Fate of wind energy tax credit up in air
BY ROD WALTON World Staff Writer
Wednesday, January 02, 2013
1/02/13 at 2:40 AM
Utilities such as AEP-PSO and OG&E have helped push Oklahoma into the forefront of wind- energy production in recent years, but all plans are on hold while industry advocates await the fate of the federal wind production tax credit.
In fact, wind farm planners across the country recently raced against time to get projects approved before the tax credit expired Monday.
Oklahoma ranks eighth nationally with about 2,000 megawatts of installed capacity, but the potential lack of incentives takes the wind out of those sails.
"Going forward will make the economics more difficult," AEP-PSO spokesman Stan Whiteford said. "Unless there's some type of mandate by the government, or a run-up in other energy prices, it's probably likely our procurement of additional wind is on hold."
American Electric Power-Public Service Company of Oklahoma, the state's second largest utility, purchases power under long-term contracts from various wind farms statewide. Whiteford estimated that wind power makes up 14 percent of the company's generation mix.
Wind investment surged in the past decade due to high energy prices, environmental worries and tax incentives for building facilities and components such as towers. The federal production tax credit was originally enacted in 1992 and has been renewed multiple times through the years.
In this era, however, congressional leaders can't seem to gain consensus on spending and taxes, much less tax credits for renewable energy opposed by libertarians and some oil and gas industry advocates. Many utilities and wind-power firms are keeping still for that very reason.
"We have no immediate plans," said Brian Alford, spokesman for the OG&E, the state's largest utility. "Like most, we'll be following the progress of efforts to renew tax credits."
The wind industry itself may be trying a proactive approach. The American Wind Energy Association broached the possibility of extending the production tax credit, but ramping it down over five to six years.
The state's biggest wind-energy investment may be the Plains and Eastern Clean Line, a $2 billion interstate transmission project to bring power from western Oklahoma through Arkansas to the Tennessee Valley Authority. If the project gets federal environmental approval, construction could start in late 2014 and be completed by 2017.
Mario Hurtado, co-founder and executive vice president of development for the project's parent company, Houston-based Clean Line Energy Partners LP, pointed out that the Plains and Eastern is not dependent on the production tax credit. However, he noted that lack of extensions could impact the wind farms the transmission line will draw from when it powers up.
Those tax credits help wind-generated electricity stay competitive, pricing-wise, with natural gas-fired and coal-fired options.
"It's not good to rely on one power generation source," he said. "That diversification makes a big difference."
AEP-PSO also offers dedicated wind power to its customers through the WindChoice program. The voluntary program will not be affected by the production tax credit, Whiteford noted.
Original Print Headline: Fate of wind tax credit up in air
Rod Walton 918-581-8457
The Oklahoma Wind Energy Center north of Woodward has been generating electricity for nearly 10 years. Tulsa World file