Berkshire Hathaway CEO Warren Buffett’s mantra of doing “anything that is basically covered by the law” to reduce his company’s tax burden has led to a new record for wind energy production.
The Berkshire-owned MidAmerican Energy is on track to be the first utility to generate enough wind energy to theoretically meet the demand of its entire Iowa customer base. The Des Moines–based utility services 770,000 customers. Buffett serves as Berkshire’s chairman and CEO, and he owns about 37 percent of the company.
MidAmerican began purchasing wind turbines about 15 years ago ostensibly to help hedge against energy prices, but Buffett said in 2014 the “only” reason to build wind power was to take advantage of tax subsidies.
“I will do anything that is basically covered by the law to reduce Berkshire’s tax rate,” Buffett told an audience in Omaha, Neb. in 2014.
“For example, on wind energy, we get a tax credit if we build a lot of wind farms,” Buffett said. “That’s the only reason to build them. They don’t make sense without the tax credit.”
MidAmerican CEO Bill Fehrman reiterated that statement in 2016 when the company announced a goal of generating 85 percent of its power capacity from wind energy.
“Because of the tax credits and our ability to deliver these projects at a low cost, we’re setting up our customers for a low-carbon future,” Fehrman told The Wall Street Journal in 2016.
Buffett and Fehrman are referring to the Wind Production Tax Credit (PTC), which is set to expire in a few years. The tax subsidy initially shelled out $24 per megawatt hour to wind producers for the first 10 years of operation, but subsidies began to be reduced in 2017.
MidAmerican will reach 100 percent green energy in 2020 when it completes a $922-million wind farm, Reuters reported. (RELATED: California, Texas Face Rolling Blackouts If Summer Heat Stresses The Grid)
Iowa has been one of the biggest beneficiaries of wind tax subsidies. The state got 37 percent of its electricity from wind power in 2017, and exported wind energy to other states with mandates to use green energy.
However, coal-fired power plants still provided the lion’s share Iowa’s electricity in 2017, according to the U.S. Energy Information Administration.
The PTC has been a political battleground for years, dividing Republicans who typically stand together on other issues.
Midwestern Republicans, including Republican Sen. Chuck Grassley of Iowa, favor wind subsidies, while most other GOP lawmakers oppose subsidies for wind turbines.
Of course, MidAmerican will still use lots of coal, natural gas and nuclear power to keep the lights on in Iowa due to wind power’s intermittent nature.
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