February 13, 2013
U.S.

House GOP to put wind power credit under microscope

By Zack Colman | E2 Wire | The Hill | February 13, 2013 | thehille.com

The wind production tax credit will be the subject of increased oversight this Congress, Rep. James Lankford (R-Okla.) told The Hill on Tuesday.

Congress, with a strong push from the White House, extended the credit for one year in the January deal to avoid the “fiscal cliff.” The renewal included an alteration that allowed wind projects to collect the credit if developers commence construction by 2014, rather than turbines beginning to produce power by that deadline.

It’s a change that will allow more projects to qualify over the next year – and one that’s raising eyebrows on Capitol Hill.

“There’s no clarification yet as to what under construction means … We are going to look at that as a committee because that is undefined area that in the hands of a regulator and we want to be sure we bring some clarity to that,” said Lankford, who chairs the House Oversight and Government Reform Committee’s Energy Policy, Health Care and Entitlements Subcommittee.

The Treasury Department and IRS are currently evaluating how to interpret the credit’s language. Some experts say the threshold for beginning construction is when developers invest 5 percent of the project cost, while others say physical activities must be under way.

Some conservative lawmakers say the tweak will expand the program and the federal deficit, noting the one-year extension would cost $12.1 billion through 10 years.

Lankford’s pledge to examine the credit came minutes after President Obama called for making the subsidy permanent during his State of the Union address.

Obama campaigned on securing an extension for the credit, wielding his support of it in wind-heavy swing states such as Colorado and Iowa.

The president, along with Democrats, has said maintaining the incentive is a jobs issue. They said ending the subsidy would have terminated 37,000 jobs, according to a wind industry-backed study.

But Lankford noted that the wind lobby has asked for a phase-out, not to become an indefinite fixture of the tax code.

“We’re not going to do that,” Lankford said. “Even the wind folks have come back and said they don’t need a permanent extension.”

The American Wind Energy Association (AWEA) has said it can gradually wind down the subsidy to end after 2018. By then, AWEA says, wind power will be able to compete with other energy sources.

In a Wednesday statement, interim AWEA CEO Rob Gramlich noted Obama’s comments on the wind credit, but did not indicate whether the trade association would change course on its calls for a phase-out.

“America’s homegrown wind energy industry is ready to work with President Obama and the U.S. Congress to advance the goals of energy independence and clean, renewable power that is available and affordable for all Americans,” Gramlich said.