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Life without the PTC ain't that bad


Posted by Chris Prandoni on Wednesday, August 1st, 2012, 12:44 PM PERMALINK


In 2002, Sen. Chuck Grassley (R-Iowa) lobbied for temporary extension of the wind Production Tax Credit (PTC) arguing that wind was nearly competitive:

"I'd say we're going to have to do it for at least another five years, maybe for 10 years. Sometime we're going to reach that point where it's competitive [with other forms of energy]. I think the argument for any tax credit is to make the new source of energy economically competitive," Grassley said.

Taking Sen. Grassley (R-Iowa) at his word, 2012 would be the last year the federal government allowed wind producers to claim the PTC. Yet, Sen. Grassley (R-Iowa)—the 1992 original author of the PTC—and other Midwest Republican Senators are again arguing for a one-year or four-year extension of the PTC.

But will allowing the wind PTC to expire be a deathblow to the wind industry in states like, oh say, Iowa? Hardly.

Wind producers will employ the PTC until 2022
The wind PTC allows wind producers to employ the 2.2 cents per KWh tax credit for the first ten years they are operating; meaning that a wind producer who began employing the PTC this year will be able to utilize the credit until 2022. Far from pulling the rug out from under the wind industry, allowing the PTC to expire will have no impact on current wind producers.

105 MW of Iowa’s electricity must come from renewable sources
One of 33 states that has either a Renewable Portfolio Standard (renewable electricity mandate) or renewable target, a large portion of Iowa’s electricity must effectively come from wind production. Iowa’s RPS, for better or worse, ensures that wind will be a critical component of Iowa’s energy mix.

Choosing instead to cite spurious numbers about impending job losses, wind PTC proponents conveniently ignore government policies that already buttress the industry. If you offered a non-wind retailer the opportunity to have a mandated consumer base and then the ability to lower their tax liability every time they sold their product, they would take that deal—and sell a lot of widgets.

Justified as a temporary tax provision by its advocates, it is time to allow the wind PTC to expire at the end of 2012, as Sen. Grassley promised. 

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