AFP’s C. Harbin Hanson: Corporate Welfare For Wind Makes No Sense

March 09, 2014

Corporate Welfare For Wind Makes No Sense

By CHRISTINE HARBIN HANSON
Posted 03/07/2014 05:51 PM ET
Investor’s Business Daily 

The Senate Finance Committee’s new chairman, Sen. Ron Wyden, has indicated his first order of business will be to extend tax breaks that expired at the end of 2013.

One break that should be excluded is the Wind Production Tax Credit (PTC) — the main handout for the wind industry.

Seemingly innocuous, the PTC gives wind companies $23 in a subsidy for each megawatt-hour of electricity they produce. But this money adds up quickly; it costs taxpayers billions of dollars every year.

Rarely does an industry enjoy such disproportionate favoritism. Even though the wind industry produces only 3.5% of the country’s electricity, it receives 42% of the federal government’s electrical financial support.

Combined with other targeted incentives, the federal government gives wind producers $56.29 per megawatt-hour, according to the Energy Information Administration. Natural gas, oil and coal power, by comparison, only get 64 cents, while nuclear power receives $3.14.

In addition to all of this support at the federal level, wind power gets a lot of support at the state level. Currently, 30 state governments enforce purchase mandates called Renewable Portfolio Standards that require utilities to buy a certain percentage of their electricity from green sources.

The PTC, when combined with such standards, gives wind producers a gross advantage over other energy producers. It’s so generous that it exceeds half of electricity’s wholesale price in many areas of the country.

This subsidy is so high that it leads many wind farms to sell their electricity at a substantial loss, just to collect the credit. These companies are literally paying utilities to buy their product — and yet they’re still turning a profit because the taxpayer foots the bill on the front end.

If wind producers are winners, then it’s American taxpayers who are losing. Most of us never even see the benefits that we’re paying for.

According to the Institute for Energy Research, taxpayers in 30 states paid more in taxes than their state received in subsidies.

New Yorkers paid $162 million more. Ohioans forked over an additional $103 million. And California came off the worst, paying $195 million that immediately left the state.

Twelve states actually paid millions and yet didn’t receive a single cent in return. That list includes Virginians, who paid $72 million, North Carolinians, who coughed up $69 million, and Floridians, who forked over $138 million.

Americans deserve energy solutions that can make it on their own in the marketplace — not ones that need to be propped up by a national redistribution scheme. Given the federal government’s serious fiscal problems, it makes no sense to give increasing levels of support to a private industry that can make it on its own.

And the PTC’s purpose long since has been fulfilled. Created in 1992, the program was passed to kick-start the wind industry.

Twenty-two years and six extensions later, the industry is no longer an infant.

That’s why the PTC expired at the end of 2013. Undaunted, the wind industry’s lobbyists are working overtime to extend and expand the handout for their clients.

Congress shouldn’t give in to their demands. The wind industry is growing fast; it shouldn’t require taxpayers to prop it up indefinitely.

Congress — and Wyden in particular — should agree with this sentiment.

Wyden’s spilled much ink decrying corporate handouts and tax breaks. Congress just needs to apply that logic evenly, and throw this blatant and unfair corporate welfare to the wind.

• Hanson is the federal affairs manager for Americans for Prosperity.

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