Lawmakers spar over extending tax breaks for wind energy producers

May 21, 2012: Wind turbines operate at a wind farm near Milford, Utah. (Reuters)

A bipartisan group of lawmakers is urging the Senate Finance Committee to renew clean energy tax incentives that expired at the end of 2013, renewing a familiar fight over a 22-year-old subsidy that critics say is too costly and distorts the market.

The 144 House and Senate members say the tax credit has created thousands of jobs and expanded the role wind energy is playing in producing renewable energy.

"Like all businesses, the wind industry seeks certainty and predictability so that long term project decisions and investments can be made. Without that stability, we once again risk losing many of the jobs, infrastructure and investment that the wind industry has created," read the letter by Sens. Mark Udall, D-Colo., Chuck Grassley, R-Iowa, and 24 other senators.

A coalition of 118 House members led by Reps. Steve King, R-Iowa, and Dave Loebsack, D-Iowa, sent a similar letter to House Speaker John Boehner, R-Ohio.

The tax credit, established by the Energy Policy Act of 1992, was originally worth 1.5 cents per kilowatt-hour of electricity produced. Last year, the rate was worth 2.3 cents per kilowatt hour and a one-year extension would cost $6 billion, according to the Joint Committee on Taxation.

Last November, more than 50 lawmakers urged House Ways and Means Committee Chairman Dave Camp to let the wind energy credit expire at the end of the year, arguing the subsidy "is now more valuable than the price of the electricity the plants actually generate."

According to The Hill, the Senate Finance Committee is expected to consider extending more than 50 tax incentives, including renewable energy credits, next month.

Sen. Lamar Alexander, R-Tenn., a prominent opponent of the subsidy, criticized the tax credit in an statement to Roll Call as "a colossal, unjustified waste of taxpayer dollars at a time when the nation has an unsustainable debt."

"The subsidy is so large that it allows wind developers in some markets to literally give away their electricity,” Alexander told the publication. "This in turn is forcing utilities to shut down nuclear plants and coal plants. After 20 years, there is no excuse for continuing to extend this subsidy of a mature technology, which was intended to jumpstart an industry."

The Institute for Energy Research, a group aligned with the oil and gas industry, released a study last year disputed by wind energy producers that found that states which aren't wind industry hubs and don't receive much from the tax credit pool "unfairly shoulder the burden."

The American Wind Energy Association on Friday praised the lawmakers pushing for an extension and noted that 70 percent of congressional districts have either utility-scale wind farms or factories.

"We look forward to Congress, in particular the Senate Finance Committee, acting quickly to extend the PTC and ITC so that the U.S. remains a global leader and our businesses can continue building, expanding and hiring," Tom Kiernan, CEO of the association, said in a statement.