April 27, 2012
U.S.

House committee hearing sheds light on wind PTC extension tactics

by Laura DiMugno on Thursday 26 April 2012 North American Windpower www.nawindpower.com 26 April 2012

Several U.S. congressmen – Democrat and Republican – spoke out in favor of the wind energy production tax credit (PTC) Thursday in a U.S. House Ways and Means Committee hearing focused on tax extenders.

Although the hearing was intended to address many of the tax provisions that expired last year or are scheduled to expire this year, the spotlight was on the PTC, with a focus on wind power.

Two of the most vocal supporters of the wind energy PTC – Reps. Dave Reichert, R-Wash., and Earl Blumenauer, D-Ore. – were present at the hearing and voiced their support for the PTC.

Unlike the oil and gas industries, Blumenauer said, wind energy has not benefited from over a century of government subsidies, and consequently, has suffered from a “Russian roulette” boom-and-bust cycle of expired and renewed tax credits.

The industry needs “certainty and a glide path to sustainability,” Blumenauer said, because it levels the playing field and “gives the private sector the confidence it needs to invest in renewables.”

Blumenauer also noted the importance of a PTC extension in enabling utilities to meet their renewable portfolio standard requirements. “We mandate that [renewable energy] be purchased,” he said. “We need to come to scale.”

Reichert – who, with Blumenauer, co-sponsored legislation last year to extend the renewable energy PTC for four years – noted that although the wind industry is dependent on the PTC right now, that doesn’t mean it will be forever.

“It doesn’t need to be permanent,” he said, alluding to tax credits that have come to be expected for other conventional sources of energy. “The wind industry is already thinking about a phase-out [of the PTC].”

There has been talk in the Senate of a gradual phase-out of the PTC. Sen. Max Baucus, D-Mont., suggested last month that the industry might be better served by this approach.

However, it’s not the time to kill the incentive completely, as companies in the wind energy supply chain have already seen the effects of policy uncertainty, Reichert stressed.

On a press call hosted by the American Wind Energy Association (AWEA) Wednesday, Steve Lockard, CEO of TPI Composites, said the 18-month turnaround time required for each wind project meant the company is already being affected by a lack of demand and may face layoffs if the PTC is not extended.

“Every month of delay will mean additional manufacturing job losses in the U.S., and action is really an urgent need at this time,” he said.

Of the seven congressmen present at the hearing, only one opposed an extension to the PTC: Rep. Mike Pompeo, R-Kan., who has pushed repeatedly for a repeal of all energy tax credits, including those for wind energy. In fact, as Ranking Member Richard Neal, D-Mass., pointed out, Pompeo is just about the only member of the House in favor of that policy.

Even Rep. Steve King, R-Iowa, who Neal called one of the “most conservative” congressmen in the House, is encouraging an extension of the wind energy PTC.

“This success story is spreading across the country because wind industry leaders know how to expand this business and provide more U.S. jobs – they just need Washington to provide stable, low tax rates,” King said Wednesday during the press call. “The production tax credit means keeping investment dollars in the market place – not in the hands of government. Now is the time for stability in the wind industry, and the PTC offers just that.”

Despite the overwhelming bipartisan support for the PTC, it still hasn’t managed to be renewed, even after several failed attempts to attach an extension to other legislation – such as the payroll tax bill and the transportation bill.

According to the congressmen present at the hearing, the PTC has had 93 bipartisan sponsors. So what’s it going to take to actually get it passed?

Rep. Tom Reed, R-N.Y., stressed that rather than politicizing renewable energy as a partisan issue, Congress should emphasize the economic and energy security benefits wind and solar power bring to the nation.

Reed, as well as many of his fellow Republicans in Congress, are in favor of an “all of the above” energy approach that includes renewable energy and a PTC for wind power and other renewables.

That being said, the most logical way for the PTC to be renewed might be to include incentives for other types of energy, not just wind, the congressmen at the hearing hinted.

According to AWEA CEO Denise Bode, the best bet for PTC renewal is to attach it to larger legislation. “I think the key factor is looking for a tax vehicle,” she said during the AWEA press call Wednesday.