Chairman Nelson Cannot Ignore Texas Wind’s Benefits and Condemn Its Cost

Wind technicians working atop a turbine in Sweetwater, Tex. Source: NY Times

Wind technicians working atop a turbine in Sweetwater, Tex.
Source: NY Times

Earlier this month, Texas Public Utility Commission (PUC) chairwoman Donna Nelson called for the federal government to end its renewable energy tax credit for Texas wind and for the end of state policies that have resulted in Texas’ clean energy economy boon. The chairman’s appeal is so devoid of a factual basis it is hard to conclude that this is anything other than part of an orchestrated campaign by fossil fuel interests to stop the growth of renewable energy. Like the other attacks on clean energy, this is more politics than substance.

The federal and state policies that Chairman Nelson wants to eliminate have been great for Texas. Texas ranks first in the nation for wind-related jobs, employing over 8,000—and many of those jobs are keeping agriculture-heavy West Texas and Panhandle communities afloat amid the devastating multi-year drought. Plus, 60% of all wind projects under construction across the country in the first quarter of 2014 were in Texas. And studies (including one produced by the Texas PUC) have shown that electricity prices are lower when more wind energy is installed on the power grid.   

I urge Chairman Nelson to objectively consider the costs and benefits for herself before she throws Texas’ booming wind industry under the bus. Or she can listen to U.S. Senator Chuck Grassley, one of Nelson’s fellow Republicans and representative of Iowa. Like Texas, Iowa has rich wind resources, and Sen. Grassley has a few choice words for those who support oil and gas over wind:

I’m glad to defend the wind production tax credit and wind energy.  Wind energy:

  • Provides more than 4% of U.S. electricity
  • Supports 80,000 American jobs
  • Spurred $105 billion in private investment in the U.S. since 2005
  • Displaces more expensive and more polluting sources of energy, lowering electricity prices for consumers.

More than 550 industrial facilities across 44 states manufacture for the wind energy industry.

The wind industry today supports 80,000 American jobs.  The tax incentive has spurred $105 billion in private investment in the U.S. since 2005.

Opponents of the renewable energy provisions want to have this debate in a vacuum.  They disregard the many incentives and subsidies that exist for other sources of energy, and are permanent law.

For example, the 100 year-old oil and gas industry continues to benefit from tax preferences that benefit ONLY its industry.

These are not general business tax provisions – they are specific to the oil and gas business.  Here are a few examples:

  • Expensing for intangible drilling costs
  • Deduction for tertiary injectants
  • Percentage depletion for oil wells
  • Special amortization for geological costs

These four tax preferences for this single industry result in the loss of more than $4 billion annually in tax revenue.

Why is repealing a subsidy for oil or gas or nuclear energy production a tax increase on energy producers and consumers, while repealing an incentive for alternative or renewable energy is not? 

It’s not intellectually honest.

Chairman Nelson should do what is good for Texas: fight for Texas wind jobs and not try to destroy this emerging industry that brings cleaner, healthy air.

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One Comment

  1. Posted June 25, 2014 at 2:58 PM | Permalink

    It is hard to judge the substance of Chairwoman Nelson’s remarks in the absence of a link, but this post too seems very light on substance.

    You suggest that the number of jobs employed in wind-related positions is relevant; my guess is that many more persons are employed in oil and gas related positions. I’d further guess that oil and gas income in West Texas and the Panhandle has done more to keep “communities afloat” than wind-related income. Have any data (i.e. substance) behind your speculations?

    Further on the jobs claims: If 8,000 people were employed in coal related jobs in Texas, would you then conclude coal has been great for Texas? I think you leave too much out of your analysis for it to be of much use. Much of Sen. Grassley’s “choice words” are similarly light-on-substance. You just can’t measure energy policy by number of jobs or number of factories.

    You link to a wind-energy industry group blog post which claims that states with a lot of wind energy have seen lower energy prices than states with less wind energy. As it turns out, I’ve read the research report the blog post is based on and looked at the data they used. It turns out that just one of the 11 states with the most wind power actually saw electricity prices fall over the period studied — Texas — and electricity prices fell over the period studied because natural gas prices were very high in 2008 and much lower in 2013.

    You “back up” the link to the wind-energy industry group with a link to a Texas PUC report from 2009. In addition to noting that wind power does tend to suppress electricity prices that report says, among other things, “Wind, for example, loses much of its economic attractiveness as traditional fuel prices moderate from the high relative levels that prevailed during early 2008.” (p. 6) And you know what? Traditional fuel prices did moderate from the high levels that prevailed during early 2008.

    But given that taxpayers support wind power through a variety of subsidies and mandates, they presumably pay through taxes for the price reduction in the power market. Before we just to the conclusion about benefits we should at least consider whether the costs of the subsidies are greater than or less than the benefits to consumers. The production tax credit is about $23 per MWh. The cited Texas PUC study suggests that each additional 1,000 MW of wind energy product reduces balancing market prices by about $2.28 (per MWh). (p. 66)