Washington (Platts)--14Nov2012/115 pm EST/1815 GMT

With congressional leaders and President Obama venturing into likely contentious negotiations aimed at reducing the federal deficit, Senator Lamar Alexander, a Tennessee Republican, said Wednesday that a "good start" would be to let the production tax credit for wind energy expire at year's end.

"We're broke... we can't afford it," Alexander said at a policy briefing organized by The Hill newspaper as the war of words over the potential extension of the PTC for wind ramped up amid Congress' lame duck session.

During the briefing, Alexander, Representative Mike Pompeo, a Kansas Republican and member of the House Energy and Commerce Committee, and former senator Phil Gramm, a Texas Republican and current vice chairman with UBS Investment Bank, painted the PTC for wind as a tax loophole for a costly and inefficient energy source.

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"This is a bad policy," said Gramm, who called the PTC for wind a market "distortion" that was forcing taxpayers to fund an energy source that was far more expensive and less efficient than natural gas. "We need to get all of these distortions out of the way and let the market work," he said.

Alexander, who said he also supported eliminating tax breaks for oil and gas companies as well as wind firms, called wind "notoriously unreliable" and compared incentivizing wind energy to "going to war in sailboats when nuclear submarines are available."

The PTC, a 2.2 cents/kWh credit, will expire at midnight on December 31 unless lawmakers vote to extend it. Senator Chuck Grassley, an Iowa Republican who included a one-year extension of the PTC for wind in a broader tax-extenders bill that the Senate Finance Committee approved in August, on Tuesday held a conference call with governors of Iowa, Colorado, Oregon and Kansas advocating for an extension of the wind PTC.

Grassley said about 23,000 jobs are on hold with the PTC extension in flux, a point Richard Caperton, director of Clean Energy Investment at the Center for American Progress, reiterated during Wednesday's briefing.

"If we get rid of the PTC, that's going to put a lot of jobs at risk," Caperton said.

Grassley said that congressional leaders have yet to give any indication on how or when the potential PTC extension will be considered during the lame-duck congressional session.

At the briefing Wednesday, Pompeo dodged a question over whether Republican leaders -- including House Speaker John Boehner, an Ohio Republican, and Majority Leader Eric Cantor, a Virginia Republican -- have indicated they would support letting the wind PTC expire at the end of the year. "There's still a lot of work to do," Pompeo said.

--Brian Scheid, brian_scheid@platts.com
--Edited by Valarie Jackson, valarie_jackson@platts.com

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