[Congressional Record (Bound Edition), Volume 158 (2012), Part 10]
[Senate]
[Page 14647]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       WIND PRODUCTION TAX CREDIT

  Mr. ALEXANDER. I ask unanimous consent that the following article 
from the Wall Street Journal on September 18, 2012, on the cost to 
taxpayers for the wind production tax credit be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  Puff, the Magic Drag on the Economy


 Time to let the pernicious production tax credit for wind power blow 
                                  away

                  (By Lamar Alexander and Mike Pompeo)

       As Congress works to reduce spending and avert a debt 
     crisis, lawmakers will have to decide which government 
     projects are truly national priorities, and which are 
     wasteful. A prime example of the latter is the production tax 
     credit for wind power. It is set to expire on Dec. 31--but 
     may be extended yet again, for the seventh time.
       This special provision in the tax code was first enacted in 
     1992 as a temporary subsidy to enable a struggling industry 
     to become competitive. Today the provision provides a credit 
     against taxes of $22 per megawatt hour of wind energy 
     generated.
       From 2009 to 2013, federal revenues lost to wind-power 
     developers are estimated to be $14 billion--$6 billion from 
     the production tax credit, plus $8 billion courtesy of an 
     alternative-energy subsidy in the stimulus package--according 
     to the Joint Committee on Taxation and the Treasury 
     Department. If Congress were to extend the production tax 
     credit, it would mean an additional $12 billion cost to 
     taxpayers over the next 10 years.
       There are many reasons to let this giveaway expire, 
     including wind energy's inherent unreliability and its 
     inability to stand on its own two feet after 20 years. But 
     one of the most compelling reasons is provided in a study 
     released Sept. 14 by the NorthBridge Group, an energy 
     consultancy. The study discusses a government-created 
     economic distortion called ``negative pricing.''
       This is how it works. Coal- and nuclear-fired plants 
     provide a reliable supply of electricity when the demand is 
     high, as on a hot summer day. They generate at lower levels 
     when the demand is low, such as at night.
       But wind producers collect a tax credit for every kilowatt 
     hour they generate, whether utilities need the electricity or 
     not. If the wind is blowing, they keep cranking the 
     windmills.
       Why? The NorthBridge Group's report (``Negative Electricity 
     Prices and the Production Tax Credit'') finds that government 
     largess is so great that wind producers can actually pay the 
     electrical grid to take their power when demand is low and 
     still turn a profit by collecting the credit--and they are 
     increasingly doing so. The wind pretax subsidy is actually 
     higher than the average price for electricity in many of the 
     wholesale markets tracked by the Energy Information 
     Administration.
       This practice drives the price of electricity down in the 
     short run. Wind-energy supporters say that's a good thing. 
     But it is hazardous to the economy's health in the long run.
       Temporarily lower energy prices driven by wind-power's 
     negative pricing will cripple clean-coal and nuclear-power 
     companies. But running coal and nuclear out of business is 
     not good for the U.S. economy. There is no way a country like 
     this one--which uses 20% to 25% of all the electricity in the 
     world--can operate with generators that turn only when the 
     wind blows.
       The Obama administration and other advocates of wind power 
     argue that the subsidy provided by the tax credit allows the 
     wind industry to sustain American jobs. But they are jobs 
     that exist only because of the subsidy. Keeping a weak 
     technology alive that can't make it on its own won't create 
     nearly as many jobs as the private sector could create if it 
     had the kind of low-cost, reliable, clean electricity that 
     wind power simply can't generate.
       While the cost of renewable energy has declined over the 
     years, it is still far more expensive than conventional 
     sources. And even the administration's secretary of energy, 
     Steven Chu, calls wind ``a mature technology,'' which should 
     mean it is sufficiently advanced to compete in a free market 
     without government subsidies. If wind power cannot compete on 
     its own after 20 years without costly special privileges, it 
     never will.

       Mr. Alexander is a Republican senator from Tennessee. Mr. 
     Pompeo is a Republican congressman from Kansas.

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