U.S. Sens. David Vitter (R-La.) and Lamar Alexander (R-Tenn.) sent a letter to U.S. Department of Interior Secretary Ken Salazar asking him to explain the administration’s economic reasoning in allowing an offshore lease sale for wind energy in the Atlantic Ocean.
The senators’ letter notes that that the agency will not allow offshore oil and gas leasing in the Atlantic Outer Continental Shelf (OCS), and requests data on the economics of the wind lease sale, to compare with “the value of a similar lease for oil and gas on equivalent acreage.”
“The administration has a habit of picking energy industry winners and losers, and we want an explanation,” Vitter said. “Secretary Salazar should at least be able to defend the economics of the lease sale for wind energy. For example, the federal government receives significant revenue from royalties for offshore oil and gas production in the form of rents, royalties, bonus bids and taxes. Can the same be said for this offshore wind project?”
“Our nation’s energy policy must make economic sense for taxpayers and not be manipulated to favor one energy source over another,” Alexander said. “I hope we find that the administration’s decisions aren’t driven by politics but instead are geared toward developing the kind of low-cost, reliable energy we need to help our private sector grow and add good-paying jobs.”
In their letter, the senators write, “the Federal Government derives significant revenue from royalties for offshore oil and gas production. The current rate companies must pay is between 12.5% and 18.75%. ” This is before taxes and after competitively bidding on the lease. This tax is levied on all energy produced by an oil and gas company working on federal offshore or onshore resources. The senators ask, in comparison: “What is the effective royalty rate Interior has contracted with NRG Bluewater Wind Delaware LLC for this lease for the energy it produces? What is the anticipated revenue to be raised from this development over the next 10 years?”
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Press release, November 09, 2012