| August
16, 2002 Senator
Frank Murkowski
Ranking Minority Member
Committee on Energy and Natural
Resources
364 Dirksen Senate Office Building
Washington, DC 20510-6150
Dear Senator Murkowski: On
behalf of the National Grange, I ask that you please support the renewable energy
tax credit and the Renewable Portfolio Standard provisions included in both the
House and Senate versions of the energy policy bill. These provisions are of vital
importance to rural America and should be included in any final package agreed
to by the conference committee. Both
the House and Senate bills include an extension of the Production Tax Credit (PTC)
for renewable energy development until December 31, 2006. A long-term extension
of this credit will ensure that renewable energy industries can obtain the necessary
funding to plan, develop, finance and construct new cost-effective facilities.
New renewable energy projects, such as wind power, will provide significant economic
development to rural America; the towers used to supply wind power cover a large
geographical area while occupying a small portion of farmland, enabling farmers
to earn extra income yet still have plenty of space to grow crops and raise cattle.
While the
PTC has been extremely helpful in spurring new utility-scale renewable development,
small wind energy systems (or those used to power an individual home, farm or
small business) do not currently receive any federal tax incentives. The Senate
version of the energy bill includes a 30 percent investment tax credit for small
wind systems (those rated 75 kilowatts and below). However, the bill caps the
credit at only $2,000 per unit, which may be too small to have any meaningful
impact. The cap should be increased. Moreover, the bill applies only to residential
systems and not to business applications, such as family farms. A more effective
approach would be to apply the credit to residential, small business and family
farm applications. These important tax credits for renewable energy provisions
are included in one or both versions of the energy policy bills and have received
strong bipartisan support.
In addition, we also urge you to support a Renewable Portfolio Standard (RPS)
requiring 10 percent of all energy production to be from renewable energy by 2020,
with one major modification. The RPS included in the Senate bill seeks to set
an achievable national standard by creating a market in which renewable energy
technologies compete with each other. According to the Department of Energy's
Information Administration, the cost of renewable energy continues to decline,
making the increased cost of a market-based RPS negligible. Moreover, increased
development in renewable energy diversifies our energy supply, spurs rural economic
development and helps the environment.
However, we believe that the RPS standard, which currently applies narrowly only
to "new construction" unnecessarily discriminates against renewable fuel technologies
produced on our nation's farms such as biodiesel and biomass. Both biodiesel and
biomass can be quickly and immediately utilized to replace fossil fuels in existing
generation facilities, with little or no modification. Making provisions for the
use of existing generation facilities to use renewable fuel sources as part of
the RPS will both increase the flexibility that electric utilities have to meet
the RPS standard and encourage even greater diversification and development of
our domestic, renewable energy resources. We
firmly believe that renewable fuel technologies used in existing generation facilities
would not directly compete or diminish the investment in other forms of renewable
energy, such as wind power. On the contrary, these technologies are complementary
and could be easily packaged together by renewable energy providers to cost effectively
address reliability concerns that arise when adverse environmental conditions
(such as a temporary lack of wind) reduce output from wind generation facilities.
Therefore, we strongly urge you to revisit the overly restrictive "new construction"
standard in the Senate legislation and adopt a more flexible standard for renewable
energy facilities that allows for the widespread use of renewable fuel technologies
that are produced on our nation's farms to qualify for compliance with the RPS
standard when they are used in existing generation facilities. Expanded
investment in domestic renewable energy will help increase the reliability of
our power supply through energy diversification, providing significant rural economic
development and protecting the environment. By supporting these provisions, the
federal government can lead the way by encouraging and increasing the use of renewable
energy nationwide. We urge you to support these important provisions throughout
the proceedings of the conference committee. Thank
you for your time and consideration. Sincerely,
Leroy Watson,
Legislative Director
National Grange of the Order of Patrons of Husbandry.
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