Noem told looming tax credit loss would hurt wind industryLosing federal production tax credits would droop the wind power industry’s sails, Rep. Kristi Noem was told during a roundtable discussion Tuesday in Mitchell.
By: Tom Lawrence, The Daily Republic
Losing federal production tax credits would droop the wind power industry’s sails, Rep. Kristi Noem was told during a roundtable discussion Tuesday in Mitchell.
If the tax credits, which are set to expire at the end of the year, are not extended, the wind power industry will be severely harmed. Companies may be forced to cancel orders, halt projects and lay off employees, Noem heard during a meeting with representatives of companies that produce and sell wind power, as well as firms that support the growing industry. The Republican congresswoman met with them at Mitchell Technical Institute.
“This hesitation is creating such a speculation and slowing things down,” said Jesse Elliott, senior engineer for Broadwind Energy of Howard.
“We need to find a way to develop wind as part of an energy solution,” Elliott said. “It’s critical that decisions on this get made soon — and now we have to wait on things like the election. Because of families and jobs, it’s all critical. We’re walking on glass, so to speak. There is so much at risk.”
The PTC for wind energy was first established in 1992 to encourage investment in renewable wind energy. The credit provides a production tax break for wind energy of 2.1 cents per kilowatt hour.
South Dakota became the first state in the nation to generate more than 20 percent of its state-produced electricity from wind.
Elliott said the perception is that the industry wants to be propped up, and that’s not correct.
“We’re not looking for a handout,” he said. “We’re looking for a strategy.”
Noem supports a four-year extension of the PTC. She has circulated a letter to the freshman class of the House and said she has tried to educate them, since some representatives do not have wind power production in their districts and are uninformed on the issue.
Noem co-sponsored the American Renewable Energy Production Tax Credit Extension Act, which would extend the PTC for wind energy for four years. But she said a one-year extension may be more realistic with the current mood in Congress.
In June, she led an effort to send a bipartisan letter to the House leadership, urging them to bring the PTC extension to the floor. Noem said she has learned that a letter stating how many members will support a bill has a real impact on committee chairs.
It appears now the issue will be addressed during the lame-duck session after the Nov. 6 election, but Noem said she is pushing for quicker action. She has to work with Ways and Means Committee Chairman Dave Camp, R-Mich.
“My job is to work with him and work on him to see if we can get something through committee,” Noem said.
The PTC may be lumped in with extension of the payroll tax cut, other energy credits, the inheritance tax, and the Bush tax cuts at the end of the year, she said.
Elliott and others at the meeting urged Noem to push to make the PTC permanent, as it is for other forms of energy. If not that, at least a long-term credit to allow companies to plan would help, she was told. The current tax credit was for four years and was passed as part of the federal stimulus package in 2008.
“It has to be a 10- or 20-year plan so we can operate under a 10- or 20-year plan,” said Steve Sershen of South Dakota Wind Partners.
Without such assurances, companies will retreat, Noem was told.
“We have no plans to do any construction in the United States,” said Jason Utton, the director of governmental affairs for NextEra Energy Resources.
He said companies can build wind parks in 18 to 24 months and can have towers up and turbines spinning in that time. But without the PTC, such work will slow down and eventually stop, Utton said.
“Without, unfortunately, the tax policy, we’re holding back,” he said. “There’s nothing there on the books in ’13. You can see it across the industry. I would say time is of the essence right now. We are looking at the edge of a cliff.”
Chris Houwman, of Sioux Falls, the vice president of operations for Malloy Electric, which does maintenance and repair for wind energy equipment, said wind power is a good investment for the federal government. The PTC costs the government $4.2 billion, Houwman said, and brings in $5 billion in taxes and $15 billion in investments.
Every 100 wind towers are equal to a $50 million ethanol plant in local dollars spent, Sersheim said. All those numbers were greeted with interest by Noem, but she was also told the good news will halt if the PTC is not extended.
MTI President Greg Von Wald said if the PTC is not extended, the real damage will be known in the spring.
“Since the Wind Turbine Technology program began at Mitchell Tech, we have been able to assist our graduates in finding great jobs in rural South Dakota in the wind industry,” he said. “These jobs come with good wages, and the employees support their local economies because of that. Our concern is that if the production tax credit is not renewed, these opportunities will be diminished.
“We can continue to provide graduates to fill service jobs for wind companies, but the lack of a PTC will limit the growth not only of the wind industry as a whole, but also the availability of well-paid jobs in South Dakota.”
Curt Eliason, who said he is a “nuts-and-bolts guy” for Renew Energy Maintenance of Sioux Falls, said layoffs are a possibility without the tax assistance
Eliason said of his company’s approximately 65 employees, up to half are involved with new development being installed or worked on. The company has been in operation for three years this month.
“We’ve got to make some pretty hard decisions on those employees if the work goes away,” he said. “It’s never fun to think about laying people off … we know all these guys by name. It’s painful, but it’s a business decision we’re facing.”
The congresswoman said she wants to support all energy development.
“We’ve got to quit pitting industries against each other,” she said.
Noem said she wants to give every incentive to wind, coal, natural gas and other energy that is produced in the United States.