September 25, 2014
Texas

Can Texas wind power stand on its own without tax subsidies?

Nicholas Sakelaris, Staff Writer- Dallas Business Journal | Sep 24, 2014 | www.bizjournals.com

Texas Comptroller Susan Combs joined other Texas conservatives calling for an end to subsidies for wind power this week.

Combs released a scathing report on the tax breaks that wind receives, concluding that it undermines Texas’ electricity market, doesn’t provide power when the state needs it most, and double burdens ratepayers.

“It’s time for wind to stand on its own two feet,” Combs said. “Billions of dollars of tax credits and property tax limitations on new generation helped grow the industry, but today they give it an unfair market advantage over other power sources.”

The federal wind production tax credit expired in January, meaning any wind projects that start in 2014 aren’t eligible for the incentive, which is 2.1-cent per kilowatt per hour.

The statements by Combs, whose terms ends in 2015, and Donna Nelson, chairwoman of the Texas Public Utility Commission, angered Jeff Clark, executive director of The Wind Coalition, because they ignore the tax breaks and subsidies other energy sources receive.

“The idea that wind is subsidized and nothing else is is ridiculous,” Clark said. “The support for oil and gas and nuclear has been incredible. We compete in a marketplace where all of our competitors are subsidized.”

Uncertainty related to the production tax credit has had a “chilling effect” on the wind industry this year. The Internal Revenue Service recently clarified the language so it applies to wind projects that got started in 2013.

The federal government likely won’t make a decision on the production tax credit until after the mid-term election in November, Clark said.

Combs says not only do wind generators get tax subsidies but ratepayers, including Oncor customers, are being charged billions for the Competitive Renewable Energy Zone (CREZ) transmission lines that bring West Texas wind power to populated areas such as Dallas-Fort Worth.

Combs estimates that the $6.9 billion CREZ project costs the average household $70 to $100 per year.

Clark responded with his own study that says renewable wind energy requires no fuel and saves ratepayers up to $900 million on cheaper energy alone.

Combs and others have been critical of wind’s variability, the fact that it produces much less power on a hot August afternoon when demand is highest.

But Clark said having a mix of fuels is ideal, especially with the Environmental Protection Agency’s crackdown on coal emissions earlier this year. Natural gas plants can be fired up quickly to compensate when wind power declines.

“It’s not 100 percent of the solution, but it’s part of a smart energy mix,” Clark said. “You’re breaking this state’s addiction to Wyoming coal and making us dependent on Texas.”

It’s also helping ranchers and farmers keep their land by finding a new source of revenue, Clark said.

“Renewable generators have been given a major helping hand to develop their industry, but it is now virtually a mature segment,” Combs said. Developing technology to store renewable energy, so that it can provide reserve capacity available to the grid during peak demand, should be part of the renewable industry’s responsibility before it adds additional generation that is still intermittent.”

Ultimately, Clark said he would like to see the comprehensive tax reform for all sources of energy.