Editorial: Wind needs tax creditThe expiration at the end of the year of a federal wind energy tax incentive is but one factor slowing the development of electrical generation by wind.
By: The Forum of Fargo, N.D., The Republican Eagle
The expiration at the end of the year of a federal wind energy tax incentive is but one factor slowing the development of electrical generation by wind. The other factors of note are the soft demand for electricity because of the recession and the availability of inexpensive natural gas to generate electricity at rates that make wind-generated power less competitive.
But the delay in extending the production tax credit is a major contributor to a condition industries and investors hate: uncertainty. That factor is among the reasons Otter Tail Power Co. is in the process of selling DMI of West Fargo, a manufacturer of the steel towers that are topped by sophisticated wind power turbines. The potential loss of jobs at DMI is a concern, but the ripple effects of the wind industry slowdown will be felt far and wide.
While some damage has been done because of the dilly-dallying in Congress over the tax credit, more economic harm is guaranteed if the credit it not renewed soon. For example, at least one major Fargo construction company counts about half its business in wind farm work. Two firms in the metro area build substations and electrical systems for the wind industry. Engineering firms in the Red River Valley sell services to renewable energy companies.
When it’s added up, the potential economic damage is more than the possible loss of 218 jobs in West Fargo or the 630 jobs at LM Wind Power (turbines and blades) in Grand Forks. Small communities have benefited from wind farms, including new taxes generated for counties, townships and school districts. If wind power shuts down – or the promise of more wind power is not realized – rural economies will take a hit.
The failure of Congress to extend the production tax credit is yet another symptom of political gridlock brought on by hyperpartisanship. Even when Midwest members of Congress say the right thing about the tax credit, nothing happens. For example, Congressman Rick Berg, R-N.D., says he favors extension and is a co-sponsor of legislation to extend the credit. Yet, as a member of the House majority and of the allegedly powerful Ways and Means Committee, he has been unable to convince his colleagues to move the tax extension measure.
Business and industry cannot plan in a climate of uncertainty. In a new and evolving clean-energy business like wind power, uncertainty is a killer. The least Congress can do in today’s challenging energy market is provide a measure of certainty by extending the credit at least five years.