SD senators confident in extension of wind energy tax credit
South Dakota's U.S. senators both said they believe Congress will extend the production tax credit for wind energy projects.
The so-called PTC was omitted from a package of temporary tax-break extensions, but both Sen. Tim Johnson, D-S.D., and Sen. John Thune, R-S.D., said they expect the Senate Finance Committee to put a two-year extension of the tax break in the legislation before it goes to the Senate floor.
"Although the initial draft package did not include the PTC, I remain optimistic the committee will act to add it," Johnson said. "The PTC spurs millions of dollars of investment in the wind industry each year."
Thune, who is a member of the Finance Committee, said the details of an extension are already settled. It would be a two-year extension through the end of 2015.
"I fully expect that provision will be included when the committee reports out the bill," Thune said.
The committee is scheduled to vote on the tax package today.
South Dakota has three manufacturing plants making parts for wind farms.
In addition to creating American jobs, Johnson said wind energy improves national security by reducing dependence on foreign oil.
South Dakota could play a growing role in the wind industry, Johnson and Thune said, noting that 26 percent of the electricity generated in the state comes from wind. That's second behind Iowa.
At the same time the Rushmore state ranks fifth nationally for wind capacity but just 18th for tapping that capacity. More than half of South Dakota's wind energy production has been added since 2010, Johnson said, but he has seen projects stalled or cancelled due to uncertainty about the federal tax credit.
"This is too important to the South Dakota wind energy sector to give up now," he said.
Thune said a federal tax break for wind energy development won't go on indefinitely.
"That's a discussion we need to have ... about how to phase out the credit over time as the wind industry matures," Thune said. "The PTC is increasingly a difficult lift. It becomes more expensive all the time. We need to provide certainty to the industry but do it in a way that people can plan around."
The PTC was created in 1992 and has been renewed nine times. It expired at the end of 2013, but Congress has a history of renewing the credit and making it retroactive. President Obama has asked Congress to make the tax break permanent.
The credit provides 2.3 cents in tax credit for each kilowatt hour of electricity produced.
Johnson said it's wise for the federal government to invest in wind energy.
"It leads to good jobs and real economic benefits," Johnson said.