Concern over nuclear competition drove Exelon’s opposition to PTC
“There’s definitely an economic impact. I mean in the Midwest we’re seeing power prices flip — they’re going negative. I’m not aware of any subsidy in the history of American energy policy that’s allowed somebody to give away their product for free and in some cases even pay people to take it,” said David Brown, Exelon’s senior vice president for government affairs.
“If you’re Ford, you can’t compete with Chevy if the government is offering a $20,000 bounty on every car they sell,” Brown added.
Brown was a featured speaker this afternoon at a Capitol Hill briefing sponsored by the conservative Republican Study Committee and the American Energy Alliance, the political arm of the fossil fuel industry-backed Institute for Energy Research. The briefing was convened to bolster opposition to the wind production tax credit, which is set to expire at the end of this year unless Congress renews it.
The briefing comes as conservative groups are stepping up their opposition to the PTC. Dozens of conservative groups including Americans for Prosperity last week urged Congress to let the PTC die.
Today, Rep. Mike Pompeo (R-Kan.), who is sponsoring legislation that would eliminate the PTC and a variety of other energy-related tax subsidies, began circulating a letter that he is asking other members to join him in sending to Speaker John Boehner (R-Ohio) urging an end to the credit.
Exelon, whose portfolio includes about 900 megawatts of wind, came out against the PTC earlier this summer, saying the credit is no longer needed and distorts the market. That position, and the company’s stepped-up lobbying efforts against a PTC extension, led one of its executives to be ousted from the board of the American Wind Energy Association, which has made winning an extension to the credit its top priority this year (Greenwire, Sept. 10).
AWEA says 37,000 jobs in the industry will be lost by the first quarter of next year without an extension to the credit. Industry officials say they don’t need the credit to be continued indefinitely but that allowing it to lapse this year would prematurely halt the growth in wind installations over the last seven years, during which time the credit has not lapsed. About 50,000 MW of wind farms are installed in the United States, a figure that has doubled in the last four years (E&ENews PM, Aug. 7).
“Thanks to the wind production tax credit, we’ve developed a clean energy economy that employs thousands of Americans — particularly veterans returning from their service,” said Matt Zeller, a military veteran who served in Afghanistan and works with the veterans group Operation Free to promote an extension of the credit. “If members of Congress want to take America’s energy security seriously, they will work quickly to renew the wind production tax credit.”
Brown said the PTC, which provides a 2.2-cent tax credit for every kilowatt-hour of electricity produced, has distorted markets to the point where other sources, such as nuclear, are unable to compete.
“It’s dollars and cents, but it’s also operational issues,” Brown told reporters after the briefing, which was closed to the media. “In the Midwest at night, when prices go negative, we either have to back our generation off or pay the market to run it. And nuclear plants are base-load electricity sources: They run best when they run all the time. And it’s very difficult to cycle them down and back up.”
Instead of continuing to rely on the PTC, Brown said wind developers should focus on developing more efficient turbines that would allow projects to compete without subsidies. He said government support should focus on funding research and development rather than continuing the tax credit.
Pompeo, in his letter, echoes several of the same arguments Brown made about wind undercutting other base-load sources of electricity because of the PTC. The Kansas Republican also links the PTC to the defunct solar panel manufacturer Solyndra, which went bankrupt after receiving a $535 million loan guarantee from the Department of Energy. However, the program Solyndra benefited from is separate from the tax credit at issue.
“We believe that the Solyndra scandal has demonstrated that it is time for the federal government to stop picking winners and losers in the energy marketplace. Twenty years of subsidizing wind is more than enough,” Pompeo’s letter says. “Our nation can simply no longer afford to pick winners and losers in the energy marketplace. The PTC should expire at the end of the year under current law.”
The PTC has broad support in both the House and Senate, including among Republicans. About two dozen House Republicans are co-sponsoring legislation that would extend the PTC for four years, and a broad Senate tax package that included a one-year PTC extension passed out of committee last month on a bipartisan 19-5 vote. Final action on the PTC and other expiring tax provisions is not expected until the end of the year.
Opponents of the credit are going to keep up their efforts to argue against it at least through the end of the year.
“At the end of the day when it comes to the PTC, strategically the goal is to make that thing so toxic that it cannot go into a final package, so that’s what we are doing,” said Benjamin Cole, AEA’s director of communications. “We are increasing the toxicity of PTC by doing what we did today, by continuing our message on this — it is fiscally toxic.”