Wind-Energy Group Backs Six-Year Phaseout for U.S. Break

The wind-energy industry asked Congress to extend a tax break for six years, a time frame it said was long enough to cut costs and short enough to ease fears the credit will become a permanent part of the tax code.

The American Wind Energy Association, whose members include General Electric Co. (GE) and the U.S. unit of Siemens AG (SIE), offered the proposal yesterday in a letter to Senator Max Baucus, a Montana Democrat and chairman of the Finance Committee, and other members on the tax-writing panel.

Wind-energy companies have urged Congress for months to extend the so-called production tax credit, which is set to expire this month. The break shaves as much as a third of the costs to generate wind power, and industry advocates contend its loss could cost thousands of jobs. Under the proposal, the credit’s value would fall gradually over the six years.

The credit’s “continued availability for a reasonable period of time will allow the industry to invest in the cost- saving technologies required to finish the job,” the Washington-based trade group said in the letter.

The group’s plan would keep 100 percent of the current 2.2 cents a kilowatt-hour for projects started in 2013. The credit would fall to 90 percent for projects completed in 2014, 80 percent in 2015, 70 percent in 2016 and 60 percent in both 2017 and 2018, the credit’s final year.

Republican Critic

Senator Lamar Alexander, a Tennessee Republican and a longtime critic of the wind industry, said at a news conference today that Congress should allow the credit, which was first adopted in 1992, to lapse.

“We can’t afford it,” Alexander said.

Tom Pyle, president of the American Energy Alliance, a Washington-based group that says it opposes energy subsidies, said the six-year phaseout could cost an additional $50 billion.

The credit is a “government giveaway that has run its course,” he said at the Washington event. Officials from 11 other small government groups, including the tea party-backed Americans for Prosperity, spoke at the news conference to urge Congress to reject extending the credit.

Earlier, a group of religious organizations defended the credit, saying wind power reduces air pollution that threatens public health.

Religious Support

“Renewable energy, including wind, is essential to protecting the health of future generations,” said Alexei Laushkin, a spokesman for the Evangelical Environmental Network, based in New Freedom, Pennsylvania.

Separately, a group of Democrats and Republicans yesterday urged President Barack Obama to support changes in the tax code to let renewable energy companies get the benefits that some fossil fuel projects now receive.

The changes include letting wind and solar companies form master limited partnerships. While owners could sell shares under these structures, the companies would be taxed at a lower rate than corporations.

“Small tweaks to the tax code could attract billions of dollars in private sector investment to renewable energy deployment, reduce the cost of renewable electricity by as much as a third and dramatically broaden the base of eligible investors,” Senators Chris Coons, a Delaware Democrat, and Jerry Moran, a Kansas Republican, and 27 other lawmakers wrote in a letter to Obama.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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