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Wind energy gets tax break

A bill that would give tax breaks to wind energy projects and the Big Stone power plant has been sent to the governor’s office for his signature.

The House on Thursday voted 52-16 to pass a proposal that would refund a portion of the construction taxes paid on wind energy projects that cost $50 million or more to build – $45 per kilowatt of capacity.

“South Dakota, right out of the chute, has a competitive disadvantage for attracting these large wind projects,” said Rep. Roger Solum, R-Watertown, who was chairman of a legislative task force that met last year to consider the tax structure for wind projects in the state.

The median size of the 11 wind projects in South Dakota is 51 megawatts, or 51,000 kilowatts. If the bill passed Thursday becomes law, a project of this size – which could cost $100 million or more to build – would receive $2.3 million.

“The critical time in a (wind) project is during its early developmental stages,” said Ron Rebenitsch, executive director of the South Dakota Wind Energy Association.

The legislation also would refund half of the construction taxes paid on a $489 million project to upgrade the emissions equipment at the 475-megawatt Big Stone coal-fired power plant in northeast South Dakota. The upgrades will allow the 36-year-old plant to comply with new federal regulations limiting smog and mercury emissions.

The plant will get a new dry scrubber, a baghouse and an activated carbon injection system that should reduce its mercury emissions by 90 percent, the target set by the Environmental Protection Agency.

Under the bill, Big Stone would get back half of the estimated $20 million to $30 million in taxes incurred by these upgrades. The project’s cost estimate does not factor in this tax break, said Chris Kling, spokeswoman for Otter Tail Power Co., the plant’s majority owner.

House Minority Leader Bernie Hunhoff urged his colleagues to reject the bill because it had not received a proper hearing.

“We’re talking about real, serious money here – what, $10 to $15 million?” he said. “Nobody seems to know exactly how much the rebate will be, which is alarming in itself.”