Sen. Murkowski floats five-year phaseout of wind credit

Murkowski suggested Congress should extend the 2.2 cent per kilowatt-hour credit for wind power production so long as tax reform discussions next year lead to a plan for its gradual end. 

And though Murkowski's committee does not have jurisdiction over the credit, her comments as the GOP's top energy senator could prove instructive if the credit comes up for a vote.

“So what we need to look at critically is if we’re going to have a production tax credit for wind, maybe you’ve got to schedule that for five years, say. It’s in place but then it phases out slowly. There’s got to be some kind of a path rather than this yo-yo effect that I think really has hampered the industry,” Murkowski said.

The credit is set to expire Dec. 31, and extending it for one year would cost about $5 billion. 

Republicans and Democrats alike have broached the phaseout subject this week. Wind industry trade group the American Wind Energy Association (AWEA) has said it supports a phaseout, but has not elaborated on how it should be designed.

Many lawmakers want the credit to survive into next year to be part of broader tax reform discussions.

But fiscal conservatives say the deficit situation means things like the wind credit must be sacrificed.

The credit’s proponents — a broad base of Democrats and Republicans from wind-heavy states — contend it brings in revenues to offset its cost.

AWEA said the credit brings in about $15 billion of private investment annually. The group says ending the credit would eliminate 37,000 jobs.

Congress has a chance to pass the one-year extension through a $205 billion tax extenders package. Senate Finance Committee Chairman Max Baucus (D-Mont.) said he expects the wind credit to pass because it enjoys bipartisan backing.

Sen. Chuck Grassley (R-Iowa) said the Senate is waiting on “fiscal cliff” negotiations to move that bill. He said the nation’s top priority is getting President Obama and House Speaker John Boehner (R-Ohio) to avoid those automatic spending cuts and income tax increases set to take effect Jan. 1.