With the election on Tuesday, the wind industry’s attention is particularly focused on the prospects for the extension of the production tax credit (PTC). There have been four interesting developments related to the extension of the PTC.
First, in the current 113th Congress, only 185 bills have been signed into law. Many observers characterized the 112th Congress as unproductive, but the 113th Congress has managed to enact only 80 percent of the numbers of bills that the 112th Congress did.1 Of course, in the post-election, lame- duck session, there is still hope for the 113th Congress to find its footing and extend the PTC and address other important issues. It is my view that it is more likely than not that the PTC will be extended through 2015 during the lame-duck session, and the Senate Finance Committee has already passed a bill that extends the PTC for projects that start construction prior to the end of 2015. A blog post discussing the Finance Committee’s approval of that bill is available here.
The current Congress has been the least productive of any Congress in the last 40 years. To provide some context, 700 bills were enacted by the 100th Congress (1987-1988) during President Reagan’s second term. President Clinton signed more than 300 bills during the 104th Congress (1995-1996), and the second President Bush signed more than 500 bills during the 108th Congress (2003-2004).2 These statistics demonstrate the main reason that the PTC has not yet been extended: dysfunction in Washington has led to gridlock, which means that very little is happening on the legislative front. We can only hope that the members return from the election ready to work as legislators to do the country’s business.
Second, on October 30, Energy Secretary Ernest Moniz restated his support for the extension of the PTC and the investment tax credit: “We need to extend those renewable tax credits and do it in a way that there is predictability on all sides.”3
Third, on October 29, Defense Secretary Chuck Hagel implicitly endorsed the PTC extension without referring to it directly: “From my perspective, within the portfolio that I have responsibility for-security of this country-climate change presents security issues for us. [It] is critically important that we pay attention to this.”4
Fourth, a General Electric (GE) policy expert articulated GE’s current view of the PTC. David Malkin, director of government affairs and policy for GE Energy Management, stated that GE is advocating for an extension of the PTC through 2015 and a three- to five-year phase out.5 This raises the question of whether GE would be prepared to progressively reduce the price of wind turbines over that five-year period.
The GE policy expert added that extending the master limited partnership (MLP) tax rules to wind would help with the transition to a post-PTC era, but expansion of the MLP tax rules to include wind was not the industry’s top priority.6 Here and here are blog posts that address the extension of the MLP rules to renewables.
1 Statistics provided by Maria Sanders of Legislative Intent Service, Inc. (www.legintent.com).
3 Anthony Adragna, Moniz Urges Renewal of Energy Tax Credits, Vows Continued Progress on Climate Change, Daily Tax Report G-3 (Oct. 31, 2014).
5 Julia Pyper, GE Gov’t Affairs Dir.: Midwest Wind Can Compete Without a Fed. Tax Credit, Green Tech Media (Oct. 29, 2014) available at http://www.greentechmedia.com/articles/read/ge-govt-affairs-director-wind-ptc-can-expire-after-2015.