Tehachapi News

McCarthy introduces bill in Congress

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As the blades atop the newest 350-foot windmills turned lazily in a light wind, a crowd gathered Friday, March 27 on a hill near Tehachapi Willow Springs Road to mark what they hope will be a decade of unhindered growth for the wind industry.

Development of the industry has been uneven because of erratic short-term tax credits, said U.S. Rep. Kevin McCarthy, R-California, who unveiled legislation that will keep the tax credits alive long enough for companies to make long-term plans.

Before he left Washington, D.C., Thursday, he said, he introduced a new bill, H.R. 1743, known as the Wind Incentives for a New Decade Energy Act of 2009.

“The Act will extend the production tax credit for a decade to stabilize the business climate,” he said. “The stop and start on the tax credit has hurt the business.”

McCarthy displayed a chart that illustrates what has happened to the installation of wind capacity when the tax credit expires -- it drops off a cliff. 

Since its creation in 1992, the credit has been allowed to expire three times, only to be retroactively renewed and extended, McCarthy said in the bill's introduction. Congress has allowed the tax credit nearly to expire several other times, resuscitating it with 11th-hour extensions.

With each late renewal and frantic extension, the industry has to re-boot to get its business plan and technology moving again, slowing the realization of the full potential of the resource.

Long-term stability
McCarthy said the extension of the credit in the recently enacted stimulus bill is a good start but, given the hiccup-like history of extensions of the tax credit, “such uncertainty in this process is a major disincentive to long-term wind and renewable energy development.”

Long-term stability in the tax code will enable energy developers to attract investors and plan schedules, create sustainable, good-paying jobs and generate a market for domestic wind turbines and their steel and cast iron components, he said.

A tax credit that is locked in for five to 10 years will bring industry costs down 15 percent, McCarthy said.

McCarthy said he plans to work with fellow legislators from other wind energy states, notably Texas and Iowa, to shepherd the bill through Congress.

Industry reacts
Industry leaders at the press conference applauded the legislation.

“This is another piece of the pie to make it more efficient,” said Linda Parker, executive director of the Kern Wind Energy Association. “We need this legislation. We need this to grow. We need this stability.”

A wind energy pioneer Hal Romanowitz, president of Oak Creek Energy Systems, Inc., called McCarthy's bill an essential tool.

“The legislation produces 15 percent of the economic value of a project,” he said. ”It's the difference between a project being profitable and not. Without the tax credit a project will lose money.

The stability created by the tax credit would spur manufacturing in the United States as companies produce more turbines and parts, Romanowitz said.

“Adopting a tax credit provides a favorable environment so investment is possible in the future,” Randy Hoyle of Terra-Gen Power said.

The press conference unfolded in the shadow of two of eight new wind turbines that Oak Creek Energy built for the California Portland Cement in Mojave.

The turbines supply 35 percent of the annual power for the plant, yielding $2 million in savings, said plant manager Bruce Shafer.

“We are the poster child of cooperation and innovation,” he said. “We have an energy-intensive industry and we are reducing our carbon footprint.”

Posted March 30, 2009; print edition April 1, 2009.