Policy: Environment & Energy

Wind industry revives push to extend key tax credit

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The wind industry is angling for another extension of a key tax credit, but how to get it and other expiring provisions across the finish line is not clear.

The American Wind Energy Association said Thursday that it has a record 12,000 megawatts of wind energy under construction across 20 states. When completed, that will be enough to power 3.5 million homes. But it warned that failing to extend the 2.3-cent-per-kilowatt-hour wind credit, which expired Dec. 31 but still rewards project developers for the 10-year credit period if they started construction before that date, would jeopardize future growth.

"As far as new orders, brand new orders, they're likely not getting [them] this year or in future years," association chief Tom Kiernan said of manufacturers during a Thursday meeting in Washington. "They're starting to have to manage for that uncertainty."

But opponents say that underscores how the credit distorts energy markets. Without the credit, they say, those jobs would not exist.

"The growth in wind is driven not by market demand, but by a federal tax subsidy that at times is more valuable than the wholesale price of the electricity in many electricity markets across the United States," a group of 10 senators, led by Sens. Lamar Alexander, R-Tenn., and Joe Manchin, D-W.Va., wrote in a December letter to the Senate Finance Committee.

For now, a short-term extension of the wind and other credits remains the most politically feasible option. The suite of incentives likely will need to be attached to a must-pass provision — the upcoming debt ceiling vote is one option — but it's early, said Joseph Mikrut of Capitol Tax Partners.

"Tax extenders never move on their own. They always have to be attached to something else," said Mikrut, a former tax legislative counsel for the Treasury Department and former staff member on the Joint Committee on Taxation. "We're still very early in this session."

Senate Democrats already have indicated support for a package of extensions. They moved to renew them all for one year in the waning days of 2013, though the measure didn't pass because it required unanimous approval.

Sen. Ron Wyden, D-Ore., who is expected to lead the Senate Finance Committee, has said he wants to pass the extenders as a stopgap measure to an eventual attempt to overhaul the federal tax code.

Current Chairman Sen. Max Baucus, D-Mont., started that tax reform effort, but Obama nominated him as ambassador to China. On top of that, the House has signaled it will focus its efforts on Obamacare.

"The majority leader [Sen. Harry Reid, D-Nev.] has filed a one-year extension proposal. I support that in the context of it being a bridge to comprehensive reform," Wyden told the Washington Examiner. "What I saw in November ... was the House leadership signaled that the principal focus was going to be opposition to Obamacare. So that clearly affected the timetable."

The wind industry supports the tax code overhaul efforts, as it is seeking a more stable incentive to weather the boom-and-bust cycles that come with the threat of an expiring credit. They point to the record 13,000 megawatts installed in 2012 as the credit faced expiration compared with the 1,084 megawatts put in service last year.

While the credit has already expired, it has been extended retroactively in the past. Fiscal conservatives and southeastern lawmakers largely oppose the credit, but it has champions in breezy Midwest and Western states on both sides of the aisle.

Still, Sen. Orrin Hatch, R-Utah, the top Republican on the Finance Committee, said the momentum for an extension has been tame to this point.

"I haven't seen it so far. But these kind of things do kind of take off after January," he said.

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