Library filed under Taxes & Subsidies from Texas
Billions of dollars in Texas wind projects remain in a holding pattern, just waiting for the final go-ahead on the federal production tax credit.
The Randall County commissioner’s court spent more than an hour discussing details of Chermac Energy Corporation’s proposed tax abatement agreement for the wind farm they are working to build in southern Randall County. Three motions had been made and voted on, each failing by a 2-3 vote.
Randall County commissioners agreed they want a wind farm built in the county but couldn’t decide on how much tax revenue they wanted to give up to make that happen.
Susan Combs, the state comptroller, stirred controversy last month when she said Texas’ growing wind energy industry should “stand on its own two feet.”
An area wind farm has expressed interest in a 10-year agreement that would reduce the taxes it would owe to Canyon Independent School District, Assistant Superintendent Randy McDowell said during the district’s board meeting Monday evening.
The evidence is in; wind energy claims are, at least for now, hot air. It’s time for Texas lawmakers to end the subsidies that have propped up the renewable energy market and let those industries stand on their own. That’s the conclusion of Texas Comptroller Susan Combs in a recent report.
The subsidies to wind generation companies are the only subsidies the state has handed out which do not require the companies to commit to job creation. From SpaceX to Toyota, other companies receiving subsidies have had those subsidies conditioned on job creation. But the wind industry is somehow 'special.'
Judges Jennifer Walker Elrod and Jerry Edwin Smith said that while PURPA promotes alternative energy, it does not “do so at the expense of the American consumer” but “mandates that the rates that utilities pay for such power shall be just and reasonable.” The majority went on to say that the more favorable pricing is meant only for those generators “able to forecast when they will deliver energy to the utility — and capable of delivering the specified amount of energy at the scheduled time.”
Texas PUC chairwoman, Donna Nelson, has initiated an investigation into "the costs of [transmission] system upgrades, the costs to maintain and operate the current system, and the allocation of those costs specifically related to renewable resources." In her memo below (and attached). Chairwoman Nelson warns of the costs, particularly of the wind PTC is extended by Congress.
With the completion of Texas’ $7 billion Competitive Renewable Energy Zone project, there are now more transmission lines than needed. That has enabled developers to sell their power at higher rates and brought the practice of selling electricity at zero or negative to a virtual halt.
“Once this deadline passes in December, it definitely puts uncertainty on future projects,” he said. “Instead of laying folks off and contracting our spending, we’re simply moving to other markets. “Canada, Mexico and South America are pretty busy right now. Pretty much everything except for Europe is open to more wind energy right now.”
In this paper, Joseph Cullen quantifies the emissions offset by wind power for a large electricity grid in Texas using the randomness inherent in wind power availability. When accounting for dynamics in the production process, the results indicate that only for high estimates of the social costs of pollution does the value of emissions offset by wind power exceed cost of renewable energy subsidies. An excerpt of Mr. Cullen's paper is provided below. The full paper can be downloaded from this page.
"[the wind industry] still faces uncertainty in the medium and long term and needs Congress to address that next year ...The legislative vehicle could be tax reform, an extenders package or something else, but ultimately our industry will begin to feel the impacts of uncertainty in 2014."
“Although we discuss states and regions as 'net takers' and 'net payers,' we note that the ultimate takers are actually the owners of wind facilities — a very concentrated group,” it said. “The payments to the wind producers come at the expense of all taxpayers everywhere,” the report said.
So how would Texas wind power fare if the 2.3-cent-per-kilowatt-hour incentive lapsed? That would depend on how long the credit is unavailable, observers say. But for a couple of reasons, the effect probably won't be as harsh as in past uncertain times. Jeff Clark, executive director of the Austin-based Wind Coalition, said he's not too worried about the ticking clock. “There's a lot of projects in the pipeline right now,” he said.
Timmins detailed the flow of money from the State Energy Conservation Office to the city of Jonestown to CM Energies to Central Texas Plastics and then back to Malouff's company. She said Central Texas Plastics submitted vouchers totaling $965,000 for work and materials but then sent most of the money -- $670,000 in checks -- back to Malouff's company.
Ironically, while taxpayers and utility ratepayers are being hammered coming and going to subsidize alternative energy and efficiency programs, the most reliable and cost-effective energy sources, fossil fuels, are the brunt of both political scorn and proposed tax increases. ...State legislators should press for those answers. We may be surprised at how much we spend for how little we receive.
As the session progresses, renewable energy advocates are bracing to defend critical policies that have helped Texas become the leading wind-power state. The ascendancy of the Tea Party, an abundance of cheap natural gas and tighter budgets have reduced the sway of the wind industry. Solar power advocates anticipate limited gains at best.
"The PTC [production tax credit] is helping projects that are ready to go, that are shovel-ready, but the thing that is hurting the industry is really low gas prices that make it fairly hard to obtain financing," said Jimmy Horn of Horn Wind Energy.
The wind energy industry is dependent on something even more unpredictable than wind: Congress. Hidden in the turmoil over the "fiscal cliff" compromise was a tax credit for wind energy.