

It is no secret the President has strongly advocated bankrolling clean energy companies to the detriment of cheaper, more competitive energy. According to National Journal, the energy industry backlashed against the President’s playing favoritism with taxpayer dollars:

Another bruise from last year’s fight that will wear on into 2013 is lobbying by Exelon, the country’s biggest nuclear generator, to eliminate the PTC altogether. The Chicago-based Exelon, which is also the 11th-ranked utility in terms of wind generation, has aggressively lobbied lawmakers to end right away the tax credit because the policy distorts electricity market prices and hurts the company’s bottom line.

Exelon spent $6.4 million on lobbying through October (fourth-quarter lobbying numbers are due out later this month). In response to Exelon’s lobbying push, which was first reported by National Journal in August, AWEA [American Wind Energy Association] kicked the company out of its group in September. Exelon is going to keep up its push against the policy now that Congress renewed it.

As I mentioned before, without the PTC and various other federal incentives, wind generation is still expected to grow 50 percent by in the next 18 years. Wind energy production will continue to grow without this expensive corporate handout.

AWEA and free market advocates have 11 months to regroup, before the PTC is set to expire and this debate begins again. This is one tax credit that can and should be sacrificed for deficit reduction and a competitive economy.

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