Former member Exelon slams AWEA tax credit proposal

Exelon – the largest US competitive power generator that was ousted in September from the American Wind Energy Association (AWEA) for its opposition to extending the production tax credit- has called the trade group’s proposal for a six-year phase down of the subsidy “completely unacceptable.”

AWEA chief executive Denise Bode in a letter to congressional leaders this week wrote that the wind industry believes such a glide path through 2018 would enable it to become cost competitive and “minimally viable.”

The PTC pays $22 per MWh, inflation-adjusted, for a project’s first decade in operation. Enacted in 1992, it expires at the end of this month. While the tax credit - the main driver of industry growth - does have bipartisan support, it faces determined opposition from fossil fuel interests, fiscal Republican conservatives and critics who say that wind energy will never be cost competitive without subsidies.

AWEA’s proposal would retain the existing formula in full for projects that begin construction in 2013, followed by 90%, 80%, 70%, 60%, and then 60% of the current level for those placed in service from 2014 through 2018. There has been no public response from either party to the idea.

“AWEA’s proposal should be viewed by Congress as a non-starter for any phase-out discussion,” says Joseph Dominguez, senior vice president for government & regulatory affairs and public policy at Exelon. “We are especially disappointed by this proposal, given that AWEA previously indicated that a 2-year extension would suffice,” he adds.

The electric and gas utility holding company estimates that a one-year PTC extension alone will cost American taxpayers more than $12bn.

“The 20-year old PTC was originally designed to jumpstart the wind energy industry,” Dominguez adds, noting that the wind industry has matured and is thriving today. “The PTC is simply no longer needed.”

Exelon, which owns about 900MW in wind capacity, contends that the pricing advantage PTC provides is distorting competitive markets in the Midwest and Mid-Atlantic regions where it operates.

“The credit actually puts at risk the operation of other, more reliable clean energy sources,” says Dominguez. Exelon is the largest US operator of nuclear plants, which represent most of its 33GW of generating capacity.

AWEA’s board voted to terminate Exelon’s membership in response to the company’s active engagement with groups opposed to renewal of the PTC. At the time, Exelon was a board member and privy to the trade group’s PTC lobbying strategy with Congress. The move quickly went public with both sides trading barbs. The company is based in Chicago.