Library filed under Taxes & Subsidies from Oklahoma
Once the five years of exemptions are over, wind companies have been sending lawyers to county courthouses to file tax protests and lawsuits contending the value of their equipment is worth hundreds of millions of dollars less than the values assigned to them by county assessors. Wind industry representative claim they have good cause for their tax protests.
Two controversial wind energy bills that could be heard this legislative session calls for stripping companies' tax incentives and making them pay a new tax. Critics say the bills raise red flags for future business in Oklahoma.
Brian Hermanson, the Kay County district attorney, said he was shocked that Rock Falls Wind Farm and Blackwell Economic Development Authority officials came up with the tax avoidance plan in secret and then sprang it on county officials at the last minute. “They didn’t tell us about it until it was all over and the wind farm was built and it was time to assess,” he said. “I was shocked at the manner they did it. I was shocked that they would try to cut the school systems from the money they had coming and the county health system from what they had coming and county government, for that matter.”
Pending lawsuits over a northern Oklahoma wind farm’s property tax liability could have more than $1 million worth of implications for state education funding, according to Brady Barnes, superintendent of Newkirk Public Schools. But while the suits await action in court, leaders of Kay and Grant counties, the Oklahoma State Department of Education and a subsidiary of Électricité de France are attempting to strike some sort of agreement that would prevent what Barnes says could be a $550,000 impact on his district come January.
Energy company EDF Renewables intends to reverse its controversial Rock Falls Wind Farm bond agreement that had complicated school financial situations for northern Oklahoma districts, according to company representatives. The decision was made after an Oct. 24 meeting with school superintendents and will likely preserve revenues for those districts.
Pending litigation over the property tax obligations of Rock Falls Wind Project in Grant and Kay counties could set dramatic new precedents and fundamentally change the way wind-energy projects are incentivized in Oklahoma.
Texas dealt a potential death blow to what would be the largest-ever U.S. wind farm: American Electric Power Co.’s $4.5 billion Wind Catcher project. ...“The costs are known,” DeAnn Walker, chairman of the Texas commission, said Thursday at a hearing. “But the benefits are based on a lot of assumptions that are questionable.”
AEP's plan to build the largest wind farm in the United States might have been dealt a fatal blow. The Public Utility Commission of Texas voted Thursday to reject the proposed 2,000-megawatt Wind Catcher wind farm, stating that as it is structured now, the project doesn't offer clear enough benefits for rate payers.
With SB 888 failing to advance Monday, lawmakers committed to ending the wind tax credit refundability could turn their attention to HB 3716, a bill that surfaced Friday. HB 3716 eliminates the refundability but allows companies to retain the credits for 20 years to decrease their Oklahoma tax liabilities.
Senate Bill 888 would not abolish zero emission tax credits, but would make them no longer refundable. That means wind companies could still use the income tax credits to offset taxes they might owe. However, once that tax liability goes down to zero, they would no longer be able to turn the remaining tax credits back to the Tax Commission and receive 85 cents on the dollar from the state treasury.
SB 888 eliminates the refundability of tax credits for renewable energy generation. The state stopped issuing new credits several years ago, and the state is already scheduled to phase out the program altogether by 2027. Zeroing out the refundability feature could save the state as much as $750 million from 2020, when SB 888 takes effect, until 2027, Coody said.
What is known so far is that the deal would place a $1 per megawatt hour tax on the production of wind energy, but only for new projects. The proposal also will include what's been dubbed "section nine," a guarantee that the gross production tax will expire if a future Legislature tries to eliminate or cap the industry's incentives.
"If we don't do something truly meaningful this session, not next session, another $70 million is literally going to be gone with the wind," Brecheen said. The senator said the bill would end corporate welfare payments, not by eliminating the tax credit, but by eliminating the refundability aspect of it.
Giving teachers in Oklahoma a raise is past due. WindWaste was established on the premise that more funding for education was critical, and the industry that has profited most in recent years from Oklahoma subsidies should contribute.
If the state has been reimbursing county school districts for wind’s ad valorem taxes, then this has not expanded the total funds to school districts at all; it has just forced the state to transfer dollars from the General Revenue Fund that otherwise would have been earmarked for school districts across the state to those rural districts near wind facilities. Robbing Peter to pay Paul does nothing to help education.
Legislative panels on Thursday passed House Bill 3710, which would put a $35 million cap on the zero emission tax credit. Last year, lawmakers decided to sunset the tax credit in 10 years for new production. The clock began ticking July 1.
Two bills, one in the House and another in the Senate, have proposed capping the state's zero emission tax credit. In 2016, Oklahoma paid $74 million in zero emission tax credits, which the legislature is proposing to cap at $5 million or $10 million.
Yates said the legislators don’t understand that the tax credits were built into the business models when the wind industry companies won state approval to build wind farms in Oklahoma. “These projects are not profitable for the first 12 years of existence,” he explained. The Wind Coalition leader said for the state to go back and change the rules “of the game so dramatically after these projects are already up and spinning, the investment is there and now to go back in and change is devastating.”
McBride is proposing a $1 per megawatt hour tax on wind power, as well as eliminating the industry’s manufacturing sales tax exemption. Other lawmakers want to cap incentives already awarded to existing projects. After 20 years, McBride said it’s time to stop subsidizing the wind industry.
Wind energy advocates are speaking out as lawmakers confirm one piece of their proposed budget plan includes placing a gross production tax on wind energy. The tax could be 4 percent for 36 months and 7 percent after that.