Alexander: Wind Industry Phase-Out Proposal Is Brazen

Monday, December 17, 2012

In a speech Thursday on the floor of the Senate, Senator Lamar Alexander (R-Tn.) called a proposal by the wind industry to phase out the wind production tax credit “a brazen fleecing of the taxpayers.” The new proposal has not received an official cost estimate from the Joint Committee on Taxation, but an initial estimate by the American Energy Alliance puts the cost at $50 billion.

"The idea of continuing to waste billions of taxpayer money over the next several years to subsidize a mature technology, at a time when the government is going broke, is as brazen as a bank robbery in the middle of the day on Main Street. ...I hope it becomes the poster child for what's wrong with spending in Washington, D.C., and I hope that the Congress will come to its senses this month and next month and say 'no' to those who come forward with their hand out for this giveaway."

The industry’s proposal would phase out the wind production tax credit over the next six years, instead of allowing what was established in 1992 as a temporary credit to expire at the end of this year, as current law requires.

The text of the senator’s speech is below:

“The nation is consumed by the fiscal cliff.  From all I can tell, the Presidential limousine is moving very rapidly toward the fiscal cliff with the President's foot on the accelerator.  I am still hopeful we will get a budget agreement that will help us get the economy moving again, but at a time like this, of course, what we all need to be doing is thinking about saving every possible penny to fix the debt. 

“This government in Washington, DC, is borrowing 42 cents out of every dollar we spend.  That is why I come to the floor to point out a proposal that has been made to fleece the taxpayers out of an additional $50 billion over the next 6 years.  This is a proposal that is as brazen as a mid-day bank robbery on Main Street.  It is a proposal by the wind developers of America to say to the taxpayers:  Please give us $50 billion or so more dollars over the next 6 years to phase-out the Federal taxpayer subsidy for wind power.

“Why is this a brazen fleecing of the taxpayers?  First, this taxpayer subsidy began in 1992, 20 years ago, as a temporary subsidy for a new form of energy.  Of course, windmills are not really new.  We have had them for hundreds of years.  But the idea was to give them a little boost so they could get bigger and perhaps help us supply electricity.

“It was intended in 1992 that this would only be a temporary tax credit.  But as President Reagan used to say:  There is nothing that comes as close to eternal life as a government program.  So this temporary taxpayer credit has been renewed time after time after time.  It is 20 years old.  Now, after billions of dollars and 20 years, wind power is, according to President Obama's Energy Secretary, a mature technology.

“The Congress has decided that Federal taxpayer subsidies for wind power should end at the end of this year.  Everyone knows that.  This is no surprise.  It has been out there for a while, so businesses can plan on this.  In other words, it is time for wind power, the Congress has said, to take its place in our free market system and compete with natural gas, compete with nuclear power, compete with hydropower, compete with solar power---compete with other forms of power producing electricity.  After all, we produce and use about 20 to 25 percent of all the electricity in the world, and we want to make sure we have plenty of it and that it is a reliable supply at a low price. 

“Yet along came the wind developers who have benefited from this giveaway for 20 years -- I say giveaway because, according to the Joint Tax Committee and the United States Treasury, from 2009 through 2013 it has cost the taxpayers $16 billion to subsidize windmills in America.  Put that in a little perspective.  The federal government spends about $6 billion a year on all energy research.  We could be spending it there.  We could be reducing the debt.  Instead, we are continuing to subsidize this mature technology.

“But the brazenness of those who have been receiving this giveaway money -- it is hard to imagine how it could be exceeded by a so-called phase-out proposal.  They announced:  Phase us out over the next 6 years, through 2018.  In 2013 the credit would be 100 percent.  We would have the credit for next year at the same level it is this year.  That’s estimated to cost about $12 billion over 10 years. That is twice the amount of money we spend each year on energy research in America.  Then, in 2014, they want 90 percent of the previous full tax credit, and then 80 and 70 and 60 and nothing after 2018.

“I have not had a chance for the Congressional Budget Office to evaluate how much this phase-out would cost, but it is tens of billions of dollars.  One estimate is $50 billion new taxpayer dollars at a time when we are borrowing 42 cents out of every dollar to keep doing something that is already phasing out on its own terms. We cannot afford that.  We simply can't afford that.  We cannot afford 1 year more of the wind tax credit -- that is $12 billion -- on top of the $16 billion for grants and the production tax credit from 2009 through 2013.

“Second, it is interfering with the marketplace.  The subsidy to wind developers is so great they are actually paying distributors of electricity, in some cases, to take their wind power, which undercuts other forms of electricity on which we rely.  Why is that so important?  We cannot rely on wind power, because it only works when the wind blows.  It often blows at night when we really do not need it.  We have a wind farm in Tennessee.  It is the only one in the Southeastern United States.  Why?  Because the wind doesn't blow much in the Southeastern United States. 

“In Tennessee, somebody has a big contract with extra subsidies by the government to put these gigantic towers on top of our scenic mountains.  And how much electricity does it produce?  Not very much.  Of course, these turbines only generate electricity about 19 percent of the time, and it produces even less electricity when we actually need it.  You can fly over it or drive by these giant windmills at 4 p.m. in the afternoon in the summer when everybody has their air conditioning on and they need electricity, and not a single windmill is turning.  You might go at night and it is turning, but they don't need the extra electricity at 7 or 8 or 9 o'clock at night.  That is the problem around the country.  It is a puny amount of unreliable, expensive electricity. 

“The idea that the United States of America, using 20 to 25 percent of all the electricity in the world, would produce the largest amount of clean and reliable electricity by windmills is the energy equivalent of going to war in sail boats when nuclear submarines are available.

“Let's let wind power, after 20 years, find its place in our market.  There are clearly places where it should be fine.  But there is no need to subsidize it from the Federal Government; to cause the ratepayers of Tennessee, for example, to pay more to import electricity produced by wind from South Dakota when we should be using those dollars to lower our rates, to pay for air pollution control equipment, and to build nuclear power plants--of which we have several in the Tennessee Valley.  They are clean--they emit no sulfur, no nitrogen, no mercury, and no carbon.  That is the cleanest form of reliable energy we have in the United States.

“There may be some places where windmills work, but not along the tops of the Tennessee mountains or even in the valleys of Tennessee.  The idea of continuing to waste $50 billion of taxpayer money over the next several years to subsidize a mature technology at a time when the government is going broke is as brazen as a bank robbery in the middle of the day on Main Street.  I hope we put a spotlight on this $50 billion giveaway.  I hope it becomes the poster child for what is wrong with spending in Washington, DC.  I hope the Congress will come to its senses this month and next month and say no to those who come forward with their hand out for this $50 billion giveaway. “


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