Loss of tax credit may knock wind out of power projects

The Associated Press

SEATTLE — A federal tax credit designed to promote the development of wind power may be allowed to expire this year — a potentially heavy blow to the burgeoning wind farming industry in the Pacific Northwest.

The credit, which is scheduled to run out on Dec. 31, grants a tax credit of 1.7 cents per kilowatt hour for new wind-power facilities for the first 10 years of a plant’s operations.

The Bonneville Power Administration has made extensive use of the tax credit. BPA officials say several developments would be jeopardized if the credit is not extended.

"It would have a huge effect on our ability to do additional wind," said BPA spokesman George Darr. "We told the developers from the very beginning that our ability depended on renewal of the production tax credit because of the huge impact on the price."

Wind power still accounts for a very small percentage of the nation’s power generation. But wind farms are less expensive than new coal or nuclear plants and, with the credit, they are competitive with new gas facilities.

Darr said projects that could be harmed include a wind farm in Condon, Ore., and the Maiden project in Yakima and Benton counties. The 300-megawatt Stateline Wind Project along the Oregon-Washington border is expected to be online before the end of the year and thus would qualify before the credit expires.

A proposed extension of the tax credit is contained in a comprehensive package of energy legislation under consideration in the U.S. House and Senate. But work on the package was dragging before the Sept. 11 attacks on New York and Washington, D.C., and it has an uncertain fate in their aftermath.

The recent anthrax scare in the nation’s capital also has complicated efforts to coordinate work on a tax-credit extension.

The Republican-controlled House did pass an economic-stimulus package on Wednesday that contained a two-year extension of the credit. But the bill’s emphasis on tax cuts and credits was expected to meet opposition in the Senate, where Democrats hold the majority.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, offered an amendment this week to extend all expiring credits for one year. But Sen. Byron Dorgan, D-Mont., warned that a one-year extension could undermine confidence in wind projects and lead to a "boom and bust cycle."

"Many wind developers will not move ahead with new wind energy projects unless we provide them with assurances that if they build and purchase equipment, secure financing, obtain environmental permits and take other steps needed to bring a new wind facility on line, that they will be able to access the production tax credit," Dorgan said in letter to Baucus.

The American Wind Energy Association predicts that wind power will grow by 100,000 megawatts over the next 20 years. At that level, it would provide about 6 percent of the nation’s energy.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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