U.S. Sen. Chuck Grassley had a pretty unique perspective on MidAmerican Energy’s announced $1.9 billion wind energy project Wednesday.
As the author of the original wind energy production tax credit in 1992, he can — perhaps more than any other politician currently lining up to take some of the credit — take some pride in the value and success of the tax credit, particularly in his home state. Grassley introduced the credit as an amendment to the Energy Policy Act of 1992.
“Wind energy has proven that it’s a force in America’s energy supply, providing clean, renewable, and home-grown power,” he said. “Wind energy comes from local farms, it’s for local customers and, most often, it adds investment value to local communities.”
Under the wind-energy production tax credit, producers are eligible for a tax credit for each kilowatt-hour of electricity produced by a qualified project during the first 10 years of operations. Currently, the credit is 2.2 cents per kilowatt-hour, and is only available when wind energy is actually being produced.
MidAmerican is planning to add 656 wind turbines in Iowa. And, during the project’s announcement Wednesday afternoon, MidAmerican President and CEO Bill Fehrman said a change to the tax credit when it received its one-year extension this year was “fundamental” to MidAmerican’s decision to proceed with the project. He said, without the tax credit, expansion could not have gone forward.
“Once the turbine is in service, you receive the tax credit for the next 10 years,” he said. “The prior language of the production tax credit stated the project had be completed by a certain date. Now, you just have to be started.”
The new language for the tax credit, which is set to expire at the end of the year, features two criteria upon which the credit is based. The first states the project must be in “continuous construction” by the end of 2013. The second states the owner must have invested at least 5 percent of the project cost by the end of 2013.
Construction is expected to begin in the fourth quarter of 2013, once MidAmerican has all of the appropriate regulatory approvals to move ahead.
“Our intent is to push forward and be in full costruction by the end of the year,” Fehrman said. “Obviously, the production tax credit is critical to the survival of the wind energy industry at this time, but there are efforts to make it more competitive.”
Fehrman declined to speculate if this project would spur further development of wind energy projects by MidAmerican competitors. He did say, however, the company’s focus has always been on its customers.
“This is about our customers; it always has been,” he said. “We had an opportunity to bring a significant value to our customers in the state, and we couldn’t let that slip by.”
Grassley also noted wind energy is beginning to prove it is a force, not only in U.S. energy supply but in driving economic development.
“Wind energy comes from local farms, it’s for local customers and, most often, adds investment value to local communities,” he said. “Nationwide, the wind-energy industry supports 75,000 jobs. Iowa ranks second among all states for wind production (total megawatts produced), and there are 6,000 wind-energy related jobs in Iowa.”
U.S. Rep. Dave Loebsack, a long-time supporter of wind energy production who led efforts to renew the current production tax credit in the House of Representatives, also weighed in, calling MidAmerican’s announcement “great news.” He also noted the job creation that would come from the announced expansion.
“The wind industry creates good paying jobs in local communities and this announcement will create new jobs in addition to the over 7,000 Iowans who are already employed in the industry,” he said. “I am pleased this investment will help strengthen not only Iowa’s leadership in wind energy but also create homegrown and affordable energy for Iowans and continue to grow our manufacturing sector in the state.”
Editor Bob Eschliman may be contacted at (641)-792-3121, ext. 423, or at beschliman@newtondailynews.com via email.