Governors group, including Kitzhaber, seeking new extension of federal tax credit for wind farms
A group of governors including Oregon Gov. John Kitzhaber wrote to congressional leaders Monday urging them to approve a multi-year extension of the federal production tax credit for wind farms as soon as possible.
The federal production tax credit, which provides an incentive of 2.3 cents per kilowatt hour for wind farms, expired at the end of 2013 after a lengthy battle in Congress. Projects that were under construction by the end of 2013 remain eligible for the credit, which provided developers who could start projects before the end of last year with some breathing room. But the governors’ letter on Monday claimed that Congress’s failure to act last year resulted in the loss of thousands of jobs, substantial new investments and local payments.
Kitzhaber was chairman of the Governor’s Wind Energy Coalition last year, which includes 23 states. Washington Gov. Jay Inslee will chair the coalition next year.
Margi Hoffman, a policy advisor for Kitzhaber, says the wind industry has invested some $9 billion in Oregon, though the state’s wind energy boom has cooled off in the last two years. That has less to do with the tax credit than new rules limiting the import of renewable energy into California to satisfy that state’s green energy mandates. Oregon and Washington utilities are still investing in new wind projects, though their pace has slowed too as they get closer to meeting initial targets under their respective states’ renewable portfolio standards.
The cost of wind energy has come down, and the federal tax credit is a crucial piece in making the projects competitive with other resources, particularly with low natural gas prices. Supporters say it helps level the playing field with between wind and fossil fuels, and is a critical piece of the financing package for most wind farms.
Sen. Ron Wyden, D-Ore and now chair of the Senate Finance Committee, will likely play a key role in the PTC debate. He is expected to move this week or next to revive a package of tax breaks – known collectively as tax extenders – that expired at the end of last year. Wyden declined to comment on the package Monday, but said its no secret that he’s been a big supporter of the PTC in the past.
Even if an extension of the PTC makes it out of the senate, it could become a political football in the House. The tax credit has been the target of some Republican lawmakers who are looking for more comprehensive tax reform, though it does it have bi-partisan support as red states are home to some of the largest concentrations of wind farms.
The tax credit and state renewable portfolio standards have also been in the crosshairs of conservative groups funded by the Koch brothers, who say taxpayers shouldn’t have to prop up energy solutions that can’t compete without heavy subsidization. Renewables advocates counter that fossil fuels have been receiving far greater direct subsidies for decades, and that lawmakers have failed to put a price on the pollution they produce.
– Ted Sickinger