Congressman Mike Fitzpatrick, R-8, who previously questioned tax credits given to wind energy companies, has introduced legislation that would extend, and then phase out such credits.
Speaking at a manufacturing summit in Hatfield Township on Thursday, Fitzpatrick said the Production Tax Credit Certainty and Phase-Out Act of 2013 would provide a “level playing field” to the wind energy industry, while at the same time setting an end date to subsidies for the industry.
“It’s really important that we have a level playing field so that all industries in the energy sector can compete against each other, and it will be a fair competition,” he said. “That’s really what will benefit consumers.”
The bill would extend production tax credits for six years, then phase them out over another six years. The credits, introduced in 1992 and renewed in 2008 and again last year, are set to expire Dec. 31.
In a statement, David Flitterman, chairman of Bensalem-based wind energy company Gamesa North America, praised Fitzpatrick’s leadership.
“Clearly, he understands the environmental and economic benefits of wind energy,” Flitterman said.
The American Wind Energy Association also commended Fitzpatrick’s legislation.
“We thank Congressman Fitzpatrick for his support of the American wind industry and the thousands of local manufacturing jobs that it brings,” spokeswoman Lindsay North said in an email. “His legislation, as part of a comprehensive tax reform bill, could provide the wind industry with much-needed predictability and allow for longer-term planning and investment into future U.S. projects. Rep. Fitzpatrick understands that like any productive business, the wind industry needs to have the rules of the road clearly defined so that developers and manufacturers can make smart, pro-growth business decisions.”
Under the production tax credit, or PTC, program, wind farm developers receive a 2-cent credit for every kilowatt hour produced for the first 10 years. For a 40-turbine farm producing 200 million kilowatt hours a year, that equals a $4-million tax credit, or $40 million over 10 years.
Extending the credit became a part of the fiscal cliff budget battles last year. Fearing the credit wouldn’t be renewed, wind energy companies rushed to complete new farms by the end of 2012 and held back on plans to build new ones, causing a slowdown in business.
Anticipating the slowdown, Gamesa – which at one time employed several hundred at its wind turbine manufacturing plant in Falls – laid off 92 employees last year. Today, it has less than 50 workers there, said company spokesman David Rosenberg.
“Everything is playing out as we expected,” he said. “We thought this would be a very difficult year, but we see an improvement in 2014.”
Fitzpatrick said the measure, introduced shortly before Congress left for its August recess, will do away with the uncertainty impacting the industry.
“I believe that if you truly support an all-of-the-above energy policy, you have to let all the sectors compete against each other on a level playing field,” he said. “That playing field isn’t level today. And it hasn’t become level making policies on a year-to-year basis.”
Rosenberg called Fitzpatrick’s bill a “responsible compromise” between those who want a permanent tax credit, and those who want no credit at all. Six years, he said, would be enough time for the industry to develop technology that will reduce costs and make wind energy more competitive with other energy sources, like natural gas.
“There’s about 80,000 people involved in this industry; these jobs didn’t exist 10 years ago,” Rosenberg said. “The bill ensures these 80,000 jobs remain certain and can grow, yet at the same time enables the industry to do what it needs to do so it can ultimately go forward without the need for the PTC at the end of six years.”
Fitzpatrick said that by extending the tax credit, wind energy companies will have the certainty needed to make long-term business decisions. Phasing it out ensures an end to the government support. He also said the bill will play into efforts to simplify and streamline the nation’s tax code.
“I believe that the federal government should not be subsidizing any of the energy sectors,” the 8th District Republican said. “Unfortunately, the federal government, Democrats and Republicans, over a long period of time, have tried to pick winners and losers in the marketplace. I don’t think it’s worked out very well for us. It hasn’t as taxpayers, and it hasn’t made us energy independent.”
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