March 16, 2012 in Opinion

Editorial: Don’t renew sales tax break for wind energy

 

With every day of rain and every inch of new snowpack, the Bonneville Power Administration edges closer to a repeat of spring 2011, when it shut down some wind generators in response to extraordinary natural and energy market conditions.

Bonneville projects more shutoffs as wind power periodically becomes too much of a good thing for Northwest utility ratepayers, and taxpayers, who are subsidizing the industry at the national and state levels.

When windmills are shut down, owners lose revenues from electricity sales and the benefits of federal tax credits pegged to the amount of power generated. The owners have sued Bonneville and complained to the Federal Energy Regulatory Commission. In December, FERC told Bonneville to rethink its policies.

Officials in Washington, D.C., and Olympia are rethinking, too. It’s time for a breather.

From zero in the mid-1990s, the generating capacity of Northwest wind farms has ballooned to 7,000 megawatts, the equivalent of Grand Coulee Dam. Construction continues, with the Palouse Wind Project that will soon supply Avista Utilities among the projects under way.

The growth has been aided by the federal and state subsidies, voter-passed mandates that require more use of renewable energy, and expensive new power lines to connect wind farms to the Northwest transmission grid, three-quarters of which is owned and operated by Bonneville. Some subsidies are scheduled to end next year, and industry companies are pressing for extensions now so they can nail down investors.

Wind energy is second only to ethanol in the amount of federal alternative energy subsidies received. In Washington, a 75 percent sales tax credit on wind equipment costs state and local government $29 million per year. The payoff: thousands of jobs, clean energy, lease revenues to property owners and millions in local property tax revenues.

But winds vary, and utilities must have other resources to back up windmills.

Federal and state budget problems suggest it may be time to reconsider whether the subsidies need be as robust as they are now. The budget proposed by Senate Democrats in Olympia would have cut off the sales tax credit as a way of increasing K-3 school funding. In Washington, D.C., renewal of the credits was rebuffed earlier this week, but they have bipartisan support and will likely survive past 2013.

Meanwhile, renewable energy supporters are unhappy with Bonneville’s proposed plan for handling recurring energy surpluses. Bonneville, they complain, is not giving wind generators the same access to the grid it gives federal power, a violation of FERC rules.

They have a point, but the wind industry’s subsidy-propelled expansion was bound to create stress. Lawmakers in Olympia, who have shown little interest in revisiting a multitude of tax breaks, should let the wind sales tax exemption expire.

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