AFP to Congress: Don’t Resurrect “Zombie” Wind Energy Subsidy

May 13, 2014

By Christine Harbin Hanson

The Senate is currently considering a package of expired business-related tax provisions—called “tax extenders”—on the floor. Although this legislation includes some praise-worthy extensions, such as permanent bonus depreciation, most of the provisions are wasteful, corporate welfare that benefit special interests at the expense of American taxpayers. The main handout for wind energy, the wind production tax credit (PTC), falls squarely in the latter category.

Even though people at the grassroots level are overwhelmingly opposed to extending sweetheart deals and handouts to special interests, their elected officials are often unwilling to stop the sweet-heart deals. Two notable exceptions to this rule are Senators Lamar Alexander of Tennessee and Jeff Flake of Arizona. This week in Washington, these two Senators are doing the right thing and standing up to special interests in the wind energy industry.

Writing in the Wall Street Journal, Senator Alexander recently called on his colleagues to reject efforts “to resurrect Washington’s most conspicuous, wasteful taxpayer subsidy—the wind-production tax credit.” He correctly pointed out how this handout for Big Wind is too costly, threatens the reliability of the electricity grid, and “destroy[s] the environment in the name of saving the environment.”

Speaking on the Senate floor on Monday evening, Senator Flake also made the case for letting expired subsidies for wind energy stay expired. His walked through the long history of the PTC, how it has outlived its initial goal of developing an infant industry, and how Congress has voted to extend 8 times. “There’s now another effort afoot to resurrect what can only be described as a zombie credit.” Senator Flake also talked about how the amount of the PTC often exceeds the wholesale price of electricity, that wind farm producers pay the market to take their power—”that’s a whopper of a subsidy,” Senator Flake remarked.

More important than words, Senator Flake introduced two important amendments to the tax extender package that will limit federal handouts for wind energy.

His first amendment would strike the 2-year wind PTC extension from the Senate’s tax extender package—the amendment that Senator Grassley sponsored during committee and the one that AFP opposed. His second amendment would heighten the eligibility requirement for wind farms, changing the definition from “under construction” to “placed in service. This means that wind farms would have to actually be producing electricity in order to claim the credit. Americans for Prosperity supports both of these amendments.

AFP applauds Senator Alexander and Senator Flake for their leadership on this issue. Their colleagues in Congress should follow their example in standing up to special interests—in the wind energy industry and others—as they consider tax extenders legislation. Expired wind subsidies should stay expired.

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