Energy official to stump for energy tax credit

WEST BRANCH -- The uncertainty surrounding extension of a key federal tax credit for purchasers of wind turbines is prompting a visit to plants in West Branch and Des Moines  by a U.S. Department of Energy official.

David Sandalow, acting U.S. undersecretary,  on Wednesday will tour the Acciona Windpower plant in West Branch, where 1.5 megawatt and 3 megawatt wind turbines are assembled. The company buys more than 80 percent of its components from domestic suppliers.

Sandalow also will visit the Keystone Electrical Manufacturing Co.  in Des Moines, which makes protection and control switchboards, medium voltage switchgear and turnkey control centers used in the generation, transmission and distribution of electric power. More than 20 percent of the company's sales involve the wind energy sector.

The federal energy production tax credit provides 2.2 cents per kilowatt hour for power from wind turbines. The current tax credit is set to expire on Dec. 31. Given that uncertainty, orders from domestic buyers have dried up, and Sandalow will be stumping for more than a one-year extension.

"The off-again, on-again nature of this tax credit has been a real problem for the industry," Sandalow said. "We need to figure out a way to provide the industry with certainty. That allows investment capital to flow, which creates jobs.

"Countries all over the world are investing in wind energy and other forms of green energy. They're doing it not only for their domestic customers, but they're also targeting export markets.

"The U.S. has been a leader in wind energy, but we can't take that for granted. We've got to invest in this sector as well as training for people who work in the field installing and maintaining the equipment."

Sandalow said President  Obama supports extension of the production tax credit, as do Sens. Chuck Grassley, R-Iowa,  and Tom Harkin, D-Iowa, as well as a majority of the Iowa congressional delegation.

But the production tax credit extension, which would cost $4.1 billion over 10 years and includes some other renewable energy sources such as geothermal, has failed to gain a majority vote three times in the U.S. Senate.

The tax credit has been extended seven times in 10 years. In 2001, 2002 and 2003 it expired, and Congress had to reactivate it.

The Senate tried in January to tuck it into lengthening the payroll-tax cuts, but it was stripped before the final vote. Grassley in May told employees of Acciona Windpower that Congress will probably renew a key tax credit for their industry, but not soon enough to avoid a slump in business in 2013.

The Acciona Windpower plant employs about 103, down sharply from about 182 at the start of the recession. The only new orders coming to the plant have been from Canada because wind developers working in the United States don't want to start projects until they are sure they will be covered by the credit.

U.S. Agriculture Secretary Tom Vilsack, speaking Monday in Cedar Rapids, said he does not expect to see any action on the production tax credit until after the November presidential and congressional elections.

"I think the production tax credit will be part of a much larger discussion of tax policy that will take place sometime after the election," Vilsack said. "I think it's important that the production tax credit not be part of the existing process where we extend things for a year.