Republican lawmakers target PTC

Kansas Republican Mike Pompeo is leading the Republican Party charge in the US House of Representatives to end the federal wind production tax credit (PTC), the latest salvo over the controversial incentive that expired last 31 December.

In a letter to House Speaker John Boehner and House Majority Leader-elect Kevin McCarthy, both Republicans, Pompeo and 53 other back benchers say that the PTC is part of their “fight to end crony subsidies for energy corporations.”

They called the PTC among the “the most anti-competitive and economically harmful tax provisions.” They contend that under President Barack Obama, federal subsidies for wind have grown from $476m per year to $4.98bn.

“Proponents of the wind PTC continue to call for an extension despite growing evidence that this subsidy has not only cost taxpayers billions, but has caused significant price distortions in wholesale electricity markets.,” they wrote.

“Growth in wind energy is not driven by market demand, but instead by a combination of state mandates and a federal tax credit that is now more valuable than the actual market price of the electricity these plants generate,” they assert.

The PTC pays eligible asset owners 2.3 cents per kWh, inflation adjusted, for a project’s first decade in operation. The credit became law in 1992, although the payout was much less.

Since then, the PTC has expired on various occasions but Congress has renewed it – the last time in early 2013 with more favorable eligibility criteria.

Wind installations have more than doubled since Obama took office in January 2009.

The 54-member anti-PTC bloc led by Pompeo is a relatively small bloc in the 234-member Republican caucus. The 435-seat House also includes 199 Democrats and two vacant seats.

Pompeo's anti-wind crusade over the past several years is at odds with both Kansas US senators and Governor Sam Brownback who support it. Kansas has some of the country's best onshore wind resource, much of which has barely been tapped.

The wind industry believes it retains enough residual support in the House and Senate, where Republicans are the minority, to win another one-year PTC extension after early November national elections.

This so-called “lame-duck” session occurs before the holiday recess as the outgoing Congress wind down business. The next Congress begins work in January.

Polls show Republicans potentially adding to their House lead and winning control of the Senate. In which case, the party’s leadership would have less incentive to cooperate with Obama on issues he sees as important such as renewable energy, knowing he will have less than two years remaining in office.