September 8, 2011
South Dakota

Big utilities seek tax cuts for developing wind farms

BY BOB MERCER, American News Correspondent, www.aberdeennews.com 7 September 2011

PIERRE – Representatives from several large utility companies that run wind farms in South Dakota called for tax reductions Wednesday as one of the steps to encourage more wind-electricity projects in the state.

They made their suggestions to a special task force created by the Legislature to study South Dakota’s competitiveness in wind energy.

The panel plans to meet a final time Oct. 5 to develop recommendations that will be delivered to the governor and the Legislature.

“We will be here with our sleeves rolled up,” said Rep. Roger Solum, R-Watertown. He is the task force chairman.

South Dakota’s program that provides tax rebates for large construction projects expires Dec. 31, 2012.

The possible replacement is a discretionary grant program that takes effect in 2013 if voters statewide approve it the November 2012 general election.

Company officials for Iberdrola Renewables asked for a complete repeal of state sales and use taxes and state contractor excise taxes instead, noting there isn’t any guarantee under the grant approach.

Iberdrola’s Ben Hach said that without changes a 200-megawatt wind farm in South Dakota will face $25 million more in taxes over its lifetimethan it would in neighboring states.

One of the task force members is Pierre lawyer Brett Koenecke, whose clients include Iberdrola.

Jason Utton, a project director, suggested South Dakota restore the large-project rebate program and the tax incentives for wind projects that were in place before 2010.

All three discussed transmission as a barrier too. The task force was assigned by the Legislature to look at tax policy.

Basin Electric’s Ron Rebenitsch listed taxes as No. 8 in his presentation, just ahead of regulatory environment.

His top seven were transmission, federal incentives, power markets, renewable mandates, ability to access the MISO transmission grid that serves the Midwest’s urban areas, environmental regulations and local ownership.

Much of rural South Dakota where wind farms can be located is served by the Western Area Power Administration’s grid rather than the MISO grid, and electricity producers must pay access fees twice to put their power on WAPA in order to get onto MISO to reach consumer centers such as Minneapolis-St. Paul.