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Consumers Energy seeks "crippling" wind farm tax clawbacks from Tuscola County schools

Michigan Radio |Tracy Samilton|November 14, 2022
MichiganTaxes & Subsidies
More than a decade ago, the districts and other groups agreed to allow Consumers Energy, DTE Energy, and standalone wind energy companies like Next Energy to build wind farms in the region — in return for a specified amount of tax revenue over a 20 or 30 year time period. But then a state agency, the Michigan Tax Tribunal, unexpectedly changed the depreciation schedule for the wind turbines. Based on the new schedule, Consumers Energy sued the groups to whom it had paid taxes, demanding a significant amount of the revenue back.

Some Tuscola County school districts say they're regretting their decision to enter into tax revenue agreements with Consumers Energy after the utility sought tax clawbacks related to wind turbine depreciation.
 
Consumers Energy is suing more than a hundred schools, townships, and social service groups in Tuscola County, seeking about $8 million in tax clawbacks.
 
More than a decade ago, the districts and other groups agreed to allow Consumers Energy, DTE Energy, and standalone wind energy companies like Next Energy to build wind farms in the region — in return for a specified amount of tax revenue over a 20 or 30 year time period.
 
But then a state agency, the Michigan Tax Tribunal, unexpectedly changed the depreciation schedule for the wind turbines. Based on the new schedule, Consumers Energy sued the groups to whom it had paid taxes, demanding a significant amount of the revenue back.
 
Josh Hahn is head of Unionville-Sebewing Area Schools. He said Consumers is suing his district for nearly $1.2 million dollars.
 
"We would become a deficit district," he said. "Which means the state would take us over, we would have to cut staff and programs, we would lose students. It would severely cripple our district."
 
Hahn said Consumers Energy has not seemed willing to come to the table, unlike DTE Energy, which recently settled its lawsuits in the county for much smaller tax clawbacks. He estimates Unionville-Sebewing Area Schools will pay only about 4% of what DTE originally sought.
 
He said it appears that Consumers Energy can't be trusted to keep its word.
 
"Right now, Consumers is trying to get solar farms in our area, and if this doesn't get resolved, I will share with as many farmers and taxpayers as I know to be ... more [truncated due to possible copyright]
     
Some Tuscola County school districts say they're regretting their decision to enter into tax revenue agreements with Consumers Energy after the utility sought tax clawbacks related to wind turbine depreciation.
 
Consumers Energy is suing more than a hundred schools, townships, and social service groups in Tuscola County, seeking about $8 million in tax clawbacks.
 
More than a decade ago, the districts and other groups agreed to allow Consumers Energy, DTE Energy, and standalone wind energy companies like Next Energy to build wind farms in the region — in return for a specified amount of tax revenue over a 20 or 30 year time period.
 
But then a state agency, the Michigan Tax Tribunal, unexpectedly changed the depreciation schedule for the wind turbines. Based on the new schedule, Consumers Energy sued the groups to whom it had paid taxes, demanding a significant amount of the revenue back.
 
Josh Hahn is head of Unionville-Sebewing Area Schools. He said Consumers is suing his district for nearly $1.2 million dollars.
 
"We would become a deficit district," he said. "Which means the state would take us over, we would have to cut staff and programs, we would lose students. It would severely cripple our district."
 
Hahn said Consumers Energy has not seemed willing to come to the table, unlike DTE Energy, which recently settled its lawsuits in the county for much smaller tax clawbacks. He estimates Unionville-Sebewing Area Schools will pay only about 4% of what DTE originally sought.
 
He said it appears that Consumers Energy can't be trusted to keep its word.
 
"Right now, Consumers is trying to get solar farms in our area, and if this doesn't get resolved, I will share with as many farmers and taxpayers as I know to be very careful of dealing with Consumers Energy," Hahn said.
 
Diane Foster is Superintendent of Akron-Fairgrove Schools. She said Consumers Energy is demanding $377,456 from her district.
 
"We made huge financial decisions based on (turbine) values that were determined prior to us making an appeal to our community," she said. "I don't want our community to think we did something in bad faith. We're not a bank. We're just here to educate kids. And all of a sudden, wow, $8 million is not that much to that company, but it's a whole mountain to those of us that might have to pay pieces of that back."
 
Foster said the tax revenue from Consumers Energy allowed the district to pay for maintenance, upgraded security, sanitary improvements, and other things the district wouldn't have been able to afford otherwise.
 
"We thought perhaps there would be some sort of coming to the table (by Consumers) after the DTE settlements," she said.
 
Foster especially praised Next Era, a standalone energy company that also struck deals with school districts and other groups for wind farms.
 
"To their credit, they dropped out (of the lawsuits)," Foster said. "They decided they didn't want anything to do with this."
 
In a statement, Consumers Energy said:
 
"Consumers Energy stands for a fair and appropriate tax on Michigan wind energy systems to keep energy costs competitive, support local services and create energy jobs in our state. Ultimately, tax revenue generated for communities from wind and solar  farms is paid by our customers on their monthly bills. We are committed to mutually beneficial solutions that help host communities prosper while maintaining affordable energy for our customers."
 
DTE Energy and Next Era had not yet responded to requests for comment prior to this story being published.
 
DTE Energy and Consumers Energy are among Michigan Radio's corporate sponsors.

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