The Answer, for Republicans on Tax Incentive, Isn’t Always Blowing in the Wind

MIDDLETON, WI - NOVEMBER 19: A wind turbine rises up above farmland on the outskirts of the state capital on November 19, 2013 near Middleton, Wisconsin. A bill that would make it easier for residents living near power generating wind turbines to sue for any perceived negative impacts to their health and property values goes before the Wisconsin legislature on Wednesday. Critics believe the bill (SB167) could kill the wind energy business in Wisconsin. (Photo by Scott Olson/Getty Images)
National Journal
Clare Foran and Amy Harder
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Clare Foran and Amy Harder
Dec. 11, 2013, 3:52 p.m.

House Re­pub­lic­ans hail­ing from the win­di­est of dis­tricts are com­ing out on dif­fer­ent sides of the fight over the pro­duc­tion tax cred­it, which the wind-power in­dustry con­siders key to its growth — and which will ex­pire at year’s end un­less Con­gress votes to re­new it.

“I have sup­por­ted it in the past, and there are ef­forts be­ing worked on now to try to maybe change, ramp it down,” said Rep. Cory Gard­ner, R-Colo., whose dis­trict is the sixth-win­di­est in the coun­try, ac­cord­ing to data com­piled by the Amer­ic­an Wind En­ergy As­so­ci­ation. After a pause, Gard­ner ad­ded: “But, I would sup­port it, yes.”

Of the top 10 win­di­est con­gres­sion­al dis­tricts in the coun­try, nine are rep­res­en­ted by Re­pub­lic­ans, ac­cord­ing to AWEA’s 2012 an­nu­al re­port.

House Ag­ri­cul­ture Chair­man Frank Lu­cas, R-Okla., whose dis­trict ranks fifth on the list, said in a state­ment to Na­tion­al Journ­al Daily that he, too, sup­ports an ex­ten­sion of the PTC. “While it is not com­pletely clear in what form it would be ex­ten­ded, I be­lieve it is im­port­ant that we con­tin­ue in­vest­ing in this re­source to help in­crease the pro­duc­tion of all forms of Amer­ic­an made en­ergy,” Lu­cas said.

Every year around this time, the pres­sure builds in Con­gress to pass a host of tem­por­ary tax policies — of­ten called ex­tenders — in­clud­ing the wind-en­ergy tax cred­it, which has been on the books for 22 years with just a couple of short lapses. After ex­pir­ing for two days in early Janu­ary, Con­gress voted to ex­tend the PTC for one year.

With an­oth­er ex­pir­a­tion date loom­ing, wind-en­ergy lob­by­ists privately say Con­gress is un­likely to ex­tend the policy by year’s end. This is for a couple reas­ons: 1) The most ob­vi­ous le­gis­lat­ive vehicle for the tax-ex­tenders pack­age — the budget — does not in­clude them; and 2) Re­pub­lic­an lead­er­ship in the House is re­luct­ant to act on any in­di­vidu­al tax policies be­fore House Ways and Means Chair­man Dave Camp, R-Mich., and his coun­ter­part in the Sen­ate, Fin­ance Chair­man Max Baucus, D-Mont., make pro­gress on com­pre­hens­ive tax re­form, which they’ve both pledged to pur­sue.

This ef­fort is the key reas­on why House Ma­jor­ity Whip Kev­in Mc­Carthy, R-Cal­if., whose dis­trict is the fourth-win­di­est in the coun­try, is not com­ing out in sup­port of an ex­ten­sion this year.

“The Whip is sup­port­ive of the cur­rent ef­forts by Chair­man Camp and the Ways and Means Com­mit­tee to re­form our tax code,” a spokes­man for Mc­Carthy said in an email to Na­tion­al Journ­al Daily. That’s a change in tone from last year. “I think we should do it,” Mc­Carthy said when asked at a Na­tion­al Journ­al event wheth­er he sup­ports ex­tend­ing it.

Texas, the biggest wind-pro­du­cing state, in­cludes three of the win­di­est dis­tricts, all rep­res­en­ted by Re­pub­lic­ans who sup­port, to vary­ing de­grees, phas­ing out the tax cred­it.

“The wind in­dustry has been a great suc­cess in Texas, and ac­cord­ing to its own re­ports, it will soon be cost-com­pet­it­ive with cheap­er forms of elec­tri­city,” Rep. Randy Neuge­bauer, R-Texas, who rep­res­ents the win­di­est dis­trict in the coun­try, said in a state­ment. “Be­cause of this suc­cess, I be­lieve it’s time for a gradu­al phase-out of the Pro­duc­tion Tax Cred­it.”

Rep. Mac Thorn­berry, R-Texas, whose dis­trict is the eighth-win­di­est, has shif­ted his po­s­i­tion over the past couple of years. In 2011, he in­tro­duced a bill to ex­tend the policy for 10 years, but a sim­il­ar pro­pos­al he in­tro­duced in May called for a phase-out.

Rep. Adam Kin­zinger, R-Ill., whose dis­trict rounds out the top 10, also op­poses ex­tend­ing the policy. “I have long sup­por­ted an ‘all-of-the-above’ ap­proach to Amer­ica’s en­ergy needs, but I be­lieve it is time for wind en­ergy to learn to sur­vive without the sup­port of the pro­duc­tion tax cred­it,” Kin­zinger said in a state­ment.

Kin­zinger’s dis­trict also in­cludes a heavy pres­ence from Ex­elon, the na­tion’s largest gen­er­at­or of nuc­le­ar power, which has been lob­by­ing to end the wind tax cred­it over the past year or more.

The House’s biggest op­pon­ent of the wind tax cred­it — and most oth­er tem­por­ary en­ergy tax in­cent­ives — sees sup­port grow­ing for his cause. “I have no­ticed a dif­fer­ence,” said Rep. Mike Pom­peo, R-Kan. “Even those folks who have been on the oth­er side aren’t as vo­cal. I think there is an in­creas­ing re­cog­ni­tion that this kind of nar­row carve-out doesn’t make sense.”

When asked about his col­leagues who sup­port ex­tend­ing the PTC, Pom­peo re­spon­ded: “We just have a dis­agree­ment.”

Hav­ing a lot of wind in your dis­trict shouldn’t be the only reas­on to sup­port a tax in­cent­ive, Pom­peo said. “We have a tre­mend­ous amount of wind en­ergy in Kan­sas,” he said. (The state is fifth in the coun­try for wind gen­er­a­tion, ac­cord­ing to AWEA.) “One could make the case that for that reas­on alone I should sup­port it,” Pom­peo said. “But it doesn’t make sense for Kan­sas con­sumers.”

To what ex­tent, if at all, Con­gress tackles com­pre­hens­ive tax re­form next year will af­fect wheth­er law­makers vote to ret­ro­act­ively ex­tend the wind tax cred­it some­time next year. Lob­by­ists say that the ex­pir­a­tion of the PTC would start hav­ing a meas­ur­able neg­at­ive im­pact by April.

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