U.S. Sen. James Lankford, R-Okla., has introduced the PTC Elimination Act. As its name suggests, the bill would aim to completely phase out the federal renewable energy production tax credit (PTC) by 2026. The legislation resembles a bill with the same title introduced in the U.S. House of Representatives earlier this year.
The PTC, a key incentive for the U.S. wind power industry, expired at the end of December 2014; however, as Lanford says in a press release, the incentive is ‘routinely retroactively extended at the end of the year.’ Although the Senate Finance Committee included a two-year extension of the PTC in a tax extenders package in July, that bill still awaits consideration on the full Senate floor.
In the release, Lankford argues the wind power sector is a "self-sustainable, multi-billion dollar industry" and "no longer needs the support" of the PTC. The Senator also says a two-year extension of the PTC would cost $10.5 billion over the next 10 years, "and nearly all of the funding is attributable to the wind industry."
"The PTC was put in place to encourage new innovations and supply our country with diverse energy," says Lankford, in the release. "I am a fan of an all-of-the-above energy strategy, and I certainly support wind as a large part of that goal. The wind industry has made major strides over the past two decades, and they have proven their industry to be efficient and self-sustainable. There is no need for the taxpayer to continue to subsidize a wind start-up tax credit."
The Senator further charges that the PTC is ultimately a redundant subsidy, as dozens of states have wind power incentives in place, such as renewable portfolio standards.
In addition, Lankford says, "The PTC also encourages distortions in electricity markets. Wind producers' negative bids are subsidy-driven and distort the market by sending incorrect price signals, which can harm the long-term reliability and cost-effective operation of the utility."
David Ward, a spokerson for the American Wind Energy Association, says, ‘This bill is a retroactive tax increase for some companies, not a 'phase out' as some have described."