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Renewable credit battle heating up as reform anticipation mounts

After lying dormant for much of this year, the debate over the future of a vital renewable energy tax credit is picking up steam this week.

The production tax credit, which was renewed in January, is likely to expire again at the end of the year, although many wind and other renewable energy companies will still be able to claim it at least through 2015 because of a tweak that accompanied the most recent extension. That means there is little chance Congress addresses the credit this year, but its fate is likely to be among the central energy-related issues tax writers grapple with as they embark on an ambitious effort to overhaul the tax code.

Groups on both sides of the debate are circulating letters to Capitol Hill honing arguments for or against the credit.

The Governors’ Wind Energy Coalition is the latest to enter the fray. Later today, the group will send a letter to both parties’ leaders in the House and Senate signed by a bipartisan slate of 11 governors. The letter emphasizes thousands of layoffs throughout the wind industry last year tied to uncertainty over whether the PTC would be extended and calls on Congress to pass a “responsible multi-year extension” of the credit.

“Our nation has some of the best wind resources in the world, but the lack of stable policy hinders the nation’s ability to develop them fully,” write the governors, led by Oregon’s John Kitzhaber (D) and South Dakota’s Dennis Daugaard (R). “The nation’s wind industry developers do not need this tax credit forever, but they do need policy certainty in the near term to bring their costs to a fully competitive level.”

The executive director of the coalition, Larry Pearce, said in an interview yesterday that the expectation the PTC will not be extended this year “hasn’t percolated up to [the governors] yet,” and he predicted they would step up their involvement in the debate as it does.

Also this week, one of the PTC’s most vocal opponents, the conservative activist group Americans for Prosperity, launched a $75,000 online advertising campaign targeting select members of Congress to urge opposition to the PTC. The group is running banner ads on conservative sites directing to a website it launched encouraging activists to contact lawmakers via Twitter.

The campaign is designed to encourage lawmakers to add their names to a letter drafted by Rep. Mike Pompeo (R-Kan.) to House Ways and Means Chairman Dave Camp (R-Mich.) encouraging an end to the PTC. Camp has said he will release tax reform legislation this year, but he and his aides have remained tight-lipped on the proposal’s details.

Pompeo has been one of the strongest critics of the PTC and argues that another extension is not needed because of the additional lead time companies will have to complete projects under current law. As long as at least 5 percent of a project’s costs are invested before the end of this year, the Internal Revenue Service has said the credit generally will be available for facilities that come online before 2016.

“This constitutes a more than generous phase-out for a credit that is being awarded to a mature technology with over 60,000 megawatts of generation installed across the country,” Pompeo wrote.

AFP is currently aiming at Reps. Jeff Fortenberry (R-Neb.) and Lamar Smith (R-Texas), and additional targets will be unveiled in the future. Christine Harbin Hanson, AFP’s federal affairs manager, said the two were chosen because they are typically “very good on energy policy” based on the group’s vote scoring but have not yet signed onto the Pompeo letter.

Both Fortenberry and Smith voted in January for the legislation that extended the PTC through the end of this year, but that bill was primarily aimed at averting the so-called fiscal cliff and included a variety of provisions including the continuation of existing tax rates for all but the richest individuals. Aides to Smith did not respond to a request for comment last night.

In a statement emailed from his spokeswoman, Fortenberry said, “Creating clean energy is a conservative value.”