Idaho wind developers were hit by a one-two punch this winter in their quest to renew a 6 percent sales tax rebate they say has helped create hundreds of jobs and millions of dollars in tax revenues.
First, the Idaho Tax Commission said the tax rebate was going to add some $47 million to the projected budget shortfall. (That turned out to be wrong.)
Then, earlier this month, the Idaho Public Utilities Commission placed a de facto moratorium on wind and solar projects after Idaho Power Co. and other major utilities said big companies were abusing a rule that aimed to help small power producers.
Both presented challenges for a coalition of renewable energy companies to keep the rebate that sunsets June 30.
But with wind and solar developers, dairy farmers, the Idaho Cattle Association, the Idaho Farm Bureau, cooperative power utilities and Micron Technology behind them, the coalition is still standing – and still fighting for the break.
“We will try to work with the wind energy consortium to help them to do their projects,” said House Revenue and Taxation Committee Chairman Dennis Lake, a Republican from Blackfoot. “But I’m pretty sure we will not just repeal the sunset.”
THE ECONOMIC IMPACT
Lawmakers have been waiting for more than month for a study by Boise State University that developers say would show the economic benefits the wind industry provides.
The study, by Geoffrey Black and Don Holley of the BSU Center for Business and Economic Research, came Monday. It showed a representative wind project of 160 megawatts would generate $33 million to state government and more than $44 million to local governments.
Meanwhile, a study released last week by economist John Church examined the impacts of wind plants one developer, Boise-based Exergy, plans to build to produce 300 megawatts of electricity.
The project would create 650 jobs over the two-year construction period and maintain 120 jobs over the next 25 years, Church said. Exergy also would pay $50 million in royalties to farmers on whose land the wind towers are placed.
“This is income in rural Idaho that will be stable over the next 25 years,” Church said.
The company would pay sales tax, but under the state exemption, it would get it back when it begins to produce power. But Exergy would pay another estimated $120 million in state and local taxes, Church said.
Without the rebate, Exergy president and CEO James Carkulis said, the project won’t pencil out. It won’t be built, and the state would get no benefits. Idaho was rated last in term of fiscal incentives for alternative energy producers compared with surrounding states, the BSU study said.
If developers go to other states, Black and Holley wrote, “Idaho realizes no increases in job creation and economic activity or associated tax revenues.”
TOO MUCH WIND POWER?
The Idaho Public Utilities Commission’s temporary rule – pitched by the big power utilities in the state – cuts the size of wind and solar plants eligible for a guaranteed price when they sell their power to utilities.
The utilities argued that so much of the intermittent power was coming on line so fast they were unable to integrate it into their systems without reliability problems. Idaho Power alone has 1,200 megawatts of wind in the pipeline.
“We have taken on as much wind as we can,” said Lisa Grow, Idaho Power’s senior vice president of power supply. “In fact, we’ve taken on more than we can take.”
The PUC’s recent action means the companies also don’t having to pay the guaranteed rate for renewable power plants – $75 a megawatt hour— compared with the lower cost of power on the market: about $49 a megawatt hour.
But despite the concerns, Idaho Power is staying neutral in the rebate debate, said Jeff Malmen, its vice president of public affairs.
“We’re providing people with the information they need to make decisions,” he said.
But several Revenue and Taxation Committee members who supported the rebate when it was first passed are having second thoughts.
“A lot of people who have witnessed the wind developments are not as excited as they were,” said Rep. JoAnn Wood, a Republican from Rigby.
Malmen said Exergy’s 300-megawatt wind plant would cost ratepayers $470 million more over 20 years than if the company just bought lower-cost power on the spot market.
“That’s deceptive,” said Peter Richardson, a Boise attorney who represents Exergy and other renewable energy companies.
Utilities shouldn’t be comparing the wind costs to today’s market, Richardson said, but to the future resources it hopes to tap.
For Idaho Power, that would be the Langley Gulch natural gas plant the utility is building near New Plymouth.
Ratepayers will pay $126 a megawatt hour for the firm power from that plant – on top of fuel costs.
Since 1980, the renewable power Idaho Power has been required to buy has been cheaper than the power from the plants and upgrades the utility has built itself, Richardson said.
Gov. Butch Otter made creating jobs and home-grown energy through the development of renewable projects a central part of his 2010 campaign.
He’s not wedded to any particular incentive and wants to help all facets of the industry including solar and biomass, said Jon Hanian, his press secretary.
“He’s supportive of continuing the dialogue with stakeholders in an effort to ensure we continue to see growth in this industry,” Hanian said.
Tax Chairman Lake expects something this session, with the sunset looming and at least 1,200 megawatts and potentially hundreds of jobs on the line for projects tentatively approved before the PUC action took effect.
“We will try to accommodate people with projects in the pipeline,” he said.
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