Western governors urge PTC extension, eventual elimination of all energy subsidies

Source: Nick Juliano, E&E reporter • Posted: Sunday, December 9, 2012

The bipartisan Western Governors’ Association is urging Congress to immediately extend the wind production tax credit for projects that begin construction next year as a first step to eventually eliminating all federal energy subsidies.

In a letter sent to congressional leadership today, Govs. Gary Herbert (R-Utah) and John Hickenlooper (D-Colo.) — the chairman and vice-chairman of the 19-state organization — urge an immediate extension to the PTC, which is scheduled to expire at the end of this year unless Congress acts.

The PTC’s fate is closely tied to broader negotiations around the so-called fiscal cliff, and an extension is expected to be included in a year-end package if President Obama and House Speaker John Boehner (R-Ohio) can reach an agreement on the larger tax and spending issues (E&E Daily, Dec. 3).

A key outstanding issue is whether the credit can be claimed by projects that go into service — as under current law — or whether it could be claimed for projects that simply begin construction. The wind industry has been intensely lobbying for the later criterion, which was included in a Senate Finance Committee bill in August, and the Western governors also endorse that approach.

“Given the late date in the year, it is important for Congress to make the PTC extension effective, particularly given the typical 18-month project development timeline,” they write. “Taking this consideration into account would, for example, allow for all projects that start construction in 2013 to qualify for the credit.”

The governors also say that the PTC should eventually be phased out, along with other energy incentives, but that it would be unfair to immediately single out the wind industry.

“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 write. “However, allowing the PTC to expire now while allowing other energy subsidies to continue within the tax code will not level the playing field and rather than avoid having the government pick winners and losers, this action would instead regressively tilt the playing field toward some established energy resources and against some important emerging resources. Given this reality, we believe that until a comprehensive review of all energy subsidies is undertaken, extending the PTC for wind is the fair approach.”

The letter concludes, “Extending the PTC now, combined with a clear path towards phasing out the credit, will provide the certainty that is needed for companies to invest in American resources and workers. We strongly urge you to support a prompt extension of the wind energy PTC and to move towards a thoughtful, but expeditious phase out of all federal energy subsidies and preferences.”