Wind industry officials in Oklahoma worried about loss of tax credits

Oklahoma lawmakers are scrambling to craft a budget despite massive reductions in state revenue.

They have approved a moratorium on several tax credits, including one that observers insist could devastate Oklahoma's burgeoning wind industry, but that won't become final until it is approved by Gov. Brad Henry.

Senate Bill 1267 would save more than $25 million in fiscal year 2011, including about $600,000 ticketed for bolstering wind development.

Developer Jaime McAlpine said the tax credit has allowed Oklahoma's wind industry to prosper.

McAlpine said the governor praised the tax credit when it was enacted in 2005 for the jobs, tax revenue and payments to landowners it would create.

"He was right. Since its passage over 900 megawatts of wind farms have been built and at least two manufacturing facilities have located in Oklahoma," said McAlpine, president of Edmond's Chermac Energy Corp.

He predicted the elimination of the zero-emission facility tax credit would kill Oklahoma's wind industry.

"If Gov. Henry signs Senate Bill 1267 into law, it will be a wind industry killer for at least four or five years in Oklahoma and a major coup for our neighbors in Kansas, Texas and New Mexico," McAlpine said.

The situation is proving to be frustrating for Oklahoma native Denise Bode, as well.

Bode, CEO of the American Wind Energy Alliance, spent the week in Dallas at Windpower 2010, the trade association's annual conference and exhibition.

The main topic of conversation, she said, was the possibility that Oklahoma lawmakers would get rid of the tax credit benefitting the wind industry.

Governors from other states talked about reducing taxes on the industry, while the cost of doing business in Oklahoma looked like it would be going up.

"I've got all these folks coming up to me because they know I'm from Oklahoma, saying 'What's the deal with this? Why would Oklahoma put a Closed for Business sign on the Red River?' I don't know why," Bode said.

Bode, a former Oklahoma Corporation Commissioner, said the tax credit is vital for the state.

"We will lose the competitive race to grow new jobs in Oklahoma if we pass a tax increase on the wind industry," she said.

That race is one the state may not be able to afford to lose.

McAlpine said a 100-megawatt wind farm is a $200 million investment in Oklahoma, one with a $20 million construction payroll leading to $875,000 annually to schools, $1.65 million in yearly payrolls for full-time and contract employees and an average $500,000 to landowners in annual royalty payments.

Such projects are unlikely to come to Oklahoma without the tax credit, he said.

"This tax credit has allowed a fledgling industry in our state to compete economically versus projects in Kansas and Texas, with Kansas and Texas projects now able to provide a substantially higher return on investment than Oklahoma projects," McAlpine said. "It affects planned manufacturing facilities to the point they will take those jobs and facilities to the 'wind friendly' states in our region."

DMI Industries, Oklahoma's only wind industry manufacturer, operates a wind tower plant in Tulsa, but Chuck Hoge, vice president of parent company Otter Tail Corp.'s manufacturing platform, said halting the tax credit could make it hard for the state to lure other manufacturers.

"For Oklahoma, it's a sad thing because it sends a message to companies interested in the state that it's not really open for wind business and that these companies may have to go elsewhere," he said.

Bode said Oklahoma needs to be in the wind business.

"We're the fastest growing businesses in the country," she said. "We added 35 manufacturing facilities in the United States for wind. I've been talking to them about coming to Oklahoma."

News of talks to put a moratorium on the state's tax credit for wind meant countless canceled appointments for the Oklahoma delegation at this week's conference.

"This moratorium is like an abrogation of contract," Bode said. "These people made decisions and signed contracts based on having the tax credit in place. I can't imagine why we would want to do this."