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Wind producers seek equal treatment on tax credits

Iowa Wind Energy Association already working on new PTC extension

Wind producers in Iowa say they want a level playing field when it comes to tax breaks.

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

“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, whose state is the nation’s third-highest wind energy producer behind Texas and California, 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 are lobbying for an extension of the Federal Wind Energy Production Tax Credit, which gives them 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 want 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.

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 92 percent, 76 percent and 76 percent drops in productivity, respectively, during the suspensions, 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. Uncertainty about the credit’s renewal in late 2012 led to widespread layoffs.

The language establishing the tax credit was changed this year 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 around 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,” the firm’s Cedar Rapids plant manager Roby Lloyd said in an IowaWatch interview this summer.

Support is not lacking from Iowa’s congressional delegation. All six members, Democrats and Republicans alike, support the tax credit.

In 2012, Iowa got 24.5 percent of its energy from wind, more than any other state. Plus, high production means that wind is responsible for about 6,000 to 7,000 jobs in Iowa, the state wind energy association reports, creating a constituency elected officials do not want to ignore.

All four Iowans in the House, Democratic Reps. Bruce Braley and Dave Loebsack and Republican Reps. Tom Latham and Steve King, have signed a letter requesting that the House Ways and Means Committee Chairman include renewable energy tax credits in upcoming tax reform legislation.

Earlier this year Loebsack and Braley co-sponsored H.R. 2539: Prioritizing Energy Efficient Renewables Act of 2013, which would make permanent the tax credits for renewable energies and eliminate certain deductions for oil and gas, including a deduction for intangible drilling costs.

As a Democrat-sponsored bill in the Republican House the bill is not expected to make it out of committee.

Editor’s Note: This article was a student journalism project produced by the Iowa Center for Public Affairs, a non-profit, online news website dedicated to collaborating with Iowa news organizations to produce explanatory and investigative work.

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