A tax incentive that benefits wind power and other renewable energy would be revived and extended through next year under a draft tax package released Friday by the Senate Finance Committee.
The 2.3-cent per kilowatt-hour production tax credit has been the subject of intense lobbying over the past several years as conservatives have targeted the subsidy. They say it distorts power markets and creates a gaping hole in federal revenues – the cost for the two-year extensions would hit $10.5 billion over 10 years, according to a Finance Committee summary.
The credit lapsed at the end of last year, and many conservatives hoped it would remain dead. But Democrats and several GOP lawmakers from breezy states support the incentive.
Qualifications for the credit have been relaxed in recent years. It is currently awarded to power producers over a 10-year period so long as projection construction started by the end of 2014, a change to which conservatives objected. In this case, that means as long as 3 percent of the total project cost had been invested.
Proponents of the subsidy, however, note that it leverages more private investment than it costs in deferred revenues. They also contend it’s a jobs booster for a supply chain that reaches nearly every state. Many Republicans also support the credit, as about four-fifths of U.S. wind installations are in GOP districts, according to the American Wind Energy Association.
The Finance Committee is scheduled to mark up the two-year extenders package, which contained 52 provisions, on Tuesday.
“This markup will give the committee a timely opportunity to act on extending a number of expired provisions in the tax code that help families, individuals and small businesses. This is the first time in 20 years where a new Congress has started with extenders legislation having already expired, and given that these provisions are meant to be incentives, we need to advance a package as soon as possible,” said Finance Committee Chairman Sen. Orrin Hatch, R-Utah.
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