March 4, 2012
South Dakota

Eilers: New law may hurt local wind farm project

By Milo Dailey, BCP staff, Butte County Post, rapidcityjournal.com 4 March 2012

BELLE FOURCHE – The developer for a Belle Fourche area wind farm said South Dakota’s pro-wind farm bill now on the governor’s desk should have a lower threshold for refunds from state tax on construction costs.

Mark Eilers said that as it stands now, House Bill 1228 will hurt smaller projects such as the one northwest of Belle Fourche.

The Rapid City native said his concern is for the $50 million capital costs threshold before the refunds would kick in.

He said Friday, March 2, 2012, “Our Belle Fourche project is targeted at 20 megawatts and will fall under the $50 million threshold.”

Eilers, president of Renewable Solutions of Minneapolis, added, “I am not sure how the $50 million mark was set, but it will hurt the smaller wind projects in South Dakota.”

A spokesman in the office of Gov. Dennis Daugaard said Friday that the bill was on the governor’s desk, but that it would likely be one or two weeks before a decision whether to sign it.

“We continue to feel it is not a matter of ‘if it will be built,’ but rather a matter of ‘when it will be built,’” Eilers said.

Black Hills Power had taken over the project, but apparently dropped it in 2011 after the South Dakota Public Utilities Commission would not allow it to be added to their rate base prior to construction.

In many states, regulators first give a utility a certificate of need for a new plant. After it is built, the utility applies for rate increases to cover construction costs of a plant that regulators supported.

South Dakota law has a single step. Power companies build a power plant, and then ask for rate hikes to cover the cost.

The Black Hills Power filing for the first large West River wind development listed an estimated cost of $38 million.

The “construction-ready” project was developed by Eilers. The company conducted exploratory research and obtained easements from landowners on the 4,200-acre site.

“Small projects like ours continue to bring tremendous economic benefits and can be a better fit into the rural communities,” Eilers said.

The current bill that passed both houses of the legislature, Eilers said, would discourage smaller developments such as the one planned for Belle Fourche.

“That is exactly what would happen if this legislation were to become law,” he said. “From my perspective, small wind power projects, say 10 megawatt at $20 million, are a desirable goal for economic development in the state and should be encouraged with support legislation.”