Congressional budget scorers reduce estimated cost of PTC 

Source: Nick Juliano, E&E reporter • Posted: Thursday, December 4, 2014

Nonpartisan congressional budget scorers today revised downward their estimate of what it would cost the government to extend a key renewable energy incentive through the end of this year.

The Joint Committee on Taxation released a revised cost estimate for H.R. 5771, a bill expected to pass the House this evening that would renew more than 50 expired tax breaks through the end of this year. JCT said it discovered a “computational error” in its cost estimate for the Production Tax Credit (PTC), which supports wind and select other forms of renewable energy.

Renewing the credit through this year would cost the government about $6.4 billion in lost revenue over the next decade, JCT said today, down from its estimate of $9.6 billion released earlier this week. The new estimate is about half as much as the $13 billion price tag JCT applied to a two-year PTC extension proposed this summer.

With the revised estimate, the PTC is no longer the most expensive of the dozens of breaks in the package, collectively known as tax extenders; that honor goes to the $7.6 billion research and development credit. The total package would cost about $42.6 billion over the next 10 years.

Conservative critics have targeted the PTC for elimination, arguing it is too expensive and primarily benefits wind power companies that no longer need government support. The wind industry argues that 30,000 jobs would be lost without at least a two-year PTC extension because too little time remains in the year for any new wind farms to qualify for the credit (E&E Daily, Dec. 3).

Developers would have to begin construction on new projects or make a “safe harbor” investment of about 5 percent of their overall costs by the end of the year to qualify for the renewed PTC. Projects that were under construction or harbored before the credit expired last year generally will be able to claim the credit as long as they are on line by the end of 2016.

It remains unclear how to reconcile JCT’s estimate with industry predictions of little new investment. JCT shows the credit would result in less than $200 million in lost revenue both in 2015 and 2016 and that the cost would climb from there to reach $939 million in 2024.