Wind energy representatives say they want equal representation in tax fight

Strategy could include cutting breaks for other energy producers

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Published: August 26 2013 | 8:52 am - Updated: 28 March 2014 | 7:33 pm in
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Wind producers in Iowa say they want a level playing field when it comes to tax breaks.

They would go so far as to push for cutting tax breaks for other energy producers, such as oil and gas, Iowa Wind Energy Association Executive Director Harold Prior said in an interview with IowaWatch.

That position, from the state with the nation's third-highest wind energy production, puts them in line with a position favored by U.S. wind power advocates, led by the American Wind Energy Association.

"Do a long term extension of the production tax credit at the federal level and the investment tax credit for wind," Prior said. "Failing that, remove the tax incentives, both within the tax code and outside the tax code, for all other generators of electricity so that we have a level playing field on which to compete."

Prior said he knows there is little chance for Congress to repeal tax breaks for other fuel producers, but that wind producers are in a fight about equity.

"Should we be picking winners and losers through government subsidies? Probably not," he said. "So if we're not going to subsidize any generator, that's fine. If we're going to subsidize some generators, we ought to subsidize them all."

Wind energy advocates such as the national and state wind energy associations are lobbying for an extension of the Federal Wind Energy Production Tax Credit, which gives wind energy producers a break of 2.3 cents per kilowatt-hour for the first 10 years of production.

That credit, referred to as the PTC, is set to expire at the end of 2013. Wind energy associations are pushing for a long-term extension of at least five years, preferably 10. The Iowa association has sent emails to its nearly 200 members and is working with a lobbyist to take its message to Washington.

BOOM-BUST CYCLE

The production tax credit has been renewed several times, often for only one or two years, since it was introduced in 1992. It has expired three times: in 1999, 2001 and 2003. In all three instances, it was renewed the next year, but the industry sustained a 92 percent, 76 percent and 76 percent drop in productivity during those years, respectively, when the tax credit did not exist, the American Wind Energy Association reported.

The PTC expired at the end of last year but was renewed for Jan. 1 through the end of 2013 as part of the fiscal cliff deal that implemented federal spending cuts but also some new taxes for the wealthiest Americans. Uncertainty about the credit's renewal in late 2012 led to widespread layoffs.

The language establishing the tax credit was changed so that construction on wind projects only had to be in progress by the end of the year rather than being completed in order to qualify for the credit.

This has led to a brief resurgence in wind turbine production in Iowa to meet orders like MidAmerican Energy's recent announcement to build a $1.9 billion, 1,050 megawatt wind farm by 2015.

Prior said manufacturers like Trinity Structural Towers and TPI Composites in Newton are scrambling to rehire hundreds of workers laid off last year, and losing valuable production time.

However, the PTC renewal didn't come soon enough to help Cedar Rapids-based Clipper Windpower, which at its peak had more than 700 employees and now has about 70. The company no longer manufactures wind turbines. Instead, it performs maintenance on its existing turbine fleet when required.

"When you renew (the PTC) late in the year, you're not giving anybody time to react," Cedar Rapids plant manager Rob Lloyd said in an IowaWatch interview this summer.

Prior said short-term renewals create a boom-bust cycle, with uncertainty and lost jobs for the wind energy industry.

"This is no way to treat a major industry contributor to the economic vitality of this country," he said. "If we had stable, long term policies we wouldn't see this happen."

LAWMAKER SUPPORT

Support is not lacking from Iowa's congressional delegation. All six members, Democrats and Republicans alike, support the tax credit. Rep. Tom Latham, a Republican, said it has been crucial for consumers and development of Iowa's renewable energy industry.

Iowa produces the third most wind power of any state, behind Texas and California, and in 2012 the state got 24.5 percent of its energy from wind, more than any other state.

High production means that wind is responsible for about 6,000 to 7,000 jobs in Iowa, the state wind energy association reports, making it a constituency that elected officials do not want to ignore.

Republican Sen. Chuck Grassley favors equal treatment when it comes to credits. Grassley spokeswoman Jill Gerber said. His feeling, Gerber said, is "if one is being considered for elimination they should all be considered either for retention or elimination."

Iowa's other senator, Democrat Tom Harkin, called renewable energy, including wind, "critical for the future of the U.S. economy and to our global competitiveness."

"Progress has not been all that it could be because of uncertainty and delays in extending the PTC," Harkin wrote in the statement for this story. "To lend predictability that will encourage greater investment in wind power I have urged a long-term or even indefinite extension of the PTC -- 10 years at least."

EDITOR'S NOTE: This project was produced by Iowa Center for Public Affairs Journalism-IowaWatch.org, a non-profit, online news website dedicated to collaborating with Iowa news organizations to produce explanatory and investigative work.

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