PTC backers, foes slug it out as cliff talks continue 

Opponents of an expiring wind energy tax break are urging lawmakers to vote against its extension and arguing the phaseout of the credit floated by an industry trade group would carry an exorbitant price tag, as wind supporters in Congress and the Obama administration continue to argue that an extension to the credit is vital to protect jobs.

The back-and-forth fight over whether to extend the wind production tax credit beyond its scheduled end-of-the-year expiration continued to simmer in the background of the larger debate over the looming “fiscal cliff.” The credit is seen as a likely candidate for inclusion in a larger deal, and advocates and opponents yesterday continued to lay out their arguments for and against it.

Sen. Mark Udall (D-Colo.), a leading advocate for extending the credit, appeared yesterday at a forum with Energy Secretary Steven Chu, where the pair argued that extending the PTC was necessary to maintain jobs in the industry, especially among domestic manufacturers that have increased their supply of wind turbine components in the recent years that the credit has been in place.

While wind costs have been falling, they are “not quite” on par with other new energy sources, necessitating an extension of the PTC, Chu said, stressing that costs would continue to fall so the credit would not be needed forever. Chu also endorsed other mechanisms to boost renewable energy, such as existing proposals that would allow renewable companies to organize as master limited partnerships to attract more investors.

Udall said he remained optimistic that the credit would win an extension this year, pointing to the broad bipartisan support for it in both chambers, although he acknowledged that the path remained murky amid the broader cliff negotiations.

“How it’s going to happen, I don’t know. I hope somebody here has a clearer crystal ball than I do,” he said during the online forum hosted by DOE.

Earlier in the day yesterday, the American Wind Energy Association released an animated Web video outlining its arguments on behalf of a PTC extension (Greenwire, Dec. 19).

Meanwhile, the American Energy Alliance and other conservative groups today plan to send a letter to lawmakers from states with renewable portfolio standards outlining arguments against the credit, charging that the 2.2-cent-per-kilowatt-hour credit distorts energy markets to prop up an unreliable energy source. Today’s letter follows an earlier one from the groups targeting lawmakers from non-RPS states.

“The effect of providing a subsidy worth half or more of the wholesale price of electricity has already negatively impacted electricity reliability, because the artificial price structure created by the PTC encourages the development of uneconomic wind while undermining the economics of reliable, full time generation such as coal and nuclear,” AEA and the other groups wrote.

AEA is the political arm of the fossil fuel industry-funded think tank Institute for Energy Research, which yesterday reiterated an argument that the PTC extension would cost tens of billions of dollars. In a blog post, IER laid out a back-of-the-envelope calculation that AEA and other opponents have previously cited estimating the cost of an American Wind Energy Association proposal to phase out the credit over six years at about $55 billion over the life of the credit.

Analyses prepared by the congressional Joint Committee on Taxation have estimated that similar phaseout proposals would cost $10 billion to $14 billion over a decade. And an independent analysis prepared for E&E Daily last week put it at $21.5 billion over 16 years (E&E Daily, Dec. 17).

AWEA’s proposal was floated last week in a letter to Congress, and the group said it emerged from an internal economic analysis of what government support would be necessary to maintain a “minimally viable” industry. That analysis has not been publicly released because the association wants to maintain a focus on its primary objective, which is convincing Congress to adopt a one-year extension endorsed by the Senate Finance Committee, while waiting until a broader tax reform discussion next year over the details of the phaseout, AWEA spokesman Peter Kelley said.