Congress Waving Wind Energy Tax Credit Goodbye?
The Senate Finance Committee voted to extend the production tax credit (PTC) for one year in August. It still needs to pass the full Senate.
The vote came just days after GOP presidential hopeful Mitt Romney said he wouldn’t support the extension. Romney and President Barack Obama disagree on the credit. And it’s a point where the president likes to illustrate the divisions in the Republican Party.
“Governor Romney says these are imaginary jobs. When you’ve got thousands of people right now in Iowa, right now in Colorado who are working, creating wind power, with good paying manufacturing jobs,” President Obama said during the second debate earlier this month. “And the Republican Senator in Iowa is all for it, providing tax credits to help this work. And Governor Romney says ‘I’m opposed. I’d get rid of it.”
That Republican President Obama mentioned is Iowa’s Charles Grassley. A veteran on the Finance Committee, he voted to move the measure forward.
Chris Rose, executive director of the Renewable Energy Alaska Project, said CIRI, the Alaska Native Corporation that will sell power to Chugach Electric from the Fire Island project, took a different credit from the federal government – one that would pay thirty percent of construction costs.
Rose said for profit producers could set up arrangements with nonprofit utilities for the production tax credit as well.
“That’s exactly what happened in the case of Fire Island. The upfront tax credit that CIRI got was passed on completely to the consumers through a lower power purchase agreement that it signed with Chugach Electric,” he said in a phone interview Thursday.
What that means is guaranteed lower rates for power consumers. Wind accounts for 4% of Chugach Electric’s power source. Rose said CIRI could triple the number of turbines on Fire Island.
CIRI ignored multiple requests to comment, so it’s unclear whether the corporation would tap into the PTC to build more turbines and produce more power.
Mike Craft is managing partner at Alaska Environmental Power – an independent wind farm in Delta Junction. His only client: Golden Valley Electric Association.
He used the PTC in the past and said the extra money went back into his wind business and other ventures.
“That tax credit can be applied directly to the renewable energy resource, or it can be used against personal tax consequences not necessarily related to the wind industry,” he said.
He said the money, whether reinvested in wind or his land business, stays in the local economy.
Elizabeth Salerno, director of data and analysis at the American Wind Energy Association, said Congress should pass an extension; her group is lobbying to extend it.
But even if Congress continues the break, she warned, don’t expect slowed turbines to resume production right away.
“There’s a business cycle, as with any industry, that a project that’s under development needs to put in an order for components, for turbines. And all of that should be happening for 2013, but because the tax credit has not been renewed, that activity is not occurring right now,” she said.
That argument may get the attention of lawmakers who say small, independent businesses will help power the economy back to a healthier state.