Energy Bill Extends Wind Power Incentive through 2007

Washington, D.C.—The American Wind Energy Association (AWEA) hailed today the extension of the wind energy Production Tax Credit (PTC) included in the wide-ranging energy bill that Congress just adopted and President Bush is soon expected to sign into law. The PTC, which was scheduled to expire on December 31, 2005, provides a 1.9 cent-per-kilowatt-hour (kWh) tax credit for electricity generated with wind turbines over the first ten years of a project’s operations, and is a critical factor in financing new wind farms.

“This is the first time that an extension of the production tax credit for wind energy has been approved before the credit expires, and, following the past six years of boom-and-bust cycles caused by successive expirations, that is very good news for the industry,” said AWEA Executive Director Randall Swisher. “The timely extension of the credit allows companies to plan for growth, create jobs, and provide more clean power to customers nationwide.”

Up to 2,500 megawatts of wind energy capacity are scheduled to come on line in the U.S. this year, bringing new power to the equivalent of 700,000 homes and injecting over $3 billion of investment into the power generation sector. With the timely extension of the PTC, the American Wind Energy Association anticipates that strong growth momentum will continue in 2006 and 2007.

“The PTC extension was secured thanks to the leadership of tax committee chairmen Senator Chuck Grassley (R-IA) and Representative Bill Thomas (R-CA),” said AWEA Legislative Director Jaime Steve. “AWEA is also very appreciative of the leadership of energy committee chairmen Senator Pete Domenici (R-NM) and Representative Joe Barton (R-TX), and of the Bush Administration’s support for an extension of the PTC.”

“AWEA also thanks Senators Max Baucus (D-MT), Jeff Bingaman (D-NM), Byron Dorgan (D-ND), Orrin Hatch (R-UT), Larry Craig (R-ID), Tim Johnson (D-SD), Ron Wyden (D-OR), and Representatives John Dingell (D-MI) and Ralph Hall (R-TX), all of whom served on the conference committee for their efforts in gaining an extension of the PTC,” said AWEA’s Deputy Director of Legislative Affairs Jon Chase. “In addition, we commend Representatives Jim McCrery (R-LA), Mark Foley (R-FL), Earl Pomeroy (D-ND), Richard Pombo (R-CA) and Mark Udall (D-CO), and Senators Harry Reid (D-NV), Kent Conrad (D-ND), Gordon Smith (R-OR) and Tom Harkin (D-IA) for their contributions.

Other key players included Senators Mike Crapo (R-ID), Ken Salazar (D-CO), Wayne Allard (R-CO), and Jim Jeffords (I-VT), and Representatives Jim Nussle (R-IA), Greg Walden (R-OR), Dave Camp (R-MI), Bob Beauprez (R-CO), Tom Reynolds (R-NY), Ed Markey (D-MA), Jay Inslee (D-WA), Zach Wamp (R-TN), Dennis Rehberg (R-MT), Ron Kind (D-WI), Chris Van Hollen (D-MD), Tom Latham (R-IA), Jerry Weller (R-IL) and others.

By simply changing the PTC expiration date to December 31, 2007, the extension leaves in place the PTC’s current 1.9 cent per kilowatt-hour value, the annual inflation adjustment provision, and the 10-year term to generate credits following the installation of a wind turbine. The bill does not contain restrictions on the availability of the PTC or place limits on offshore wind projects, as some anti-wind lawmakers had proposed.

The final energy bill does not include the Senate provision calling for 10% of the nation’s electricity to be generated from renewable sources like wind and solar by 2020, also referred to as the Renewables Portfolio Standard (RPS). “By failing to include in the energy bill this provision to boost renewable energy development over the longer term, Congress missed a unique opportunity to enact forward-looking energy, economic, security, and environmental policy all at once,” said Swisher.

The bill also does not include an incentive for small wind systems for homeowners and small businesses, although it provides a 30% credit capped at $2,000 for residential solar systems and fuel cells. Such incentives are needed to help reduce the up-front cost of purchasing such systems.

“With the timely extension of the PTC, the wind energy industry can move ahead – uninterrupted – to produce thousands of additional high-paying jobs, boost rural economic development, and generate clean energy for consumers,” said Steve.