Wind communities seek end to "bait and switch" on wind park taxes

DTE Energy and Consumers Energy have filed more than 1,100 tax appeals to slash the taxes they owe to communities with wind parks

Republicans have introduced a new bill in the state Senate to stop what wind-rich communities are calling a "bait and switch" by utilities.

Rick Sundquist is an attorney with Clark Hill. He represents a coalition of local governments in Huron, Gratiot, and Isabella counties, where Michigan's wind parks are located.

Sundquist says communities that agreed to let wind parks in did so based on a depreciation table established by the Michigan Tax Commission. The table told them how much tax revenue they'd get from the wind parks over the years of their natural lifespan.

Then in 2011, the Michigan Tax Commission suddenly changed the schedule, slashing the amount of tax revenue communities could receive for wind parks. 

Sundquist says the Commission won't reveal why.

"Our clients feel betrayed," he says. "Municipalities put their budgets together based upon it (the old table) and in the blink of an eye, it changed."

Sundquist says utilities have now filed more than 1,100 tax appeals seeking large tax refunds, as well as dramatically lower tax liabilities going forward. He says the situation could cripple the budgets of communities with wind parks.

A bill introduced by Republican Senators Curt VanderWall (R-MI 35), Kevin Daley (R-MI 31), and Dan Lauwers (R- MI 25) would place a less aggressive valuation table into law instead of leaving it to the Tax Commission to decide, and the table would be retroactive except for cases where appeals have already been decided.

In a statement, DTE Energy says:

“Regarding SB 441, we are interested in a resolution to the issue based on true cash value of wind turbines. It should be fair to local units of government and tax payers. However, we are opposed to the bill as written.”

Consumers Energy provided no comment on the bill.  

Sundquist says it makes no sense to argue that wind parks should be valued based on their cash value, since they are fixed assets that cannot be moved.

He says the utilities are simply trying to make a cash grab. The Michigan Public Service Commission already approved a 10% or higher profit margin for the construction of the wind parks, and the utilities' wind farms continue to generate revenue on electricity they provide to consumers.

"All of these real estate taxes that they're seeking to get back have already been reimbursed to the utilities through rates," says Sundquist, "and have already been determined to be reasonable and prudent. Which makes this even more ridiculous."

Consumers Energy is one of Michigan Radio's corporate sponsors.