An argument over wind

The wind industry argues that companies that burn coal and natural gas get a subsidy too, in that they are allowed to dump pollutants into the air without paying for the damage they cause.

By Matthew L. Wald

The New York Times

With the wind industry facing the expiration of a production tax credit at the end of the year, the sector’s main trade association is facing off against Exelon, the big power generation company, over whether the tax break should be renewed. Last week, the Wind Energy Association expelled Exelon as a member because the company opposed a renewal of the credit.

The association says that if the tax credit expires, some 17,000 jobs will be eliminated next year and that deliveries of new turbines will spiral to zero.

But Exelon says the tax credit is distorting energy markets because the credit itself is larger than the average value of electricity produced in the Midwest. Surges of wind energy late at night during periods of low electricity demand are driving the market price of electricity below zero, according to independent statistics.

Exelon complains that in that circumstance, its nuclear plants actually have to pay grid operators to accept their electricity. The wind farms in that region do as well, but they remain profitable because they earn the production credit.

The issue of the tax credit and so-called negative pricing has emerged in the presidential campaign, with the Obama administration favoring an extension of the credit and Mitt Romney opposing it. But the credit’s fate may be resolved by the November election, depending on Congressional action.

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