Wind credit proponents prepare for 'fiscal-cliff' agreement without extension

An energy security group told The Hill on Friday that it does not expect the one-year wind credit extension it has supported to make it into a “fiscal cliff” deal.

The Truman National Security Project's Operation Free campaign is preparing to fight for a retroactive extension to the credit next Congress.

Michael Wu, the group’s advocacy policy director, said the extension would likely be left out of a short-term agreement to avoid automatic spending cuts and tax increases set to take effect Jan. 1.

“Everything in a stopgap package would be geared toward keeping taxes from jumping on the middle class, which is why the AMT (alternative minimum tax) and payroll tax would likely be in but the PTC (production tax credit) wouldn't,” Wu said.

The 2.2-cent per kilowatt-hour credit for wind power production expires Dec. 31.

The wind industry says letting it end would eliminate 37,000 jobs, and that it would pull the rug out from an industry that is nearing self-sufficiency.

Fiscal conservatives, though, contend extending the credit is too costly given the federal deficit situation.

Extending the credit retroactively is less than ideal for the wind industry, as investment dropped when the credit last lapsed in 2004.

Much of the same is happening for 2013, Ellen Carey, a spokeswoman with the trade group the American Wind Energy Association (AWEA), told The Hill on Friday.

“Passage before the end of the year is preferred, but should the deal be made shortly after the beginning of the new year, it should be retroactive to Jan. 1 for strong, seamless business activity.

“Virtually the entire U.S. wind industry is on hold awaiting the rules for 2013 developments, and manufacturers here report having few if any orders,” she said.

Sen. Mark UdallMark Emery UdallDemocrats will win back the Senate majority in 2020, all thanks to President Trump Poll: Trump trails three Democrats by 10 points in Colorado The Hill's Morning Report — Trump and the new Israel-'squad' controversy MORE’s office said the Colorado Democrat and leading advocate for the credit remains optimistic that a one-year extension will find its way into a fiscal cliff bargain.

“We obviously do look ahead, but we want to focus on what we can do in the here and now,” Audrey Nicoleau, a spokeswoman for Udall, told The Hill on Friday.

But some Republicans have expressed concern about a language change included in the extension proposal. They say the alteration amounts to an expansion of the credit. The tweak would allow wind turbines to receive the credit if they’re under construction — rather than producing power — by Dec. 31, 2013. That is part of the reason a one-year extension would cost $12.1 billion through 10 years.

“I don’t see how Congress can prioritize the PTC in a stopgap measure when we’re looking at tax hikes and huge spending cuts that are about to impact the entire economy. I don’t think there’s any way that gets included in a stopgap measure,” Benjamin Cole, a spokesman with conservative energy group American Energy Alliance, told The Hill on Friday.

If the wind credit negotiations transition into next Congress, talks could focus more on AWEA’s proposal to phase out the incentive.

The group earlier this month proposed extending the credit one year — with the language change — and then phasing it out through the next five years.

Some lawmakers, however, have said that scenario would take too long.

Wu said sealing a multi-year deal is key for establishing industry stability.

He explained that if Congress takes several months to retroactively renew the credit — even with the language change in place — its effect on spurring investment next year might be limited without longer term certainty.

“[A] retroactive extension with the ‘under construction’ language might spur more investment, but it's very unclear to me how much it really helps,” Wu said.