Wind Tax Credit Still Alive In Capitol Haggling

[UPDATE: As expected, the Senate Finance Committee on Thursday afternoon passed a tax-break package that would extend the expiring wind production tax credit. If passed by the full Senate and House – not likely to happen for weeks or months, if at all – wind facilities that begin construction before the end of 2013 would be eligible for the 10-year credit. See the full story here.]

Washington’s dysfunction is on full display with the fight over the production tax credit for wind. One day an extension of the key measure is included in legislation. The next day it’s out. Then it’s back in again.

As of this writing Thursday morning, that’s the latest, according to Bloomberg: Senate Finance Committee Chairman Max Baucus (D-Mont.) has added a one-year extension of the PTC for wind energy, upon which 37,000 jobs might hinge, into a big package of tax breaks due for a committee vote later in the day.

Siemens Kansas wind nacelle factory

image via Siemens

But here’s something to consider: Even if the 2.2-cents/kilowatt-hour tax credit makes it through the Senate, there’s still that pesky matter of the House of Representatives. As Politico reported: “House tax writers … weren’t involved in the negotiations on the business tax package and it’s unclear how quickly the chamber might move.”

This leaves the wind industry swirling in uncertainty, perhaps for several more weeks if not months. That makes it challenging for investors and developers to make decisions about projects that would go into service after Dec. 31, as Federal Energy Regulatory Commission Chairman Jon Wellinghoff noted on Wednesday.

“The wind industry, like any other energy industry, needs ‘some level of certainty’ about tax policy in order to be able to make business plans, and the PTC should not be subject to an ‘arbitrary and immediate cutoff,’” Wellinghoff said at a Washington, D.C., energy conference, according to a post on the American Wind Energy Association’s blog.

Earlier this week, Republicans had reportedly moved away from a deal to extend the PTC after the presumptive GOP nominee for president, Mitt Romney, declared his opposition to the tax break. But the ranking Republican on the Finance Committee, Orrin Hatch, signaled the possibility of a deal, and such a deal was clinched in late-night negotiations.

To get the deal on the wind PTC, Baucus had to give some ground. Supporters of a continuation of the tax credit – nearly all Democrats, and a healthy number of Republicans – were seeking at minimum a two-year extension. But Baucus apparently got just one year, although Bloomberg said that under the language that would be considered by the full committee, “wind and other alternative-energy projects could qualify for the credit if they start construction, not begin operation,” by the end of 2013.

Pete Danko is a writer and editor based in Portland, Oregon. His work has appeared in Breaking Energy, National Geographic's Energy Blog, The New York Times, San Francisco Chronicle and elsewhere.