FOR IMMEDIATE RELEASE: October 7, 2015
Senator Lankford Introduces Bill To Phase Out Federal Energy Tax Credit
WASHINGTON, DC – Senator James Lankford (R-OK) today introduced the PTC Elimination Act, a bill that would phase out federal renewable energy tax credits, including wind, by 2026. PTC stands for the Production Tax Credit, which was established 23 years ago as part of the Energy Policy Act of 1992. Specifically, the bill will remove the credit from the tax code making it a permanent sunset of the credit. Currently, the credit expired in December 2014, however, it is routinely retroactively extended at the end of the year. In order to make the removal concrete, the subsidy needs to be completely removed from the tax code through legislative action.
In July, the Senate Finance Committee included a two-year extension of the Production Tax Credit in its Tax Extenders package markup of the Tax Relief Extension Act of 2015 (S. 1946).
Since the adoption of the Energy Policy Act of 1992, wind power has grown tremendously and is a self-sustainable, multibillion dollar industry. Wind generation has grown 5,000 percent and production has spiked from 2.8 million megawatt-hours to 167.6 million megawatt-hours. Meanwhile, the cost to taxpayers for the PTC for all qualified renewables has increased substantially since it was put in place. Though the industry no longer needs the support, another two year extension of the subsidy is estimated to cost taxpayers $10.5 billion over the next ten 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,” said Lankford. “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.”
Wind power is an economically sustainable industry, and 37 states, including Oklahoma, have production incentives in place through either renewable portfolio standards or renewable portfolio goals. Ultimately, the federal PTC is a redundancy that subsidizes policies which states are already pursuing and doing so in ways that are targeted toward local resources and utility markets.
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.