Wind-Energy Group Backs Six-Year Phase Out for U.S. Break

Source: By Jim Snyder, Blookberg • Posted: Thursday, December 13, 2012

The wind-energy industry asked Congress to extend a tax break for six years, a time frame it said was long enough to cut costs and short enough to ease fears the credit will become a permanent part of the tax code.

The American Wind Energy Association, whose members include General Electric Co. (GE) and the U.S. unit of Siemens AG (SIE), offered the proposal yesterday in a letter to Senator Max Baucus, a Montana Democrat and chairman of the Finance Committee, and other members on the tax-writing panel.

Wind-energy companies have urged Congress for months to extend the so-called production tax credit, which is set to expire this month. The break shaves as much as a third of the costs to generate wind power, and industry advocates contend its loss could cost thousands of jobs. Under the proposal, the credit’s value would fall gradually over the six years.

The credit’s “continued availability for a reasonable period of time will allow the industry to invest in the cost- saving technologies required to finish the job,” the Washington-based trade group said in the letter.

The group’s plan would keep 100 percent of the current 2.2 cents a kilowatt-hour for projects started in 2013. The credit would fall to 90 percent for projects completed in 2014, 80 percent in 2015, 70 percent in 2016 and 60 percent in both 2017 and 2018, the credit’s final year.

Some lawmakers, including Senator Lamar Alexander, a Tennessee Republican, and groups backing small government, such as the Competitive Enterprise Institute, say the credit should be allowed to lapse.

Savings, Bills

“Congress should not vote to extend the Wind Production Tax Credit,” said Myron Ebell, director of the Washington-based institute’s Center for Energy and the Environment. “That will save billions of taxpayer dollars and help prevent electric rates for consumers from going up and up.”

The institute will join other groups at 11 a.m. today at a news conference on Capitol Hill in Washington in opposition to extending the credit.

Religious organizations scheduled a 10 a.m. conference call with reporters in support of the tax break. The groups back wind energy because it reduces air pollution that threatens public health. The groups include the Evangelical Environmental Network, based in New Freedom, Pennsylvania.

Separately, a group of Democrats and Republicans urged President Barack Obama to support changes in the tax code to let renewable energy companies get the benefits that some fossil fuel projects now receive.

The changes include letting wind and solar companies form master limited partnerships. While owners could sell shares under these structures, the companies would be taxed at a lower rate than corporations.

“Small tweaks to the tax code could attract billions of dollars in private sector investment to renewable energy deployment, reduce the cost of renewable electricity by up to one- third and dramatically broaden the base of eligible investors,” Senators Chris Coons, a Delaware Democrat, and Jerry Moran, a Kansas Republican, and 27 other lawmakers wrote in a letter to Obama.