September 25, 2012
By Paul Monies
Oklahoma Gov. Mary Fallin remains committed to an extension of the federal production tax credit for wind energy, joining several other Republican governors and lawmakers in the central United States and highlighting a split with GOP presidential nominee Mitt Romney.
Fallin, speaking at the annual meeting of the Southern States Energy Board in Oklahoma City, said she still supports a temporary extension of the production tax credit. The incentive, which expires Dec. 31, offers wind producers a 2.2 cent per kilowatt-hour tax credit.
Fallin sent a letter to congressional leaders in February supporting a renewal of the wind production tax credit. This summer, Romney's campaign said the former Massachusetts governor did not support an extension of the credit. His energy plan doesn't mention the incentive but does say government shouldn't pick winners in the marketplace.
“I agree with Governor Romney on 99 percent of the issues,” Fallin said Monday in an interview with The Oklahoman. “But on this one, I've got to do what's best for our state.”
Fallin said the wind industry supports more than 3,000 jobs in Oklahoma. The state ranks in the top 10 nationally for wind capacity and electricity generation from wind. Republican governors in other wind-producing states such as Iowa and Kansas also support an extension of the credit.
The wind sector continues to shed jobs as uncertainty remains over the production tax credit. A study for the American Wind Energy Association predicts up to 37,000 jobs could be at risk if the credit expires. Tulsa's DMI Industries, which makes wind towers, last month announced the layoff of more than 165 people as its parent company decided to exit the wind sector.
In an afternoon panel, Michael Skelly, president of Clean Line Energy Partners, said improvements in wind turbines and blade materials have lowered the cost of wind energy. He cited a recent report by the Lazard investment bank that put the cost of wind with a production tax credit in the 3 cents per kilowatt-hour range. That compares to about 5 cents without the tax credit. New construction for coal and natural gas generators were 7 and 8 cents per kilowatt hour, Skelly said.
“Wind is at the lower end of the scale, but it's more about the fuel than it is the capacity,” said Skelly, whose company plans to build a high-voltage, direct-current transmission line from Oklahoma Panhandle wind farms to utilities in Tennessee. “It's really a way of offsetting other fuel costs. Local wind and natural gas makes sense for Oklahoma and the southeastern United States.”
Despite the split with Romney over the wind production tax credit, Fallin used her speech to criticize the Obama administration for its refusal to open offshore areas in the eastern Gulf of Mexico and mid-Atlantic for oil and gas development.
“We all know we can do this safely, and we all know that Washington has been standing in the way,” she told about 170 Southern States Energy Board conference participants. Fallin is chairman of the board.
Meanwhile, Fallin and Colorado Gov. John Hickenlooper, a Democrat, have been instrumental in pushing domestic automakers to provide natural-gas-fueled cars and light trucks for state fleets. Governors in 22 states have signed on to the request for proposal, she said.
“We hope it will help pave the way for new products with a new demand for those products,” Fallin said. “It will not only transform the public sector use for these fleet systems but also help grow the private sector, which is also participating and using natural-gas vehicles.”
Fallin touted the passage of Senate Bill 1096, which compels state agencies to reduce their energy usage 20 percent by 2020.
“It's estimated we can save $300 million to $500 million in the next eight years in our state,” Fallin said. “So instead of wasting our energy here in Oklahoma, we're actually looking at ways to use new technologies to help with energy efficiency, which I think is a win-win for everybody.”