Idaho’s wind industry boomed after the Legislature created a tax incentive in 2005. That incentive is set to expire this year, and opponents of wind farms see the coming debate over renewal as their chance to demand more accountability and more say
Idaho’s wind-power industry has risen in five years from almost nothing to producing hundreds of millions of dollars and the equivalent of enough electricity to power half of the Treasure Valley.
An industry that started with a single tinkerer’s turbines west of Boise has grown to hundreds of turbines lining the windy ridgelines of the Snake River Plain, thanks to passage by the 2005 Legislature of a bill to give producers of alternative energy a rebate on the sales tax they pay on their equipment.
But that rapid growth has created opposition. Neighbors of wind farms in eastern Idaho say they’re surprised, and often affected, by massive turbines and wind farms they have no say about. And utilities argue that they can’t use all of the power being produced without increased costs for their customers.
The 2005 rebate law sunsets this year. Developers of wind, biomass and other renewable energy sources say the incentive’s continuation is crucial to developing the homegrown power that creates jobs and brings taxes for counties and schools.
But opponents see the Legislature’s consideration of the tax exemption’s renewal as a choke point at which they can bring the industry under control.
“This will be one of the big fights of this session,” said Roy Eiguren, an Idaho energy lobbyist representing wind developers.
BATTLE LINES DRAWN
Eiguren has a wide and diverse coalition on his side. It includes dairy farmers, the Idaho Cattle Association, the Idaho Farm Bureau and Adams County, all of which are seeking to develop biomass energy. Other allies are landfill power developers, solar power developers and Micron’s Transform Solar offshoot.
But a group that formed in Bingham and Bonneville counties wants lawmakers to ensure that Idaho is getting its money’s worth from the developers of wind energy, which are increasingly multinational corporations.
Idahoans for Responsible Wind Energy wants lawmakers to ensure that residents who live next to proposed wind farms get adequate notice and fair consideration for the impacts that the huge towers and turning blades have on their property values and quality of life.
“It’s not just the visual impact,” said Maureen Finnerty, a spokeswoman for Idahoans for Responsible Wind Energy. “It’s about the money and whose wallet it’s in.”
But tax records provided by wind developers show they have paid $2.4 million in taxes to counties and schools from 2006 to 2010. If the sales tax rebate were not in place, the wind projects wouldn’t have been built, said Rich Rayhill of Ridgeline Energy, a wind developer.
Bob Lewandowski built a small wind farm out of old wind turbines he bought from California. It produced 300 kilowatts of electricity and was the only wind farm operating in Idaho when he died in 2005. By the end of this year, developers expect 544 megawatts of renewable power generation, almost all from wind, will be on-line. (For comparison, Idaho Power’s record for peak use is about 3,100 megawatts.)
The 6 percent sales tax rebate – essentially a state tax exemption – is critical to the industry’s continued growth, said James Carkulis, CEO of Exergy, a Boise-based wind developer.
“Our return on one of these projects is a half or less than the sales tax itself,” he said. “The margins are that tight.”
REAPING THE WIND
Finnerty lives in the Rimrock subdivision in the foothills overlooking Idaho Falls. She got involved after Ridgeline placed 95 wind turbines on the ridge behind her house.
She makes it clear that she speaks only for herself and for Idahoans for Responsible Wind Energy.
“When these first went up I told myself, ‘I’m going to ignore these things because I don’t want them to impact my mental quality of life,’ ” Finnerty said. “Then I decided that’s not right for me or for the state.”
She wants lawmakers to create a regulatory system that ensures the public is fully informed and has a voice in deciding where wind farms are developed. She also wants lawmakers to take another look at the rebate to ensure that counties and schools get their fair share for the costs that come from the impacts of turbines and the displacement of other development.
She’s not proposing a moratorium on wind plants, but she doesn’t rule it out if the group’s concerns aren’t addressed.
Republican Rep. Erik Simpson of Idaho Falls doesn’t want to push a moratorium, either. But he says he might just consider such legislation.
“I would prefer for the two sides to get together to work things out,” Simpson said. “It’s obvious citizens in eastern Idaho are frustrated by the siting and lack of notification for wind turbines.”
Rep. Wendy Jaquet, a Ketchum Democrat, hopes to work with Simpson on a bill that ensures public involvement and, perhaps, requires developers to post bonds. The state must decide how important it is to encourage alternative energy, she said, and the debate over renewing the sales tax rebate will ensure that happens.
Jaquet also hopes that the Legislature’s consideration of the alternative energy rebate becomes the model for looking at the state’s many other sales tax exemptions. Critics of exemptions say that once passed, exemptions often become impossible to change or eliminate – even when they outlive the purpose for which legislators originally passed them.
“The burden needs to be on the industry to tell us why they need it,” Jaquet said.
UTILITIES WANT CHANGES
The future of wind and alternative energy in Idaho won’t be decided solely in the Legislature. Idaho Power and other utilities have asked the Public Utilities Commission to reduce the amount of power they must buy at a special incentive rate under requirements set by the Public Utility Regulatory Policies Act of 1978.
They want to pay incentive rates to fewer small power developers, meaning that most power generators would have to negotiate rates with the utilities.
Idaho Power argues that the current system makes it pay premium prices for inconsistent power that it doesn’t need.
“Adding this much of this type of power will increase our costs and may have a negative impact on how reliable our system is,” Lisa Grow, Idaho Power’s senior vice president of power supply, recently wrote.
But Peter Richardson, an attorney for the wind industry and industrial customers of Idaho Power, said wind power is much like hydroelectric power: It doesn’t depend on fuel, like natural gas, that can spike in price.
Wind developers are getting about 7.5 cents a kilowatt-hour for the power they sell to Idaho Power under the required rate. But Idaho Power is building a natural gas plant near New Plymouth at a cost of 12.5 cents a kilowatt-hour, which will raise rates on Idaho Power customers more than 5 percent, Richardson said. If natural gas prices rise higher, the plant could cost customers even more.
“Alternative energy projects actually have a downward impact on rates,” Richardson said.
Utility executives say they need the natural gas plant to have a firm source of power when the wind doesn’t blow. But Carkulis said he has the technology to “firm up” wind power – make it more dependable – but has not had any interest from Idaho Power.
“We could produce the same output (as the natural gas plant) with less money in a fully firm situation,” Carkulis said.
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