Marita Noon: It’s time for tough love on tax credits for the mature wind industry

By Marita Noon (Diary) - Red State
Our America Initiative Advisory Council Member of Energy & Environment

After 22 years of taxpayer support, the wind industry is coming to Congress for another handout--"just one more time" 

Is the lame duck Congress oblivious to the message voters sent to Washington last month? Or, are they intentionally ignoring it in favor of special interests? A pending vote on a tax-extenders package—that would have a slim chance of passage in the new Congress—will reveal whether or not they learned anything from the 2014 midterms.

Throughout 2014, since the Production Tax Credit (PTC) for the wind energy industry expired on December 31, 2013, lobbyists from the American Wind Energy Association (AWEA) have pushedCongress to vote to retroactively revive the PTC. So far, sound fiscal thinking has prevailed. The lame duck session provides their last opportunity to hand over hard-earned American tax dollars to big business, and pile national debt on future generations.

The PTC provides one of the best examples of the worst kind of taxpayer waste being considered in a tax-extenders deal. The largest benefactors of the credit (underwritten by U.S. taxpayers) are wind energy turbine manufacturers like General Electric (which purchased Enron’s wind turbine business in 2002), and investors like Warren Buffet, who, without apology, recently admitted: “We get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”

The U.S. wind energy business started as a gleam in Enron’s eye, enjoyed an entitled childhood at taxpayer expense, and, by now, should have blossomed into an adult. Instead, now, at the tail end of this Congressional session, the industry—by way of AWEA lobbyists—has its hand out for a ninth round of “free” taxpayer money. These dollars, which get transferred from hard-working taxpayers to big corporations and billionaires, are borrowed from our children, with the paper being sold overseas in what is known as “national debt.”

For this lame duck Congress, AWEA’s panhandling should be as welcome as grown children returning home for financial support—“just one more time.” Like parents, possessing the kind of wisdom that often only crystalizes in our fifties, Congress must now realize the inevitable: sometimes seeing our dependents grow up to be independent requires tough love and a line in the sand. Though it is hard, most parents know saying “no” is part of the process of having children that grow into mature, responsible adults.

When the PTC was conceived in 1992, America’s energy paradigm differed totally from today. At that time Americans had a constant concern: growing imports of foreign oil from the Middle East left us vulnerable to global market forces that were driving prices higher at work, at the pump, and at home. We inherently knew then, as now, low-cost abundant energy is essential to America’s leadership on the global stage. Wind was touted as one of the answers. Despite the fact that wind produces electricity (albeit inefficiently, ineffectively, uneconomically), and electricity has nothing to do with foreign oil, Washington, throwing caution to the wind, embraced it.

The Energy Policy Act (H.R.775.ENR, or “EPACT92”) was signed into law and quickly set the wind industry up across countless countrysides, with offensive turbines towering above tens of thousands of homes.

Washington declared victory and left it at that, hoping our money, given to the wind industry, had been well spent, would lead to a mature wind industry that found its footing, and that it would pay handsome dividends to taxpayers down the road. Unfortunately, EPACT92 was long on hope, but short on encouraging the habits necessary for self-sufficiency. No one should be surprised that the industry’s immaturity has persisted for more than twenty years.

The wind PTC has been the industry’s biggest single source—though unearned—of support. Each new wind energy complex earns the tax credits for a full ten years. The machines only last an estimated twenty years—though the White House has authorized thirty-year bird-kill permits that allow, without punishment, protected bald and golden eagles to be chopped up mid-flight. The two-point-three-cent-per kWh bonus has a pre-tax value as high as three-and-a-half cents—which creates a big benefit to billionaires like Buffett.

The largest U.S. grid market’s wholesale energy clearing price averaged just $0.038 last year, according to industry sources. As a result, wind projects can bid their energy into electricity auctions far below its costs—and beneath the bids of conventional sources. We, taxpayers, make up the loss for them each April 15. In exchange, the grid receives the fickle wind-fueled electricity only when the weather cooperates. Indispensable and dependable coal- and gas-fueled power plants pay the price—as do consumers through higher electricity rates. Traditional power sources produce less electricity but have to work harder and for less pay. (Sounds like our conventional power plants need to form a labor union.)

Wholesale market revenues and the wind PTC make up only about 2/3 of total proceeds flowing to wind development owners. The other third comes from the value of additional federal subsidies combined with the financial incentives inherent in state-level tax breaks and mandates. In the end, wind investor proceeds depend on roughly 1/3 sales revenue and 2/3 handouts.

No wonder they take another round of free money for granted. We’ve taught them well: “Ask and you shall receive.”

While the wind industry has been promising to grow up for years, many elected officials, intent on protecting the taxpayers’ dime, have felt voter pushback. Some legislators have openly questioned wind energy’s value. Oregon Senator Doug Whitsett wrote a scathing review in a 2011 newsletter, recognizing that big business was benefitting at tax and ratepayer expense, while claiming the support was needed for an “infant wind industry.” A year earlier, Sen. Lamar Alexander (R-TN)49% (R-TN) pennedan astute paper comparing grid-scale wind energy to the notion that “sailboats” should power our military naval fleet.

AWEA continues to carefully navigate its message, always claiming its costs are falling and “almost competitive,” but fails to answer the most important question: competitive with what? Last week a New York Times (NYT) headline proclaimed: “Solar and Wind Energy Start to Win on Price vs. Conventional Fuels,” yet, within the text, the article states: “Those prices were made possible by generous subsidies that could soon diminish or expire.” Just days before the NYT piece was published, two of America’s brightest minds admitted, that after four years of trying to prove that it was possible “to produce a gigawatt of renewable power more cheaply than a coal-fired plant,” renewable energy simply “won’t work.”

The wind PR machine never brings up dependability and responsiveness to demand—attributes its fuel cannot, by definition, ever deliver. Without the ability to convert wind currents into electricity at all the right times, wind energy facilities cannot replace the existing dependable power plants that keep our lights on. Wind’s fuel may be free, but having to build and maintain two sets of power plants instead of one costs far more than wind’s fuel-cost advantage can save.

In its own way, the Environmental Protection Agency (EPA) is also helping fill the sails of the wind industry. It has proposed “renewable sources” as one of four “building blocks” available to states for complying with its proposed carbon dioxide emissions rules. Like the National Academies of Science, the EPA knows that even if atmospheric CO2 imposed a proven danger, using wind energy to reduce it, at over $200 per ton avoided, is roughly four times as expensive as other practical methods. EPA doesn’t even consider the lowest-cost long-term zero-CO2-emitting option: new emissions-free and dependablenuclear power stations.

A month ago voters sent a message to Washington. Were they listening? While negotiations are underway in Washington on the last minute tax-break “deal,” it isn’t clear which is more important to our elected representatives: voters or corporate cronies and lobbyists. A tax-extenders bill that incorporates pork for special interests would be the equivalent of Congress thumbing its nose at voters, while coddling industries that refuse to become self-sufficient—all the while piling more national debt service and repayment obligations on our children and grandchildren.

Hopefully, with twenty-plus years of history, our leaders recognize their poor parenting practices that best prepared their “offspring” to persuasively argue for perpetual access to money they didn’t earn. Voters should ask: can this lame duck Congress find the courage to finally stop enabling the wind industry and force it to grow up? Congress must say to them: “We’ve been supporting you for 22 years. Enough is enough!”

In the face of intense, last-ditch lobbying by AWEA, Congress needs help breaking its bad habits. But tough love is hard. To do the right thing, Congress needs support in the form of encouragement from voters. Pick up the phone today and tell your representatives: “Our nation’s affordable electricity should not be used by Congress as a bargaining chip in a tax-extenders package for special interests. After 22 years of government support, it is time for the wind industry to grow up. The now-expired wind PTC needs to be buried once and for all.”

 

Author’s note: Thanks to Tom Stacy for research assistance.

(A version of this content was originally published at Breitbart.com)

 

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column.

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