Wind power developers are feeling left out of the new energy bill passed by Congress on December 18 and signed into law by President Bush the next day.
While this may slow development across the nation, it will not impede construction of a new wind generation facility in Sheffield, a spokesman for UPC Wind said.
The new bill leaves out a provision that has helped the economics of commercial wind projects. Up to now, federal law has provided a production tax credit of 2 cents per kilowatt hour of electricity for commercial wind generation.
The production tax credit provision was included in the bill passed by the House of Representatives, said Andrew Savage, spokesman for Congressman Peter Welch. The House bill would have paid for the credit by repealing subsidies granted to oil producers in earlier energy legislation.
According to figures provided by the American Wind Energy Association (AWEA), 24-billion kilowatt hours of electricity are generated using wind power each year. At 2 cents per kilowatt hour, that amounts to about $480-million in tax credits each year. AWEA credits its figures to the federal Office of Management and Budget.
The credits can be used by corporations and equity investors to pay their taxes, said Christine Real de Azua, assistant director of communications for AWEA, in a telephone interview.
President Bush threatened to veto the bill if the oil and gas subsidies were left out, Mr. Savage said, and the Senate voted a version that retained them and eliminated the production tax credits for wind power.
Mr. Savage said the veto threat was “another example of where the priorities of the President and his Republican allies are the opposite of what they should be.”
The Senate version of the bill was accepted by the House and has become law.
Ms. Real de Azua said the tax credit will expire in December 2008 if no action is taken.
Over the years, she said, the credit has typically been allowed to expire by Congress before being reenacted. In 2005 Congress, for the first time, extended the credit for two years, well before it expired.
Mr. Savage said he expects the issue to be revisited in the next session of Congress, which begins in January. The problem, he said, is a matter of how Congress will pay for the tax credits. He said there does not appear to be much opposition to the credits themselves.
Matthew Kearns, UPC’s director of development for New England projects, said the production tax credit is important “for the supportive message it sends.”
Over the seven years he has been in the wind business, the production tax credits have come and gone, Mr. Kearns said. That has made it difficult to plan ahead, but “we’ve been very adaptable,” he said.
The credits are financially helpful at a time that commodity prices for steel and copper are increasing construction costs for wind projects, he said.
This is not a problem for the Sheffield wind project, he said. “On the Sheffield project our economics are firm,” Mr. Kearns said.
He said construction is set to begin in Sheffield as soon as pre-construction plans are complete and weather permits.
While “full-tilt construction” will begin “after our favorite mud season, and road restrictions are lifted,” Mr. Kearns said there will be construction on the site before spring.