Wind Power Tax Credit ‘Dead’ in Congress This YearAlex Nussbaum
A federal tax credit that benefits wind power projects is dead in Congress this year as Republicans seek a broader tax overhaul, Representative Charles Boustany said.
“Maybe there will be some in the Senate who will try to revive it but I really do think it’s dead in the House,” Boustany, a Louisiana Republican and member of the House Ways and Means Committee, said in an interview today in New York. While the credit might be revived as part of lame-duck legislation after the November elections, that seems unlikely, he said.
The 2.3-cent per kilowatt-hour production tax credit, which pays owners for power produced during a project’s first decade, expired at the end of last year. A broader tax reform proposal released last month by Representative Dave Camp, chairman of Ways and Means, would reduce the amount project owners can claim to 1.5 cents, boosting government revenue by an estimated $9.6 billion.
A record 12,000 megawatts of wind farms were under construction in the U.S. at the end of last year, reviving an industry that has seen the number of new projects decline when the tax credit was allowed to expire, according to the Washington-based American Wind Energy Association.
The industry, which has supported an eventual phase-out of the tax credit, may want a slower reduction in payments than the Camp draft legislation, Boustany said.
“In fact, they were the only industry that came to us and said we don’t need this down the line,” he said. Wind project backers said they “just need it to bridge the investment that was contingent on it.”
President Barack Obama’s proposed budget calls for a permanent extension and expansion of the production credit at a cost of $19.3 billion over the next decade. Renewing expired tax breaks for the energy industry is a priority for Senator Ron Wyden, the Oregon Democrat who leads the chamber’s Finance Committee. He is planning a vote on restoring the measures in the next few months.
The credit’s demise amounted to “retroactive tax increases” for wind companies that have invested as much as $25 billion a year in U.S. projects and would undermine investor confidence, said Tom Kiernan, chief executive officer at the American Wind Energy Association.
“The wind industry has been and will continue to be engaged in tax-reform discussions,” Kiernan said in an e-mailed statement. “The Senate Finance Committee offered a very constructive approach to reform, in our view, and we look forward to working with Congress as debate over tax reform continues.”