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Citizen letter urging Congress to oppose extension to the Wind PTC

Nearly 6,500 citizens from 25 participating states united in signing this letter urging Congress to oppose any extension of the wind energy production tax credit (“PTC”) due to expire at the end of 2012. More than 200 U.S. Senators and Members of Congress received the letter. The body of the letter is provided below. The full letter, without signatures included, can be accessed by clicking on the link at the bottom of this page.

Citizens' Plea to END the
Wind Energy Production Tax Credit (PTC)


END it COMPLETELY, and END it NOW!

Dear:

We are writing to join thousands of other citizens in urging you and your colleagues in the House and Senate to not extend the wind production tax credit (PTC) that has subsidized the wind industry since 1992.  This tax expenditure is due to expire at the end of this year, and it should be allowed to do so, permanently.

The Congress and the White House are facing several weeks of intense discussion considering the tax increases and spending cuts due to take effect at the end of this year.  We are very aware that you will be under pressure to extend provisions such as the PTC as a part of a compromise to avert some or all of those revenue and expenditure changes.  We implore you to resist that pressure, and permit the PTC to end on schedule.  Renewing the PTC would cost billions that our nation simply cannot afford, without any material benefit to the economy.

It has been evident for years that government support for wind energy development is very costly, and has utterly failed to establish industrial-scale wind as a self-sustaining contributor to meeting our energy needs. 

The attachment to our letter takes a closer look at the reasons the PTC needs to end.  The bottom line is that after more than three decades of government subsidy and support in multiple forms[1]  the wind industry can’t support itself, doesn’t make a significant contribution to meeting our energy needs and has no realistic prospects for doing so in the foreseeable future.

Since the PTC was first introduced in 1992, the government has provided $40 billion to the industrial wind energy industry in tax credits and cash grants with these costs dramatically increasing in recent years.  In the last year alone, nearly $5 billion has been distributed.  There is no plausible justification for continuing this spending, and certainly not when the nation is facing the huge debt and deficits prevailing today.

Please let the wind PTC expire.

Sincerely,

Participating states include Arizona, California, Hawaii, Idaho, Illinois, Indiana, Kansas, Maine, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Wisconsin and Wyoming.

ATTACHMENT:  THE FACTS ABOUT INDUSTRIAL-SCALE WIND


1.  Wind is a mature industry – it’s time for it to stand on its own.  The Joint Committee on Taxation reports that between 1992 and 2015[2] , the cumulative cost of the PTC, without extension, will be approximately $17 billion with the bulk of this claimed by wind resources constructed since 2006.  These costs are in addition to the anticipated $22.6 billion in direct cash outlays under the Section 1603 grant program now expired. Yet, after decades of government support of multiple kinds, the wind industry remains economically unviable.

2.  The wind-sector slow-down is not tied to the end of the PTC.  The wind industry insists it's at risk of a slow-down without the PTC and jobs will be lost.  But this view ignores crucial factors driving development in the United States.  Demand for wind has eroded, in part, due to states meeting their renewable mandates.  Lower natural gas prices have further reduced wind's attractiveness as a 'fuel saver'.  Faced with these market conditions, wind developers are tabling projects.  The Energy Information Administration[3]  now forecasts flat growth in the wind sector for this decade regardless of what happens with the PTC.

3.  Wind energy is costly, and government efforts to offset the cost distort the markets.   Wholesale power contract prices for onshore wind are roughly two- to three- times the price of more reliable generation, making wind one of the most expensive power sources in the U.S. even after the PTC is factored in.  The PTC offsets the high price of wind energy, giving the false impression that wind is competitive with other resources, but at 2.2¢/kWh, the subsidy's pre-tax value (3.4¢/kWh) equals, or exceeds the wholesale price of power in much of the country.  The size of the subsidy relative to wholesale prices is distorting competitive wholesale energy markets and harming the financial integrity of other, more reliable generation[4]. 

4.  The industry’s job-creation claim is based on one-sided, simplistic modeling.  The wind industry insists the PTC enables American jobs but ignores potential jobs that would be created given alternative spending of federal funds.  Further, industry job forecasts fail to report on the more important net job creation.  In states like Vermont, government models have shown that above-market energy costs tied to renewables reduce any positive employment impacts of renewable energy capital investment[5].  This is without taking into account additional costs associated with wind-related transmission build-out and grid integration costs associated with wind energy’s intermittency. 

_______________________________________ 

[1] In addition to federal tax credits, government efforts to support the wind industry have included (1) a mandatory federal requirement (under PURPA) that utilities purchase wind energy from qualifying independent producers, (2) feed-in tariffs or their equivalent in a number of state (these impose a tax in the form of higher electricity rates to subsidize wind development), (3) “renewable portfolio standards” requiring that utilities obtain some minimum percentage of their electricity from wind and other “renewable” sources and (4) various other tax breaks such as sales and property tax exemptions. 

[2] M. Sherlock Testimony, April 2012.
http://science.house.gov/sites/republicans.science.house.gov/files/documents/hearings/HHRG-112-SY21-WState-MSherlock-20120419.pdf

[3] Energy Information Administration. EIA Reference case for wind energy, June 2012.  http://www.eia.gov/oiaf/aeo/tablebrowser/#release=AEO2012&subject=0-AEO2012&table=16-AEO2012&region=0-0&cases=ref2012-d020112c

[4] Northbridge Group, Negative Electricity Prices and the Production Tax Credit. September 2012. http://www.nbgroup.com/publications/Negative_Electricity_Prices_and_the_Production_Tax_Credit.pdf

[5] Vermont Department of Public Service, The Economic Impacts of Vermont Feed in Tariffs. December 2009. http://publicservice.vermont.gov/planning/DPS%20White%20Paper%20Feed%20in%20Tariff.pdf



cc:  House Speaker John Boehner
Representative Eric Cantor
Representative Kevin McCarthy
Representative David Camp
Representative Sander Levin
Senate Majority Leader Harry Reid
Senate Minority Leader Mitch McConnell
Senator Max Baucus
Senator Orrin Hatch

Ltr_to_cong_nov_2012_final_thumb
Ltr To Cong Nov 2012 Final

Download file (390 KB) pdf

DEC 26 2012
http://www.windaction.org/posts/35704-citizen-letter-urging-congress-to-oppose-extension-to-the-wind-ptc
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