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OPINION: Tax credit for wind energy will also hurt coal, Montana economy

Thomas J. Pyle | Hagadone News Network | UPDATED 10 years, 1 month AGO
by Thomas J. Pyle
| November 15, 2015 5:00 AM

Here’s a question for Montana’s U.S. senators and representative: Do you support raising state gas and electricity bills by nearly $500 in the next five years?

That may seem like a silly question. After all, no politicians go to Washington promising to make life harder for their constituents, especially low- and middle-income families. Yet that’s exactly what’s at stake with Congress’s upcoming vote to renew the Wind Production Tax Credit.

The Wind Production Tax Credit, which expired last year, gives wind producers a 2.3-cent tax credit for every kilowatt-hour of electricity produced over 10 years. Since 2008, it has cost U.S. taxpayers at least $7.3 billion. And when combined with other federal subsidies, Montana taxpayers forked over $32 million to corporate wind facilities between 2005 and 2014, according to a new study by my sister organization, the Institute for Energy Research.

And now, if industry lobbyists get their desired two-year Production Tax Credit renewal, it will cost taxpayers another $10 billion in corporate welfare.

Enough is enough. Wind advocates have claimed for decades they wouldn’t need handouts within a few more years  —  claims that have proven wrong time and again. Wind’s recent history illustrates this reality. When the Production Tax Credit is active  —  aka, when the tax spigot is open  —  new wind installations soar. When it’s temporarily expired and no more tax dollars are available, installations plummet.

That was the case in 2013 when the tax credit expired. New installations plunged from an all-time high of 13,000 megawatts in 2012 to just 1,100 megawatts in 2013  —  a single-year 92 percent drop. Similar declines occurred following previous temporary expirations.

This points to a simple conclusion: Wind companies can’t cut it without taxpayers propping them up. And no wonder it’s economically unsustainable — wind energy is dramatically more expensive for Montana’s businesses and families. Electricity produced from new wind facilities is three to four times more expensive than that produced from existing traditional sources. The Wind Production Tax Credit is thus hitting you twice — once in your taxes, again in your utility bills.

That it’s corporate welfare and drives up energy bills should be reason enough for Congress to oppose the tax credit. But this year, there’s another: It’s the only meaningful way for Congress to impede President Obama’s reckless climate agenda.

The centerpiece is the Environmental Protection Agency’s new regulation on existing power plants. It would force Montana to cut carbon dioxide emissions by 47 percent by 2030. This will require fundamentally restructuring state energy grids. Economists at Energy Ventures Analysis estimate it will cost Montana families nearly $500 in higher gas and electricity bills by 2020. After that, NERA Economic Consulting predicts average electricity price increases of 24 percent from 2022 to 2033, peaking as high as 37 percent in a single year.

But here’s the thing: This regulation won’t work without dramatically increasing the use of wind power. In fact, wind is so critical to the regulation’s success that the final version essentially bribes states to offer more subsidies for wind and solar.

This is how the Wind Production Tax Credit and Mr. Obama’s carbon regulation are inseparable. Wind energy can’t survive without subsidies, and Mr. Obama’s carbon regulation won’t work without more wind. Therefore, by leaving the tax credit expired, Congress has an opportunity to take the wind out of the president’s climate agenda sails.

In this way, the Wind Production Tax Credit forces both of Montana’s senators and all of its representatives to make a clear choice: either vote for President Obama’s climate agenda and raise electricity prices on Montana families, or protect their constituents by opposing any effort to revive the expired tax credit. It’s a no-brainer, even for Congress.


Pyle is the president of the American Energy Alliance.

ARTICLES BY THOMAS J. PYLE

November 15, 2015 5 a.m.

OPINION: Tax credit for wind energy will also hurt coal, Montana economy

Here’s a question for Montana’s U.S. senators and representative: Do you support raising state gas and electricity bills by nearly $500 in the next five years?