Wind Farm: Microsoft, Sprint calling on Congress to extend PTC

Microsoft and Sprint–both Fortune 100 companies with substantial commitments to renewable energy–delivered a letter yesterday to Congressional leadership asking for an extension of the federal Production Tax Credit (PTC) for wind power, an incentive scheduled to expire in December.

The letter calls on Congress to act immediately to extend the PTC before it expires. More than 400 wind manufacturing facilities in 43 states are facing imminent risks of layoffs and shutdowns for lack of orders.

Nearly half of the world’s largest corporations plan to moderately or significantly increase investment in renewable energy over the next five years, according to research by Ernst & Young released last week. Microsoft and Sprint are the largest “wind customer” companies to call on Congress to extend the PTC, ranking 37th and 90th, respectively, in the Fortune 500, with combined annual revenues of over $100 billion. They join 15 other major U.S. companies and consumer brands, including Starbucks, Nike, Campbell’s Soup, Staples, and Yahoo!, who signed a similar letter in February. HP, which had previously joined the coalition, was also a signer of yesterday’s letter.

“The PTC has enabled the wind turbines industry to slash wind energy costs–90 percent since 1980–a big reason why companies like ours are buying increasing amounts of wind energy,” the letter states. “Failure to extend the PTC for wind would tax our companies and thousands of others like us that purchase significant amounts of renewable energy and hurt our bottom line at a time when the economy is struggling to recover.”

According to the U.S. Environmental Protection Agency, Microsoft is the third largest purchaser of green power in the U.S., buying more than 1.1 billion kilowatt-hours (kWh) annually–equivalent to 46 percent of its electricity use. Microsoft announced last month that beginning in fiscal year 2013 (July 1 of this year), it plans to achieve carbon neutrality across all of its direct operations including data centers, software development labs, air travel, and office buildings through a combination of renewable energy investments and a cascading carbon fee that will hold each business division accountable for its carbon emissions.

“We believe that our commitment to carbon neutrality is consistent with the culture of innovation at Microsoft which will help increase our focus on efficiency and clean energy,” said Rob Bernard, Chief Environmental Strategist at Microsoft. “In joining Sprint, we recognize that there is much more work to be done to help society transition to cleaner, more reliable and secure energy sources.”

Sprint is the only wireless provider to be included on the U.S. EPA Green Power Partners National Top 50 list, and is number 14 on the Fortune 500 list. In 2006, Sprint announced a five–year agreement with Kansas City Power & Light (KCP&L) that facilitated the development of the Spearville, Kansas, Wind Farm. In 2010, wind power provided 93% of the energy needs for Sprint’s 200-acre Overland Park, Kansas, campus.

The PTC provides a tax credit of 2.2 cents per megawatt hour of generated electricity for wind developers, which translates to lower delivered cost of the resource. Since the PTC was enacted seven years ago, wind power capacity has increased by 47,000 megawatts, a seven-fold increase.

The companies warned Congress that “eliminating the PTC will sharply increase prices for wind energy and particularly affect the many large and influential companies that are already committed to buying and using wind energy.“

It will also shut down much of a thriving U.S. manufacturing sector, one of the fastest-growing sources of factory jobs even in the depths of the economic slowdown.

Corporate leaders across diverse industries are rapidly increasing their use of wind energy. Wind energy serves to bring down the marginal costs for electric power, enabling large power purchasers to incorporate wind power into their energy portfolios at a competitive price, making them better prepared to handle volatility in the market.

"This is what successful policy looks like when it’s working,” said Denise Bode, CEO of the American Wind Energy Association. "Wind power gives major corporate energy purchasers the competitive advantage of an energy source that is immune to price shocks. And the Production Tax Credit provides the tax relief necessary to rapidly scale up the industry and its manufacturing here in the U.S.”

The Production Tax Credit for wind has been in place without interruption since 2005 and has led to 47 GW of new wind capacity, equal to about 94 power plants, spurring nearly $70 billion in private investment, according to the American Wind Energy Association. Largely owing to the PTC, wind energy accounted for 35% of new electrical generation capacity installed in the past four years, and now supplies 20% of electricity needs in states like Iowa and South Dakota. Nationwide, the wind energy industry supplies close to 3% of electricity nationwide and is on track so far to make 20% of all of America’s electricity by the year 2030, as envisioned by the George W. Bush administration.

The full text of the letter follows:

The Honorable John Boehner
Speaker of the House
U.S. House of Representatives
Washington, DC 20515

The Honorable Harry Reid
Senate Majority Leader
U.S. Senate
Washington, DC 20510

The Honorable Nancy Pelosi
House Minority Leader
U.S. House of Representatives
Washington, DC 20515

The Honorable Mitch McConnell
Senate Minority Leader
U.S. Senate
Washington, DC 20510

June 13, 2012

Dear Speaker Boehner, Majority Leader Reid, Minority Leader Pelosi, Minority Leader McConnell:

As some of the largest non-utility purchasers of renewable energy, we write to urge you to support the extension of the Production Tax Credit (PTC) for wind energy as part of any legislation containing tax provisions as soon as possible, and not wait until the end of the year. Eliminating the PTC would sharply increase prices for wind energy and particularly affect the many large companies that are committed to buying and using wind energy.

For a diverse set of reasons, American businesses have significantly ramped up their purchase of American wind energy in the past decade. The economic benefits for consumers of wind electricity are tremendous. Electricity rates, which reflect marginal costs for power plant operations and fuel prices, consistently decrease when wind enters the market. Because wind prices can be locked in up front, businesses incorporating wind into their energy portfolios are better equipped to hedge market volatility in traditional fuels markets caused by supply shocks. We are concerned that allowing the PTC to expire would immediately raise prices for the renewable electricity we buy today. Even the threat of its potential expiration is already causing thousands of layoffs in an industry that has otherwise been a bright spot for employment through the depth of the recession, and has created one of America’s fastest-growing manufacturing sectors.

The PTC has enabled the industry to slash wind energy costs – 90% since 1980[i] – a big reason why companies like ours are buying increasing amounts of renewable energy. Wind now supplies over 3% of US demand and accounts for 35% of new electric generation capacity installed in the last five years.[ii] In the seven years that the PTC has been continuously in place, installed wind capacity has grown sevenfold to nearly 47 Gigawatts representing more than $60 billion in private investment.[iii]

As Congress investigates ways to spur business growth, we urge you to ensure a full one-year extension of the PTC as soon as possible. Failure to extend the PTC for wind would tax our companies and thousands of others like us that purchase significant amounts of renewable energy and hurt our bottom lines at a time when the economy is struggling to recover. Extending the PTC lowers prices for all consumers, keeps America competitive in a global marketplace and creates home grown American jobs.

Sincerely,
Microsoft
Sprint
Hewlett-Packard

Cc:
The Honorable Max Baucus, The Honorable Benjamin Cardin, The Honorable Bob Casey, The Honorable Jack Reed, The Honorable John Kyl, The Honorable John Barrasso, The Honorable Mike Crapo

The Honorable Dave Camp, The Honorable Fred Upton, The Honorable Kevin Brady, The Honorable Greg Walden, The Honorable Tom Price, The Honorable Tom Reed, The Honorable Nan Hayworth, The Honorable Renee Ellmers, The Honorable Sander Levin, The Honorable Chris Van Hollen, The Honorable Allyson Schwartz, The Honorable Xavier Becerra, The Honorable Henry Waxman

i American Wind Energy Association, “Federal Production Tax Credit for Wind Energy”, Fact Sheet, www.awea.org/issues/federal_policy/upload/PTC-Fact-Sheet.pdf
ii American Wind Energy Association, Press Release, “Wind Rebounds in 2Q, but Continued Growth Depends on Consistent Tax Policy”, August 4, 2011, www.awea.org/newsroom/pressreleases/2q-2011-release.cfm
iii American Wind Energy Association, “Federal Production Tax Credit for Wind Energy”, Fact Sheet, www.awea.org/issues/federal_policy/upload/PTC-Fact-Sheet.pdf

The PTC provides an income tax credit of 2.2 cents per kilowatt-hour for the first 10 years of electricity production from utility-scale turbines. It is set to expire on Dec. 31 unless Congress extends it first. A recent study by Navigant Consulting found that extending the Production Tax Credit will allow the industry to grow to 100,000 jobs in just four years, while an expiration would kill 37,000 jobs within a year.

A House bill seeking to extend the PTC has 101 cosponsors, including 23 Republicans, while a Senate bill to extend it was introduced March 15 by seven Senators, including three Republicans. PTC extension efforts have received the endorsement of a broad coalition of more than 370 members, including the National Association of Manufacturers, the American Farm Bureau Federation, the Edison Electric Institute, and the Western Governors’ Association. A PTC extension also has the support of the U.S. Chamber of Commerce, the National Governors Association, and the bipartisan Governors’ Wind Energy Coalition, which includes 23 Republican and Democratic Governors from across the U.S. A PTC extension has been endorsed by a number of newspapers across the country, including the Houston Chronicle, The New York Times, the Denver Post, the Daily Oklahoman, and the Toledo Blade.

By Jon Goldstein, www.awea.org/blog/