Wind PTC Waiting For Fiscal Cliff Deal

Last week saw more calls for an extension of the wind energy production tax credit, the pivotal subsidy that will expire at the end of the month unless Congress acts. But don’t expect anything to happen until the president and Republican leaders come to an agreement on the so-called fiscal cliff.

The latest push to get the PTC extended came Friday from the Western Governors’ Association, which fired off a letter to Congress arguing that keeping the tax credit alive would make sure Santa’s Workshop has enough power to make toys for all the good little boys and girls.

Caithness Shepherds Flat wind farm oregon

image via Caithness Shepherds Flat

Just kidding. They said it was “critical to achieving the country’s clean energy goals, building the nation’s manufacturing base, creating jobs, lowering energy costs and strengthening energy security.”

That might be a bit overblown, but at the very least an extended PTC would stanch job losses in the wind-power manufacturing chain, where orders for turbines, nacelles, towers and other components have dried up as companies shelve project plans.

What’s interesting here with the WGA is that of the 19 governors in the organization, just seven are Democrats, once again making the point that this is a green policy that enjoys rare bipartisan support –  just not quite enough to squeeze it past largely Republican-based opposition in Congress.

That said, the governors were measured in their endorsement of the PTC.

“While the PTC is vital to the near-term future of renewable energy production in the Western United States and across the nation, we agree that the credit should not exist in perpetuity,” said Utah’s Republican governor, Gary R. Herbert, chairman of the WGA, and Colorado’s Democratic governor, John Hickenlooper, the group’s vice-chairman.

The governors coupled the ending of the PTC with the jettisoning other federal energy subsidies.

“In the long run, we believe repealing all federal energy subsidies (tax or otherwise) is the preferred approach. No one energy company, or energy source, should receive preferential treatment from the federal government,” they said.

The prevailing expectation is that a short-term extension of the credit is a good bet – though no lead-pipe cinch – to be part of a budget deal, whether it comes by the end of the year or sometime later in January, when the pressure on Congressional Republicans to derail big tax increases and Defense Department budget cuts would presumably force action. This would open the door for a discussion about a gradual phase-out of the tax credit.

Under current law, the PTC of 2.2 cents per kilowatt-hour is available for turbines in operation before the end of this year, and can be claimed for 10 years. The Joint Committee on Taxation estimates that modifying the expiration date to make turbines under construction by the end of 2013 eligible – as passed in August by the Senate Finance Committee as part of a large package of tax breaks – will cost $116 million in 2013 and a cumulative $12.1 billion by the end of 2022.

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.

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