Last year, the US wind industry Production Tax Credit was scheduled to expire at the end of December and the news media was all over it. The PTC is also scheduled to expire that the end of this year, but the issue is getting much less attention, why is that?
Senator Don Nickles, who served the state of Oklahoma and the country for 24 years, recently told Breaking Energy the important difference is the attention being paid by congress to the PTC this time around.
“Last year it was whether or not to extend the Bush tax cuts, all of them, and most of them continued. The PTC was extended last year with almost no debate and no attention…This year people on the hill are looking at it [PTC extension] more seriously. Senators are looking at it and recommending not to do it,” he said.
Nickles served on the powerful Senate Energy and Natural Resources Committee for 24 years and was involved in all major energy issues, he told Breaking Energy. “I ran for office due to flawed energy policy going back to Carter administration,” he said.
The PTC was originally passed in 1992 as temporary industry jumpstart mechanism. “Enough is enough,” said Nickles, “the industry doesn’t need any more help.” He went on to say wind is subsidized more than any other fuel and this distorts the marketplace.
In fact, the PTC was not only extended, but expanded, contends Nickles. This view refers to the fact that under the terms of last year’s extension, projects only need to be started by end 2013 rather than completed, which were the former PTC qualification criteria.
What Happens to PTC Now?
“Now it appears there will not be an extenders package this year, so it will expire,” said Nickles. He also thinks it will probably not be reinstated next year for two reasons: 1) The marketplace doesn’t need it due to the huge number of installments added to the grid this year; 2) Because it’s expensive and taxes would need to be raised elsewhere to make up for it.
“The economics of it say it shouldn’t be extended,” Nickles said.
“In arena of tax reform, people believe reform is needed, it should be broader, flatter, and not pick winners and losers and PTC does that.”
There is a great deal of controversy over whether wind power would compete with natural gas – at current prices – without the benefit of the PTC, which is worth 2.3 cents per kilowatt-hour.
“Wind jobs are being created at expense of natural gas jobs. Wind is only beating natural gas because it gets a subsidy,” said Nickles
Some analysts claim that in certain parts of the US – portions of the Midwest in particular – wind is currently cost competitive with natural gas and coal without the PTC.
However, many states also have Renewable Portfolio Standards that offer additional incentives to companies generating electricity with renewable energy and Nickles finds this excessive.
“We still have mandates in 29 states (RPS), I call them non-fossil fuel mandates. Wind certainly doesn’t need both RPS and PTC.”
This story was originally published on Breaking Energy.