U.S. Public: Say NO to Big Wind

The Big Wind lobby has descended on Washington DC and its objective is singular -- secure a four-year extension of the Production Tax Credit ('PTC'), the 20-year ‘temporary' subsidy most credited for market growth in the wind sector. The PTC is due to expire at the end of this year.

For the last month, the industry poured millions of dollars into its nationwide campaign aimed at convincing the public that any lapse in the subsidy would prove a crushing blow to American jobs. Most of the ads targeted Congressional House members who resisted the industry's demands for their PTC earmark. The cry for action reached a fevered pitch last week as Congress negotiated the payroll tax bill, viewed by many as the last best chance to attach an extension of the PTC before November's presidential election.

Politicos from wind-friendly states like Iowa and Kansas wrote letters repeating the same tired talking points about jobs. It was embarrassing to see these politicians blindly repeat what they were told with no apparent understanding of the costs and impacts of their pro-wind policies. They clearly viewed their support of the PTC as safe politically. Not so fast.

The Public Pushes Back

Last week the American public proved that support of the PTC was, well, complicated. Thousands of Americans from eigtheen states signed letters to Congress asking their representatives to vote NO on extending the PTC.

Three key arguments were raised in the letter:

1. Since the PTC was adopted in 1992, its annual cost has ballooned from $5 million a year in 1998 to over $1 billion annually today. The open-ended subsidy of 2.2¢/kWh in after-tax income represents a pre-tax value of approximately 3.7¢/kWh, which in many regions of the country equals, or exceeds the wholesale price of power!

2. If the PTC were to sunset, taxpayers would still be obligated to cover nearly $10 billion in tax credits for wind projects built in the last decade. This debt is in addition to the nearly $20 billion already accrued for wind projects built under Section 1603.

3. Despite the billions in public funding since 2008, the wind sector lost 10,000 direct and indirect jobs, bringing the total to 75,000 jobs.[1] In states like Vermont, government models have shown that above-market energy costs tied to renewables have the deleterious effect of reshuffling consumer spending and increasing the cost of production for Vermont businesses. These increased costs reduce any positive employment impacts of renewable energy capital investment.

The PTC -- Outdated and Inefficient

Even if we accept that earmarks for big wind are still appropriate, the PTC is highly inefficient and should, at least, be updated to respond to current market conditions. For example, since it is uniform across the country the PTC supports poorly sited wind development in some areas while in other areas pays for projects that would have been built regardless of the credit.

The policy also ignores other crucial factors driving wind development in the U.S. including State mandates and energy prices. With more than half the states demanding renewable development, some policy experts question why projects receive benefits from both State renewable portfolio policies and the PTC. Good question!

Conclusion

Last week Congress listened to the American public and said 'no' to extending the PTC. By all accounts, the Big Wind lobby was stunned by the vote and has now pulled out all the stops to pressure Congress to vote for an extension as soon as possible. This time, their pressure will be met with an equivalent response from Americans nationwide who are determined to stop this unneeded, wasteful spending perpetuated by lazy, thoughtless politicians.

The message from taxpayers is simple: The cost of the PTC is excessive, the benefits elusive and, big wind's pitiful performance as measured against industry promises makes this entitlement an easy one to sunset.

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[1] Lawrence Berkeley National Laboratory reports (p. 7): "The American Wind Energy Association, meanwhile, estimates that the entire wind energy sector directly and indirectly employed 75,000 full-time workers in the United States at the end of 2010 - about 10,000 fewer full-time-equivalent jobs than in 2009, mostly due to the decrease in new wind power plant construction." A recent AWEA blog (February 3, 2012) confirms the 75,000 is still current.