Regarding the federal deficit, President Obama famously said, “I will not support any plan that puts all the burden for closing our deficit on ordinary Americans [and yet does not ask] the biggest corporations to pay their fair share.” Now, however, Mr. Obama vigorously supports at least one policy that violates that pledge: the federal production tax credit (PTC) for wind energy.
Conceived in 1992 as a means to spur the construction of wind-energy facilities that could compete with monopoly-owned conventional fossil-fuel power plants, this hefty tax credit mostly has benefited the same monopoly: conventional nuclear and fossil-fuel-fired electricity producers.
With wind plants totaling 9,289 megawatts of capacity, Florida-based NextEra Energy/FPL (aka Florida Power & Light) is the largest recipient of this tax credit. Of course, NextEra is only the largest, not the only, corporate beneficiary of taxpayer largesse. Nonetheless, the largesse it receives is huge.
Primarily because of the PTC’s generous tax benefit, BusinessWeek reports, from 2005 to 2009 “FPL has paid just $88 million in taxes on earnings of nearly $7 billion.” That gave FPL a tax rate of merely 1.25 percent over that period. Most corporations average a 30 percent tax rate. At that rate, FPL’s tax obligation would have been more than $2 billion.
This $2 billion tax avoidance is a result of the company’s “taking advantage of incentives to develop renewable resources.”
One might argue that these lavish tax credits are warranted, as they supposedly level the playing field between startup producers of “clean” wind energy and established “dirty” conventional energy producers. Yet NextEra/FPL is the eighth-largest power producer in the United States, with the bulk of its generation coming from fossil or nuclear sources.
The company owns the largest fossil plant in the United States, the recently completed West County Energy Center’s combined-cycle gas turbine (CCGT) plant, located on a 220-acre site in the environmentally sensitive Everglades.
Curiously, the price tag for this facility is also $2 billion, nearly equal to the value of NextEra/FPL’s combined tax credits from 2005 to 2009.
NextEra/FPL boasts that its huge number of PTC-driven wind-generation plants have “allowed FPL to avoid building 13 medium-sized power plants since 1980.” Ignoring the fact that intermittent wind turbines never can replace steady, reliable fossil plants, it appears that FPL more honestly could have stated the impact of the PTC thus: The wind-energy production tax credit funded the construction of America’s largest fossil-fuel generation plant, located in the heart of the environmentally sensitive Florida Everglades.
NextEra’s huge wind-turbine fleet seems impressive. When adjusted for wind’s on-again, off-again nature, however, the United States’ largest fleet of wind turbines will have an average capacity of perhaps 2,700 megawatts (ranging from zero to 9,000 megawatts hourly and daily) yet will cost $18 billion.
Had this $18 billion instead constructed eight gas turbine plants like NextEra/FPL’s new one in the Everglades, the company would have nearly 30,000 megawatts of dependable capacity versus wind’s paltry and unreliable 2,700 megawatts. Moreover, gas turbines, unlike wind turbines, actually could replace dozens of coal plants while reducing carbon-dioxide emissions by half.
This, too, is a return wind generation can never match because it forces “backup” fossil-fuel plants to ramp up and down constantly as wind speeds rise and fall, causing inefficiencies, high fuel use and high carbon-dioxide emissions.
What of the president’s pledge? While being committed to both “stopping the ocean’s rise” by controlling carbon dioxide and asking the “biggest corporations to pay their fair share,” he has let the PTC fail him on both counts.
Not only has the PTC helped a Fortune 200 company evade its “fair share” of corporate income tax, Mr. Obama has unwittingly let his beloved production tax credit fund the construction of the largest fossil-fuel gas-fired turbine plant in the United States a mere 1,000 feet from the Everglades’ Arthur R. Marshall Loxahatchee Wildlife Refuge.
If Mr. Obama is serious about protecting the environment and making the “biggest corporations” pay their fair share, he should oppose any extension of the PTC.