Latham: Natural gas blocks wind tax credit

Source: DAN PILLER • Des Moines Register • Posted: Friday, January 13, 2012

Gas prices have dropped, making it an affordable wind energy alternative.

U.S. Rep. Tom Latham, R-Ia., suggested Thursday that natural gas interests have helped block renewal of a tax credit for wind producers.

“They’re pushing hard against wind, of course,” Latham said at a state Capitol event highlighting Iowa’s wind energy industry.

The production tax credit of 2 cents per megawatt hour expires December 2012. Supporters want the tax credit renewed for four years, and fear that failure will cause wind development to “fall off the table,” in the words of Iowa Wind Energy Association President Harold Prior.

A spokesman for the U.S. Gas Association said the organization has not taken a position on the production tax credit for wind energy.

Iowa is the nation’s second-largest producer of wind-generated electricity, with more than 3,675 megawatts in place and another 407 megawatts planned for this year by MidAmerican Energy of Des Moines.

Deep-pocketed wind providers such as MidAmerican have rushed to get their projects in the ground this year on the chance that the tax credits might not be extended.

Latham noted the widely publicized lobbying by Texan T. Boone Pickens on behalf of natural gas, which Pickens now promotes as an energy fuel for his new Clean Energy fueling company.

“He used to be a wind supporter,” Latham said. “Now he’s working against it.”

Natural gas has emerged as a threat to wind energy’s electric utility market because enlarging supplies, coming from new shale fields in Texas, Ohio, Pennsylvania and West Virginia, have reduced its price to a 10-year low.

Several utility wind projects around the U.S. have been canceled because of the availability of cheaper natural gas.

On Thursday, natural gas traded for $2.75 per thousand cubic feet on the New York Mercantile Exchange. Three years ago gas sold for more than $11 per thousand cubic feet.

The production tax credit for wind was first enacted in 1992 and has been renewed three times after lapsing.

Wind interests tried hard to get the credit extended by the 2011 session of Congress so that wind projects could get financing for this year. Latham said he hoped the credit could be attached to the payroll tax extension, to be acted on by the end of February.

“That’s probably our best chance to get the production tax credit passed,” Latham said.