News from AWEA: Federal Wind Production Tax Credit Extension Bills Offered In Both Houses

["Tom Gray" <tomgray@igc.org>]

-----Original Message-----
From: Christine Real de Azua [mailto:christine@awea.org]
Sent: Thursday, March 22, 2001 2:04 PM
Subject: News from AWEA: Federal Wind Production Tax Credit Extension Bills Offered In Both Houses

American Wind Energy Association
www.awea.org

FOR IMMEDIATE RELEASE:                                  Contact

:  
Tom Gray (802) 649-2112
March 22, 2001

 

        

        

        

        

        

Christine 
Real de Azua (202) 
383-2508

        

        

        

        

        

        

        

        

        

STAGE IS SET FOR WIND INCENTIVE EFFORT AS
EXTENSION BILLS ARE OFFERED IN BOTH HOUSES

Proposals Would Extend Clean Energy Tax Credit for Five Years;
Wind Industry Mapping Capitol Hill Blitz

Senators Chuck Grassley (R-Iowa), Jim Jeffords (R-Vt.), and Kent Conrad (D-N.D.) 
helped set the stage for what is expected to be a strong effort to extend the 
federal wind energy production tax credit (PTC), introducing legislation (S. 
530) March 14 to extend the credit for five years.  S. 530 joins a 
companion bill (H.R. 876) introduced in the House of Representatives a week 
earlier.

       Jaime Steve, Director of 
Legislative Affairs for the American Wind Energy Association (AWEA), said wind 
companies and advocates will be pressing the case for the incentive actively, 
with one highlight of the campaign being a week-long lobbying blitz on Capitol 
Hill in conjunction with AWEA's national conference, Windpower 2001, in 
Washington, D.C., in early 
June.

        "The bill is called the 
BREEZE Act, and I hope it'll be a breeze to get it passed into law," Grassley, 
who chairs the powerful Senate Finance Committee, said.  "The wind is a 
clean, abundant natural resource.  Harnessing its power makes perfect 
sense, especially in times of energy shortages and soaring prices.  Wind 
energy is a breath of fresh 
air."

        Other initial cosponsors 
of S. 530 include Senate Energy Committee Chair Frank Murkowski (R-Alaska), John 
Breaux (D-La.), Gordon Smith (R-Ore.), Byron Dorgan (D-N.D.), Dianne Feinstein 
(D-Calif.), Larry Craig (R-Ida.), Patty Murray (D-Wash.), Tim Johnson (D-S.D.), 
and Chuck Schumer 
(D-N.Y.).

         "The wind 
industry is grateful for the support of Senator Grassley, who has championed the 
PTC since its inception in 1992," said Jon Chase, AWEA Assistant Director of 
Legislative Affairs.  "The introduction of this bill is a crucial step 
towards extending the wind 
PTC."

         In the House, a 
bipartisan group of members from the Ways & Means Committee, which is 
responsible for all tax legislation, joined to back H.R. 876.  The bill was 
introduced March 6 by Rep. Mark Foley (R-Fla.), along with lead sponsors Reps. 
Jerry Weller (R-Ill.), Bob Matsui (D-Calif.), and Karen Thurman 
(D-Fla.).

         Other original 
sponsors were Reps. Rob Portman (R-Ohio), Wes Watkins (R-Okla.), Jim Ramstad 
(R-Minn.), Jim McCrery (R-La.), E. Clay Shaw, Jr. (R-Fla.) and Scott McInnis 
(R-Colo.). All 10 of these members serve on the tax 
panel.

         "The wind 
industry greatly appreciates the strong bipartisan leadership of Representatives 
Foley, Weller, Matsui and Thurman in offering this legislation," said AWEA 
Legislative Director Steve.  "This is a vital part of building a broad base 
of support for extending the 
credit."

         The PTC 
provides a 1.5 cent per kWh tax credit (adjusted for inflation) for electricity 
produced using wind resources.  Under current law, the PTC is set to expire 
December 31.  The provision was first created as part of the Energy Policy 
Act of 1992. When extended for the first and only time in 1999, the PTC 
attracted support from two-thirds of the House tax committee and nearly half of 
the entire House of Representatives.

#

The following is relevant background 
information about wind energy in the U.S. and the world. 

Growth of the 
Wind Energy Industry

- Total worldwide wind capacity today is 
approximately 17,000 MW, enough to generate about 34 billion kilowatt-hours of 
electricity each year.  This is about the same amount of electricity as 5 
million average California households (containing 12.5 million people) 
use.

- Wind energy was the world's fastest-growing energy source during 
most of the 1990s, expanding at annual rates ranging from 25% to 35%.  In 
2000, about 3,500 MW of new wind capacity (close to a $4 billion investment) was 
installed around the world, but only 53 MW of that total, or a little more than 
1%, was installed in the U.S.  However, AWEA expects as much as 2,000 MW of 
new wind capacity to be installed in the U.S. this year.

- Leading states 
in terms of installed wind capacity today are California (1,646 MW), Minnesota 
(272 MW), Iowa (242 MW), and Texas (188 MW).

- U.S. wind potential is 
enormous--many times the amount installed.  California's potential, for 
example, is conservatively estimated at 5,000 MW of wind capacity.  Other 
western states have much larger potential--e.g., Wyoming has more than 10 times 
California's.  The U.S. is, quite literally, a "Saudi Arabia of wind," with 
vast resources throughout the Plains states.


Market Drivers Behind 
Wind Energy's Growth

(1) Federal government policy:  The federal 
government provides a tax credit of 1.5 cents per kWh (adjusted for inflation) 
for electricity generated by a wind plant during its first 10 years of 
operation.  This credit is intended to "level the playing field" for wind, 
which must compete with other energy industries that receive billions of dollars 
in federal subsidies each year. The wind energy credit will expire at the end of 
this year unless it is extended by Congress.

(2) State government 
policy:  Several states, as part of electric utility restructuring 
legislation, have enacted policies to encourage clean energy sources like 
wind.  The state of Texas, for example, has passed a law requiring the 
construction of 2,000 MW of new renewable energy generation by the year 2009, of 
which wind is expected to capture a major share.  New wind projects of 160 
MW, 208 MW, and 82.5 MW have been announced in Texas within the past few 
months.

(3) Declining costs:  The cost of producing electricity from 
wind energy has declined by more than 80%, from about 38 cents per kilowatt-hour 
in the early 1980s to a current range of 3 to 6 cents/kWh (levelized over a 
plant's lifetime).  In the not-too-distant future, analysts believe, wind 
energy costs could fall even lower than most conventional energy sources, 
reaching an unsubsidized cost of 2.5 cents/kWh.

(4) The green power 
market:  As the electricity market becomes more competitive, utilities and 
other power suppliers are looking for ways to differentiate their 
products.  One of the best ways to do that is to offer "green 
power"--electricity from clean energy sources like wind--at a premium 
price.  Today, over 190 utilities nationwide are selling wind-generated 
electricity as part of green power programs, and consumer demand for green power 
(even though still very small) is beginning to result in the building of new 
wind power projects.


Clean Energy Policy Options

(1) 
Renewables Portfolio Standard (RPS):  The RPS is a "minimum content 
requirement," which specifies that a certain minimum percentage of electric 
power must be generated from renewable energy sources (wind, solar, and 
others).  Typically, RPS legislation provides that the minimum percentage 
increase gradually over time to encourage the sustained, orderly development of 
the renewable energy industries.   Several states, including Texas, 
have enacted RPS laws, and the concept is also being considered by the U.S. 
Congress.  More information on the RPS is available from http://www.awea.org/policy/index.html#RPS .

(2) 
Production Tax Credit (PTC):  The U.S. government currently provides a tax 
credit of 1.5 cents per kilowatt-hour (adjusted for inflation) for all the 
electricity generated by a new wind plant during its first 10 years of 
operation.  Under current law, the credit is scheduled to expire at the end 
of 2001.  The American Wind Energy Association (AWEA) is seeking its 
extension for at least five years.  More information on the PTC is 
available from http://www.awea.org/policy/index.html#PTC .

(3) 
Incentives for Small Wind Turbines:  Tax incentives or rebates help make 
the purchase of a small wind turbine for household use more attractive to 
potential buyers.  California currently provides a rebate of up to 50% of 
the purchase price of a small turbine, and that has helped to sharply increase 
demand for the units in the state.

(4) Disclosure of Energy 
Sources:  AWEA also supports "disclosure" laws, which require sellers of 
electricity to inform customers of the sources of energy (coal, nuclear, natural 
gas, etc.) that are used to generate the electricity.  Such information is 
important for consumers to be able to make intelligent choices in a competitive 
marketplace.

(5) Fair Transmission Policy:  The nation's electricity 
transmission system operates based on rules that were designed to fit the 
characteristics of fossil fueled power plants.  Congress should take 
appropriate steps (including guidance to the Federal Energy Regulatory 
Commission and the emerging Regional Transmission Organizations) to ensure that 
wind energy is not disadvantaged in the market simply because it is an 
intermittent power source.


Benefits of Wind Energy 
Development

Wind energy provides both environmental and economic 
benefits.

- Windy counties profit from wind development 
through:

(1) Tax Payments: Every 100 MW of wind development generates 
about $1 million in property tax revenue.  Development of another 2,000 MW 
of wind this year will mean $20 million annually in tax revenues to rural 
communities.

(2) Jobs:  Every 100 MW of wind development creates 
about 500 job-years of employment.  Installation of 2,000 MW will result in 
10,000 job-years.

(3) Payments to landowners: The development of 2,000 MW 
in the U.S. will mean annual payments of approximately $4 million to farm and 
ranch landowners.

(4) Stable electricity prices: A recent study (January, 
2000) found Iowa's electric utility customers could save over $300 million over 
a 25-year period if a proposal to meet 10% of the state's electric demand 
through wind energy is adopted.  The savings result because the cost of 
fossil fuels is expected to rise over time, while wind's costs decline.  
Savings in California, where prices have skyrocketed because of supply 
constraints, would be enormous.

(5) Reduced emissions of pollution and 
greenhouse gases: A single 660-kW wind turbine will displace emissions of 1,100 
tons of carbon dioxide (the leading greenhouse gas), 6 tons of sulfur dioxide 
(the leading component of acid rain), and 4 tons of nitrogen oxides (the leading 
component of smog) every year, based on the U.S. average utility fuel mix.  
375 acres (more than half a square mile) of forest would be needed to absorb the 
same amount of CO2.

Quotation

"Wind energy is just moving into its 
takeoff phase today.  This industry is positioned to provide jobs and 
economic development in many states across the country over the next 20 
years."--Randall Swisher, AWEA Executive Director.

-

AWEA, formed in 1974, is the national 
trade association of the U.S. wind energy industry.  The associations 
membership includes turbine manufacturers, wind project developers, utilities, 
academicians, and interested individuals.  More information on wind energy 
is available at the AWEA web site:  
www.awea.org

Christine Real de Azua
Communications Coordinator
American Wind Energy Association
122 C Street NW
Washington D.C. 20001
main (202) 383-2500
direct (202) 383-2508
fax (202) 383-2505
email: christine@awea.org
website: www.awea.org

Wind PTC Extension Bills Introduced - Mar 01 .DOC