Category Archives: Production Tax Credits

USA: Wind costs more than you think due to massive federal subsidies

Randy Simmons, Professor of Political Economy at Utah State University | The Conversation | April 8, 2015 | ~~

As consumers, we pay for electricity twice: once through our monthly electricity bill and a second time through taxes that finance massive subsidies for inefficient wind and other energy producers.

Most cost estimates for wind power disregard the heavy burden of these subsidies on US taxpayers. But if Americans realized the full cost of generating energy from wind power, they would be less willing to foot the bill – because it’s more than most people think.

Over the past 35 years, wind energy – which supplies just 2% of US electricity – has received US$30 billion in federal subsidies and grants. These subsidies shield people from the uncomfortable truth of just how much wind power actually costs and transfer money from average taxpayers to wealthy wind farm owners, many of which are units of foreign companies.

Proponents tend to claim it costs as little as $59 to generate a megawatt-hour of electricity from wind. In reality, the true price tag is more than two and a half times that.

This represents a waste of resources that could be better spent by taxpayers themselves. Even the supposed environmental gains of relying more on wind power are dubious because of its unreliability – it doesn’t always blow – meaning a stable backup power source must always be online to take over during periods of calm.

But at the same time, the subsidies make the US energy infrastructure more tenuous because the artificially cheap electricity prices push more reliable producers – including those needed as backup – out of the market. As we rely more on wind for our power and its inherent unreliability, the risk of blackouts grows. If that happens, the costs will really soar.

Where the subsidies go

Many people may be familiar with Warren Buffet’s claim that federal policies are the only reason to build wind farms in the US, but few realize how many of the companies that benefit most are foreign. The Investigative Reporting Workshop at American University found that, as of 2010, 84% of total clean-energy grants awarded by the federal government went to foreign-owned wind companies.

More generally, the beneficiaries of federal renewable energy policies tend to be large companies, not individual taxpayers or small businesses. The top five recipients of federal grants and tax credits since 2000 are: Iberdrola, NextEra Energy, NRG Energy, Southern Company and Summit Power, all of which have received more than $1 billion in federal benefits.

Iberdrola Renewables alone, a unit of a Spanish utility, has collected $2.2 billion in federal grants and allocated tax credits over the past 15 years. That’s equivalent to about 6.7% of the parent company’s 2014 revenue of $33 billion (in current US dollars).

President Obama’s proposed 2016 budget would permanently extend the biggest federal subsidy for wind power, the Production Tax Credit (PTC), ensuring that large foreign companies continue to reap most of the taxpayer-funded benefits for wind. The PTC is a federal subsidy that pays wind farm owners $23 per megawatt-hour through the first ten years of a turbine’s operation. The credit expired at the end of 2013, but Congress extended it so that all projects under construction by the end of 2014 are eligible.

In all, Congress has enacted 82 policies, overseen by nine different agencies, to support wind power.

I explained in December why Congress shouldn’t revive the PTC, which expired at the end of 2014. In this article, I’m adding up the true cost of wind power in the US, including the impact of the PTC and other subsidies and mandates. It’s part of a study I’m doing of other energy sources including solar, natural gas, and coal to determine how much each one actually cost us when all factors are considered.

Tallying the true costs of wind

Depending on which factors are included, estimates for the cost of wind power vary wildly. On the low end, the financial advisory firm Lazard claims wind costs $59 per megawatt-hour. On the high side, Michael Giberson at the Center for Energy Commerce at Texas Tech University suggests the it’s closer to $149. Our analysis in an upcoming report explores this wide gap in cost estimates, finding that most studies underestimate the genuine cost of wind because they overlook key factors.

All estimates for wind power include the cost of purchasing capital and paying for operations and maintenance (O&M) of wind turbines. For the studies we examined, capital costs ranged from $48 to $88 per megawatt-hour, while O&M costs ranged from $9.8 to $21 per megawatt-hour.

Many estimates, however, don’t include costs related to the inherent unreliability of wind power and government subsidies and mandates. Since we can’t ensure the wind always blows, or how strongly, coal and natural gas plants must be kept on as backup to compensate when it’s calm. This is known as baseload cycling, and its cost ranges from $2 to $23 per megawatt-hour.

This also reduces the environmental friendliness of wind power. Because a coal-fired or natural gas power plant must be kept online in case there’s no wind, two plants are running to do the job of one. These plants create carbon emissions, reducing the environmental benefits of wind. The amount by which emissions reductions are offset by baseload cycling ranges from 20% to 50%, according to a modeling study by two professors at Carnegie Mellon University.

While the backup plants are necessary to ensure the grid’s reliability, their ability to operate is threatened by wind subsidies. The federal dollars encourage wind farm owners to produce power even when prices are low, flooding the market with cheap electricity. That pushes prices down even further and makes it harder for more reliable producers, such as nuclear plants, that don’t get hefty subsidies to stay in business.

For example, the Kewaunee Nuclear Plant in Wisconsin and the Yankee Nuclear Plant in Vermont both switched off their reactors in 2013. Dominion Energy, which owned both plants, blamed the artificially low prices caused by the PTC as one of the reasons for the shutdown.

As more reliable sources drop off and wind power takes their place, consumers are left with an electrical infrastructure that is less reliable and less capable of meeting demand.

Lost in transmission

Another factor often overlooked is the extra cost of transmission. Many of America’s wind-rich areas are remote and the turbines are often planted in open fields, far from major cities. That means new transmission lines must be built to carry electricity to consumers. The cost of building new transmission lines ranges from $15 to $27 per megawatt-hour.

In 2013, Texas completed its Competitive Renewable Energy Zone project, adding over 3,600 miles of transmission lines to remote wind farms, costing state taxpayers $7 billion.

Although transmission infrastructure may be considered a fixed cost that will reduce future transmission costs for wind power, these costs will likely remain important. Today’s wind farms are built in areas with prime wind resources. If we continue to subsidize wind power, producers will eventually expand to sub-prime locations that may be even further from population centers. This would feed demand for additional transmission projects to transport electricity from remote wind farms to cities.

The final bill comes to…

Finally, federal subsidies and state mandates also add significantly to the cost, even as many estimates claim these incentives actually reduce the cost of wind energy. In fact, they add to it as American taxpayers are forced to foot the bill. According to Giberson, federal and state policies add an average of $23 per megawatt-hour to the cost of wind power.

That includes the impact of state mandates, which end up increasing the cost of electricity on consumer power bills. California is one of the most aggressive in pushing so-called Renewable Portfolio Standards (RPS), requiring the state to consume 33% of its electricity from renewables by 2020. Overall electricity prices in states with RPS are 38% higher than those without, according to the Institute for Energy Research, a non-profit research group that promotes free markets.

The best estimate available for the total cost of wind power is $149 per megawatt-hour, taken from Giberson’s 2013 report.

It is difficult to quantify some factors of the cost of wind power, such as the cost of state policies. Giberson’s estimate, however, includes the most relevant factors in attempting to measure the true cost of producing electricity from wind power. In future reports, Strata will explore the true cost of producing electricity from solar, coal, and natural gas. Until those reports are completed, it is difficult to accurately compare the true cost of wind to other technologies, as true cost studies have not yet been completed.

Blowing in the wind

The high costs of federal subsidies and state mandates for wind power have not paid off for the American public. According to the Mercatus Center at George Mason University, wind energy receives a higher percentage of federal subsidies than any other type of energy while generating a very small percentage of the nation’s electricity.

In 2010 the wind energy sector received 42% of total federal subsidies while producing only 2% of the nation’s total electricity. By comparison, coal receives 10% of all subsidies and generates 45% and nuclear is about even at about 20%.

But policymakers at the federal and state level, unfortunately, have decided that the American people will have renewable energy, no matter how high the costs. As a result, taxpayers will be stuck paying the cost of subsidies to wealthy wind producers.

Meanwhile, electricity consumers will be forced to purchase the more expensive power that results from state-level mandates for renewable energy production. Although such policies may be well intended, the real results will be limited freedom, reduced prosperity and an increasingly unreliable power supply.

Megan Hansen, a Strata policy analyst, co-authored this article.

Senate passes truncated extenders bill before adjourning

By Nick Juliano, E&E reporter | December 17, 2014 |

In one of its last items of business before adjourning for the year, the Senate last night reinstated a bushel of expired tax incentives, including the production tax credit for wind energy — for two weeks.

Following passage of the so-called tax extenders bill, the Senate confirmed dozens of nominees for key administration and judicial posts — including at the Interior and Energy departments (see related story). After that, the Senate adjourned for the year, joining the House, which ended its session last week. Congress returns Jan. 6.

The extenders outcome was well short of the goals of the lead tax-writers on both sides of the Capitol, who were ultimately unable to agree on anything more ambitious. So lawmakers landed on the last-ditch, better-than-nothing-but-not-much-else punt to allow taxpayers to claim the breaks for this calendar year.

The Senate cleared H.R. 5771 on a 76-16 vote. When the House sent over the extenders bill, it tacked on separately passed legislation to allow people with disabilities to establish tax-exempt savings accounts, a provision partially offset by a 9-cent-per-gallon fuel tax increase supported by the barge industry to boost the Inland Waterways Trust Fund (E&E Daily, Dec. 5). President Obama is expected to sign the legislation as soon as today.

Sen. Ron Wyden (D-Ore.), the outgoing chairman of the Senate Finance Committee who voted against the bill, lamented that he was unable to secure passage of his separate proposal to extend the more than 50 breaks through the end of 2015, which he said would provide an adequate cushion to enact tax reform legislation next year that would do away with the temporary provisions altogether.

Now, he says, attention will be divided next year between tax reform and the likely need for another extenders bill, which he also said would likely usher in the end to the production tax credit. The credit primarily boosts wind and a handful of other renewable energy sources. It enjoys bipartisan support, mostly from Republicans in windy states, but has become a target of conservative groups linked to the Koch brothers, which view it as a giveaway to a politically favored industry.

“If you look at all the internal debate within the Republican Party alone, I think — and this is one of the most troubling aspects of this — this puts issues like wind in a very tough spot next year,” Wyden told reporters after the extenders vote yesterday. “You’ve got a Republican caucus that for the most part has been opposed to the wind PTC. There’s been discussion of various kinds of transitions and the like. What I know is politically it is going to put them in a real spot.”

Sen. Michael Bennet (D-Colo.), who was chairman of the Finance Subcommittee on Energy, Natural Resources and Infrastructure this year, called passage of the truncated bill “another low point in the world of dysfunctional Washington politics” and pointed to its expected lack of benefit to the wind industry in particular.

“This bill does little to help families and businesses in Colorado, particularly our wind energy industry. Waiting until now to extend the wind PTC — and only for two weeks — generates nothing but more uncertainty for these businesses that employ thousands of Coloradans,” Bennet said in a statement. “This tax credit has been an economic driver for Colorado’s diverse energy industry, but Congress continues to inflict more economic damage by not giving businesses predictability to plan for the future.”

Developers have said that because projects take months to plan, they would be unable to benefit from a credit extension only through the end of this year. Still, the nonpartisan Joint Committee on Taxation says the credit will spur some activity, estimating that the $23-per-megawatt-hour incentive would cost the government more than $6 billion in lost revenue over the next decade.

Critics say the provision is too costly and benefits wind developers that no longer need it.

“We look forward to working with the new Congress to unwind this culture of cronyism that is embodied by handouts like the wind PTC,” said Thomas Pyle, president of the American Energy Alliance, which has been leading opposition to the credit. “The new Congress should resist Big Wind’s enticements and reject any attempt to extend the wind PTC.”

Last night’s vote was the coda to a year of negotiations over the more than 50 tax provisions, which also include incentives for biofuels and energy efficiency along with the PTC. Wyden initially put forward a proposal to extend all the breaks through next year, but his House counterpart, Ways and Means Chairman Dave Camp (R-Mich.), preferred an approach that would have made permanent a handful of incentives such as the research and development tax credit while eliminating most of the rest of the extenders.

Camp and Senate Majority Leader Harry Reid (D-Nev.) had reached a tentative agreement before Thanksgiving to make 10 credits permanent, extend the others through next year and phase out the PTC by the end of 2017. But objections from the White House and liberal Democrats such as Wyden scuttled the deal before it could formally be released (Greenwire, Nov. 26).

It’s possible that the PTC phaseout could return next year. It has support from senior Republicans including Sens. Chuck Grassley of Iowa and John Thune of South Dakota, the third-ranking member of GOP leadership. But it also has some powerful opponents.

“Maybe there will be support for a phaseout, but I think you’ve seen there’s a lot of political muscle behind the result tonight, which is to end the wind credit in two weeks,” Wyden said. “I think it’s going to be hard to get it back.”

No more faking it: Companies ditch green credits, clean up instead

Credit:  By Ben Elgin, December 17, 2014,

It has been a near-magical tool allowing corporations to claim massive reductions in greenhouse gas emissions for very little cost.

For years, thousands of companies have purchased renewable energy credits, known as RECs, to say they use green power and to shrink their carbon footprints. Now, as skepticism mounts about whether RECs achieve their claimed environmental benefits, the market for these credits is slowing—and a number of companies, from Whole Foods Market (WFM) to McDonald’s (MCD), are quietly scaling back their involvement.

“These voluntary green power markets have no significant effect on how much renewable energy is generated,” says Michael Gillenwater, executive director of the nonprofit Greenhouse Gas Management Institute, which trains companies on how to accurately measure their emissions.

Most businesses purchase their power from the grid, where it’s impossible to distinguish between electrons created by windmills and electrons created by coal plants. The market for RECs emerged in the late 1990s as a way to separate green energy into two products—the electricity and the environmental benefits, which can be sold separately. [NWW note: RECs, also called “green tags”, were invented by Enron.]

A single REC represents the environmental benefit associated with one megawatt-hour of renewable electricity placed on the power grid. By purchasing RECs, companies can claim credit for using the green electrons. The money they pay usually flows through a network of brokers, who then pass along some of the funds to the company that generated the clean energy. This represents a new revenue stream for clean energy developers, which, in theory, results in the construction of wind turbines and solar installations that otherwise wouldn’t be built.

Companies who purchase the RECs can claim (PDF) a reduction in their own carbon emissions, according to several green-minded organizations and the Environmental Protection Agency. For instance, Intel (INTC), the No. 1 buyer of RECs in the U.S., says it has reduced heat-trapping emissions by more than 1 million metric tons per year since 2008 by acquiring RECs. (Bloomberg LP, which owns Bloomberg Businessweek, used RECs to lower its carbon footprint by 43 percent last year.)

A growing number of doubters are calling this vanishing carbon an illusion. Gillenwater, who has conducted two separate studies on the subject, says the money from RECs is so small that it doesn’t spur energy developers to build more wind farms or solar plants. Closed Loop Advisors, a New York-based sustainability consulting firm, says companies shouldn’t claim emissions cuts from RECs because these funds don’t alter the power being supplied to the grid. “Shifting the marketing rights from one party to another does not change anything in the real world,” it stated in a report (PDF) published this month.

Wal-Mart Stores (WMT) also dismissed RECs in a recent paper (PDF) outlining its renewable energy strategy, stating the credits “may not have the desired impact of accelerating renewable energy development.”

Amid these concerns, the popularity of RECs appears to be slowing. After growing at a clip of 25 percent per year from 2010 to 2012, the market for voluntary REC purchases that are “unbundled” from electricity—the most common category for corporate buyers—grew just 1 percent in 2013, according to a recently released report (PDF) from the National Renewable Energy Laboratory.

Several big REC buyers tracked quarterly by the EPA have recently disappeared from its rankings, including Whole Foods, McDonald’s, Hilton (HLT), and Safeway (SWY). That follows other big buyers that have scaled back their REC purchases in recent years, including PepsiCo (PEP) and Johnson & Johnson (JNJ).

Companies including Whole Foods and PepsiCo say they are focusing on more tangible solutions, such as installing renewable energy projects at their facilities. “PepsiCo believes it can have a greater impact on carbon reduction by investing directly in renewable and alternative energy solutions at a facility level,” PepsiCo spokesperson Erin Thomas said in an e-mail. McDonald’s didn’t respond to requests for comment.

Intel continues to be the biggest purchaser of RECs, but says it’s also focused on energy efficiency and building on-site renewable energy installations at its various U.S. locations. (Bloomberg LP says it’s focused on developing on-site renewable generation and won’t count RECs toward its goal of reducing carbon emissions 20 percent by 2020.)

Hilton and Safeway have backed away from RECs for different reasons. Safeway says it stopped purchasing RECs as it goes through its acquisition by Albertsons. Hilton, meanwhile, said it scaled back its purchase of RECs because the prices were rising and it wasn’t having a major marketing impact, says Randy Gaines, Hilton’s vice president of engineering, housekeeping, and laundry operations in the Americas.

Wal-Mart summed up the skepticism. “While REC purchasing may allow us to more quickly say we are supplied by 100% renewable energy,” its report stated, “it provides less certainty about the change we’re making in the world.”


Congress extends wind tax credit, but only for 2 weeks

Credit:  Sammy Roth, The Desert Sun | December 16, 2014 |

Congress revived a key tax credit for wind energy Tuesday — but only for two weeks.

Wind advocates had urged legislators to pass a multi-year extension of the tax credit, which expired at the end of last year. Under the bill passed overwhelmingly by the Senate late Tuesday, only projects that started construction this year — or that start construction before Dec. 31 — will be eligible for the tax credit.

For the wind industry, that’s a minor victory at best. According to the American Wind Energy Association, new wind construction all but evaporated this year due to uncertainty over whether the tax credit would be extended, meaning few projects stand to benefit from the retroactive extension.

“It has very little value to the wind industry,” said Nancy Rader, executive director of the California Wind Energy Association, an industry trade group. “I know it’s a disappointment.”

Tax credit supporters have argued that extending past 2014 would spark new wind development around the San Gorgonio Pass, where hundreds of old turbines are due to be replaced by newer, more efficient models. That kind of “repowering” could reduce the number of turbines in the Coachella Valley while increasing the area’s overall energy output, renewable energy experts say.

The production tax credit for wind and other renewables has been around since 1992, but it’s faced several renewal battles, and it’s lapsed on multiple occasions. Developers who qualify for the tax credit earn 2.3 cents per kilowatt-hour of energy produced over the first 10 years of a project’s lifespan.

“It’s a production tax credit — you get paid not based on how much the systems cost, but how much energy is produced,” said V. John White, executive director of the Center for Energy Efficiency and Renewable Technology, last month. “And this has been a very successful, performance-based standard that has really contributed to the industry’s growth.”

The production tax credit faced stiff opposition from groups backed by the fossil fuel industry, but it ultimately passed as part of a package that extended dozens of lapsed tax credits through the end of this year. The bill is expected to cost taxpayers $41.6 billion over 10 years, with the production tax credit — which applies to wind energy and several other renewables, although not solar — account for $6.4 billion.

Senate Majority Leader Harry Reid, D-Nev., nearly struck a deal with House Republicans last month that would have revived the production tax credit through 2017. But that deal fell apart after the White House threatened to veto it, arguing the overall package contained too many giveaways for big corporations.

The House, which adjourned for the year last week, ultimately voted to approve the one-year, retroactive extension. The Senate followed suit in a 76-16 vote Tuesday evening, on what was possibly its last day in session. President Barack Obama is expected to sign the legislation.

USA-House approves tax bill with one-year extension of wind, energy incentives

Credit:  By Ari Natter | Bloomberg BNA | December 4, 2014 |

The House voted Dec. 3 to pass tax legislation that would only extend the wind production tax credit and other energy incentives through the end of 2014, a move that clean energy advocates said would result in lost jobs and halt new projects.

The $42 billion bill (H.R. 5771) also would retroactively extend other energy tax credits that expired at the end of 2013, including a $1 per-gallon credit for biodiesel and renewable fuel, as well as credits for cellulosic biofuel makers and certain energy efficiency improvements.

The House passed the bill by a vote of 378-46. An amendment from Rep. Dave Camp (R-Mich.) to extend a tax credit for natural gas and other alternative fuel gas stations was incorporated into the bill and “considered as adopted” by the House Rules Committee Dec. 2. Continue reading

USA – Let “Protection” Tax Credits Expire!

Let the wind PTC expire once and for all

Credit:  By Don Nickles | The Washington Times |

Tuesday, December 2, 2014

After a well-deserved victory, Republicans have finally been granted their chance to take on comprehensive tax reform. This is a laudable, and, frankly, overdue goal that needs to happen next Congress. However, this goal faces many challenges. Chief among these is stopping the semi-annual extension of failed tax policies like the Production Tax Credit (PTC) for wind energy, which is set to come up for a vote imminently in Congress.

If Republicans allow the PTC to be extended during the lame duck session, it will cast doubt on their commitment to deliver true tax reform. Because the truth of the matter is, how can our Continue reading

USA-Wind Power Is Intermittent, But Subsidies Are Eternal – Don’t Renew the PTC

Wall Street Journal      Nov. 30, 2014

There is no need to extend a program that has cost U.S. taxpayers $7.3 billion over the past seven years.

By Tim Phillips

“Tax credits have been essential to the economic viability of wind farms so far, but will not be needed within a few years.”   So said Christopher Flavin, now president emeritus of the Worldwatch Institute — in 1984.

Thirty years and billions of dollars later, the wind industry is still saying it needs taxpayer support. Congress is currently hearing this argument as it debates whether to extend the 22-year-old “production tax credit” in the lame-duck session. The PTC, which gives wind producers a 2.3-cent tax credit for each kilowatt-hour of electricity produced over 10 years, expired at the end of 2013. Now wind-industry lobbyists are roaming the halls of Congress, asking legislators to renew it as part of a tax-extenders package before adjourning on Dec. 15.

The industry’s arguments are bluster. Wind-power capacity has increased by nearly 5,000% since the PTC was created and the industry now makes billions of dollars in annual revenue. Meanwhile, the credit has devolved into another example of corporate welfare.

Over the past seven years, the PTC has cost taxpayers $7.3 billion, and it is expected to pay out $2.4 billion more in 2015. Combined with other subsidies and programs, wind generators received $56.29 in government subsidies per megawatt-hour in 2010, according to a 2012 report from the Institute for Energy Research. That’s compared with 64 cents in subsidies for natural gas and $3.14 for nuclear power.

The program operates as one of America’s least-known wealth-redistribution schemes, forcing taxpayers to pick up the tab for wind farms beyond their borders. In 2012 more than 30 states paid more in subsidies than wind farms in those states received in tax credits. Citizens in five states paid more than $100 million more in federal taxes than they received from the PTC: California ($196 million), New York ($163 million), Florida ($138 million), New Jersey ($126 million) and Ohio ($104 million). Eleven states paid into the PTC even though they have no qualifying wind production. The unlucky losers included Florida, Virginia and North Carolina.

The credit also encourages abuse—both of the electricity grid and the taxpayer. Instead of paying wind producers based on how much of their electricity is used, the PTC pays them based on how much electricity they generate. Companies that invest in wind power thus receive tax credits to produce something that consumers may not actually want. In fact, producers often pay electricity-grid operators to take their product. This phenomenon is known as “negative pricing.”

Wall Street has figured out that it can use this system to its advantage. The PTC offers major corporations a chance to lower their tax rates by investing in wind energy. But investors also realize that wind farms make little financial sense if the taxpayer isn’t picking up the tab.

Wind power’s fluctuating growth patterns bear this out. In 1992 wind installations produced about 2.8 million megawatt hours of electricity; in 2013 wind installations produced 167.6 million megawatt hours. Yet when the PTC expired temporarily in 2000, wind installations plummeted 92% the next year. The same thing happened in 2002 and 2004, when new installations fell 76% after two temporary expirations.

But the past few years deserve special mention. For most of 2012, wind producers weren’t sure if the PTC would be renewed at the end of the year. As a result, producers didn’t break ground on new projects, with only 1,100 new megawatts brought online the following year—a more than 90% drop.

Yet Congress caved and gave the PTC a one-year extension in January 2013, throwing in a bonus: Wind projects under construction by the end of the year would still be eligible for the PTC, even if they wouldn’t come online until after the credit expired.

Corporations and wind producers promptly rushed to cash in the taxpayer’s generosity. The industry broke ground on 12,000 megawatts of new wind farms before the PTC finally expired on Dec. 31. Thanks to the credit’s 10-year payout guarantee, taxpayers still have another decade of subsidizing wind.

It would be a mistake for Congress to renew the PTC again, and it is time to let the wind industry compete with other energy industries in a fair market. Congress should ignore the hot air surrounding the PTC and let it flutter away forever.

Mr. Phillips is the president of Americans for Prosperity.

SFS E-MAIL: Wind Energy PTC: Taking Action!

November 27, 2014

TO: All SFS Members:

This e-mail came in from Lisa Linowes at, one of our main sources of breaking news articles.   It appears that we CAN make a difference by making calls and e-mailing the people who count when it comes to killing the Wind Energy PTCs. Please read the message below and heed her request! Continue reading

WIND: Negotiators near ‘PTC extenders’ deal to preserve PTC through 2017

Credit:  Nick Juliano, E&E reporter • Posted: Wednesday, November 26, 2014

Congressional negotiators are nearing a year-end tax deal that would extend and phase out the wind industry’s key federal incentive through at least 2017, according to sources familiar with the details of the emerging deal.

While details had not been made public at publishing time this afternoon, the treatment of the production tax credit (PTC) in the emerging bipartisan deal goes beyond the simple extension contemplated by an earlier Senate bill and seeks to provide a long enough pathway for wind and other qualified renewable energy developers to gradually wean themselves from government support.

The deal is included in a broader “tax extenders” bill that negotiators were said to be putting the finishing touches on this evening. Spokesmen for the House Ways and Means Committee and Senate Finance Committee, which have jurisdiction over the bill, did not respond to calls for comment.

In general, the package will temporarily extend through the end of next year the more than 50 tax breaks collectively known as extenders that were included in a Finance Committee package, S. 2260, earlier this year. About 10 of the tax breaks that had been temporary will become permanent, including the research and development tax credit, and the PTC will be phased out, sources tracking the process said. A tax break for transit riders also could become permanent in the package, while several other energy-related breaks are likely to get temporary extensions.

However, the White House signaled its strong opposition to the reported $450 billion package soon after details began emerging this afternoon.

“The president would veto the proposed deal because it would provide permanent tax breaks to help well-connected corporations while neglecting working families,” Jennifer Friedman, a White House spokeswoman, said in a statement reported by multiple news outlets.

The statement did not mention any specific credits, and Friedman did not immediately respond to a request for additional comment.