When is an ultimatum not an ultimatum? How about in the closing days of the 2011 legislative session, when a wind energy producer went all-out to lobby to extend a multimillion-dollar sales tax rebate?
Pull the plug on the rebate, said Roy Eiguren, a lobbyist for Exergy Development Group, and the company will pull the plug on hundreds of millions of dollars worth of projects.
That was April 7. To put it charitably, the winds have changed direction since then.
Exergy founder James Carkulis now says his company will follow through on Southern Idaho wind projects it has on the drawing board – even though, as he told The Associated Press, the projects will be “more than likely unprofitable.”
Eiguren, meanwhile, was left with some explaining to do. “Since the vote, James has been re-evaluating the projects,” he told the AP.
The larger question may be whether legislators are re-evaluating their position on tax breaks for alternate energy projects.
One of the last issues to come before the 2011 Legislature, a bill to extend the rebates passed the House on a close 40-29 vote, only to die in the Senate on an 18-17 vote. As a result, the rebates, passed in 2005, will expire on June 30.
This reworked rebate bill was a compromise crafted by lawmakers, the wind industry and utilities that have been uneasy about the proliferation of wind projects – so the bill’s defeat was an end-of-session surprise. But because of that narrow defeat, it would be no surprise if the tax rebate issue resurfaces in 2012. That’s especially true considering the big dollars at stake.
Bill sponsors like to point to cost-benefit analysis on the rebates. According to Boise State University research, a 160-megawatt wind farm, eligible for $12 million in rebates under the failed bill, would generate $77 million in state and local taxes over 25 years. A small, 2.5-megawatt hydro project – also eligible for the renewable rebates – would have received $187,718, while generating more than $1.3 million in state and local taxes.
We supported extending the renewable energy rebates because we believe the state needs to keep all of its power-production options open. We also believed, as sponsors argued, that phasing out the rebates would drive a nascent wind power industry to pursue projects elsewhere.
Idaho still needs wind power. But while Exergy does not speak for the entire Idaho wind industry, the company’s abrupt about-face undermines the developers’ case for rebates. Not to mention undermining one company’s credibility at the Statehouse.
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