Your editorial “Big Wind and Tax Reform” (Nov. 11) says the production tax-credit subsidy takes billions out of the pockets of working Americans and transfers the money to rich investors. That’s not half of it.
In addition to the $24/megawatt hour in production tax credits (PTC) in the first 10 years of a project’s life, wind payments under power-purchase agreements (PPAs) with utilities and nonutilities (like Facebook, Amazon, Google, etc.) can average $70/Mwh and more over contract lengths that are typically 20 years and longer.
Thus, wind energy is guaranteed compensation from extra-market sources that is two to four times the $20 to $30/Mwh typically received by true market participants. Wind operators typically offer power to the market at negative prices to make sure that they won’t be bumped offline so that they can continue to produce and earn both the PTC and PPA payments.
Most of the new power transmission in the U.S. in recent years is being built to bring wind energy to large population centers. The cost of the billions invested in new transmission projects is passed through to electric customers at rates of return exceeding those allowed by state public utility commissions. According to a recent report on wind energy technology by the Berkeley Lab, about $20 billion in new transmission will be built annually between 2014 and 2019. For context, annual transmission expenditures are about equal to the value of all coal sold to the electric sector by U.S. producers in 2016.
Congress (and some states) made the market for renewable energy, and rich investors continue to force large chunks of unneeded energy into the nation’s power markets. The negative prices for wind power force local utilities out of wholesale power markets because utility-owned generation can’t compete with subsidized, mandated power, especially with demand growth very low or flat.
Retail electric rates should be declining because, according the wind lobby, renewables are so inexpensive. This is clearly not the case. Wholesale power prices are down but retail rates are not.
Susan Fleetwood
Rogersville, Mo.
Lets examine this in terms that are relatable to Georgetown.
The Production Tax Credit, PTC, of $24/megawatt hour equates to 2.4cents.kilowatt hour. The wind energy provider receives 2.4 cents for every kw hour they generate electricity.
The Power Purchase Agreement, PPA, of $70/megawatt hour equates to 7cents/kilowatt hour. The energy provider receives an average of 7cents for every kw hour they generate electricity.
Because of the secrecy surrounding Georgetown electric, we do not know the actual cost of the electricity to Georgetown, but, let us assume the 7cents/kilowatt hour is close. Thus the provider receives about 9.4cents/kilowatt hour when they are generating electricity. Remember the residential charge is about 9.6cents/kilowatt hour.
When there is excess electricity being produced and loaded onto the ERCOT transmission system, the wind generators reduce the cost of the electricity being dumped onto the transmission system, sometimes at negative prices, because they do not get paid the PTC and PPA of 9.4cents/kilowatt hour unless they are generating electricity. Even though the wind turbine blades can be feathered so as to not generate electricity, the wind companies do not do that as they will not be paid their 9.4cents/kilowatt hour.
Because of the subsidies, wind generators can sell electricity below the costs of the fossil fuel generators and the fossil fuel generators will ultimately be driven out of business, unless they are also subsidized. Then consumer prices will have to be increased to pay for that subsidy.
Citizens need transparency into Georgetown Electric.
