BOISE, Idaho – Lobbyists for wind energy companies stood in shocked disbelief Thursday after the Idaho Senate narrowly killed a measure to extend a sales tax rebate for alternative energy. The expected deal had been hashed out between lawmakers, utilities and wind developers in closed-door negotiations that dominated the final month of the 2011 Legislature.
The 18-17 vote killed what would have given alternative energy developers – including geothermal, digester gas and irrigation-canal hydroelectric projects – a 6 percent break on energy production equipment through 2014. Also, the action affects 18 wind projects in their advanced stages that would have sought to qualify for the tax break, which now expires June 30.
Sen. Joe Stegner, R-Lewiston, led the opposition, blasting the measure as nothing more than a deal to help specific companies.
“This has been crafted by people who will enjoy that rebate,” Stegner said. “It’s not been developed by policy makers with regards to whether it’s going to be good policy for the state. It’s been developed by the industries that will benefit.”
Tauna Christensen, a resident of Firth who helped found the group Idahoans for Responsible Wind Energy, said she was “elated” that the rebates weren’t extended.
“We already give them massive federal subsidies,” Christensen told The Associated Press after the vote. “If they can’t survive on those alone, they should not have any more of our taxpayer dollars.”
Idaho’s wind isn’t as strong as in Montana or Wyoming, but its geography west of the Rockies makes it easier for producers to ship their electricity to West Coast population centers. Even so, turbine developers say the Senate’s decision will make it tougher to convince them to select Idaho over neighboring states where tax incentives are available.
Armand Eckert, who is developing a 20 megawatt wind farm near Buhl, said small projects like his will be hurt by Thursday’s vote, because they already require more than a decade to recoup their investment. The rebate helped reduce the financial risk, he said.
“It has all the potential of killing not only my project, but the other projects out there,” Eckert said. “It’s hugely disappointing.”
Rebates aren’t as significant for geothermal projects as they are to wind, since the bulk of the cost of turning hot water into electricity comes from drilling, not from energy production gear that’s eligible for the tax break. Still, Dan Kunz, president of U.S. Geothermal in Boise, said Thursday’s vote sends a symbolic message about Idaho’s commitment to renewable energy.
“It’s a statement of how Idaho is supporting green energy, compared to states where there is no sales tax, such as Nevada, where there’s also a renewable portfolio standard,” said Kunz, whose company runs a 10 megawatt power plant near Malta on the Idaho-Utah border.
Wind energy – and Idaho’s role in promoting the industry – emerged as the key final issue of the 2011 Legislature.
Dozens of developer and utility lobbyists worked to convince lawmakers on a slew of issues swirling around the big, white turbines that have become an almost ubiquitous part of the southern Idaho horizon.
Residents of the Idaho Falls area such as Christensen sought a two-year moratorium on the projects, arguing Idaho needed time to consider their impacts on power rates, the environment and public health. When that was rejected, they returned with another unsuccessful bill that sought to forbid wind turbines near residential property without permission.
Meanwhile, wind companies such as Ridgeline and Exergy Development Group started the session brawling with utilities Idaho Power Co., Rocky Mountain Power and Avista Corp. over the rebates. The utilities insisted a proliferation of wind projects was already driving up their customers’ rates, while the wind companies argued losing the rebate would force the industry to go elsewhere.
As a result, closed-door discussions that eventually included Gov. C.L. “Butch” Otter’s office resulted in an agreement on a limited extension – in exchange for a key concession to utilities aimed at preventing future wind and solar projects from dividing up their large projects into 10 megawatt installations just to qualify for an attractive, state-mandated rate for their power.
The compromise seemed to be breezing through the Legislature, passing the House on a 40-29 vote on Tuesday.
After the Senate ended the measure’s run, Exergy lobbyist Roy Eiguren stood in the Capitol rotunda with Shell Wind Energy lobbyist John Watts, poring over the votes, scrutinizing the lawmakers who had turned the measure down – and trying to figure out just what went wrong.
Meanwhile, those who fought the rebates this session celebrated unrestrained.
“I can’t tell you how happy I am,” said Rep. Erik Simpson, R-Idaho Falls, sponsor of the failed moratorium.
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