Governors urge PTC extension; Grassley sees fate tied to fiscal cliff

Source: Nick Juliano, E&E reporter • Posted: Wednesday, November 14, 2012

As Congress begins its lame-duck session today, a bipartisan group of governors is urging an extension to a vital wind energy tax credit, the fate of which a key Senate backer says will depend heavily on whether congressional Republicans and the White House can reach a deal on broader tax and spending issues Congress faces before the end of the year.

The governors come from states that receive a significant portion of their electricity from wind or have major manufacturing facilities where turbines, towers, blades and other components are built. Organized as the Governors’ Wind Energy Coalition, the state leaders have been part of the yearlong push to extend the production tax credit, which is scheduled to expire at the end of the year.

“Due to the uncertainty that has resulted … we have begun to see a negative economic impact and loss of jobs in our states,” Iowa Gov. Terry Branstad (R) said at a Capitol Hill news conference today.

Govs. John Kitzhaber (D-Ore.), Sam Brownback (R-Kan.) and John Hickenlooper (D-Colo.) participated in today’s news conference by phone, sharing stories of how the wind industry has grown in their states and calling for an extension of the credit. The governors’ coalition also sent a letter to House and Senate leaders yesterday urging an extension of the credit.

Wind industry lobbyists remain optimistic that the PTC will win an extension during the lame-duck session that begins this afternoon, although its prospects are expected to be closely tied to several other pieces of year-end business collectively known as the “fiscal cliff.”

Lawmakers and the White House continue to negotiate over those broader issues, which include whether to extend income and investment tax cuts enacted under President George W. Bush and whether to stall billions of dollars in mandatory “sequestration” spending cuts that will hit all federal agencies in January.

The Senate Finance Committee in August approved an extension of the PTC as part of a larger bill covering dozens of so-called tax extenders, which are temporary but often renewed tax breaks for individuals and businesses, but that bill has not yet come to the floor. Leadership aides have said it remains a top priority for Senate Majority Leader Harry Reid (D-Nev.), although timing remains in flux.

Sen. Chuck Grassley (R-Iowa), who sponsored legislation creating the PTC in 1992, said an extension of the credit is likely to depend on the fate of ongoing negotiations among House Speaker John Boehner (R-Ohio), President Obama and other officials regarding the larger fiscal cliff issues. If they can get a deal, he said, he expects the PTC to be included along with the other broadly supported extenders, such as the research and development tax credit.

“I would expect that they all would go through, although a lot depends on conversations that are going on … unrelated to wind and unrelated to extenders, conversations that are going on between Speaker Boehner and the president of the United States,” Grassley said.

Grassley declined to offer an opinion on the broader fiscal cliff issues, such as whether tax rates should go up for wealthy taxpayers at the end of the year, which is a key sticking point in the negotiations. The senior Republican lawmaker said he was primarily interested to see the process continue and avoid a stalemate.

The PTC and other clean energy issues are “not the most important thing” in the negotiations between Obama and Boehner, Grassley acknowledged. But he said he would continue to point out the importance of extending the wind credit and remained hopeful it would be part of a deal.

The PTC provides wind developers a $22 credit for every megawatt-hour of electricity from turbines that come online by Dec. 31, but without an extension, industry officials have warned that almost no wind farms would be built next year, causing jobs to be lost throughout the industry. Already this year, at least 4,000 jobs have been lost, mostly from manufacturing companies that have received few orders amid uncertainty over whether the credit will be extended, industry officials estimate.

The American Wind Energy Association says expiration of the PTC will cost a total of 37,000 jobs by next year, cutting the industry’s workforce in half.