Outgoing legislator calls wind energy production tax a big mistake 

What a difference a few years make. In 2007, the Idaho Legislature unanimously passed and the governor approved House Bill 189 removing the property tax for wind projects, replacing it with a 3 percent production tax.

The legislation was a huge mistake, according to outgoing Rep. Erik Simpson, R-Idaho Falls. In fact, subsidized wind energy projects are now under fire in the state from a number of individuals and groups.

Rep. George Eskridge, R-Dover, sponsored HB 189, telling the Senate Local Government and Taxation Committee that it was a needed bill, citing that the cost of turbines over the last year had resulted in decreased incentives for the development of wind farms.

During testimony in the Senate committee at the time, several legislators had questions about the bill, but ultimately supported it, passing it unanimously. Sen. Curt McKenzie, R-Nampa, spoke in favor of the bill, saying wind energy had a lot of potential in the state. He later carried the bill on the Senate floor.

The House Revenue and Taxation Committee notes show no discussion on the bill, only that it was passed unanimously in committee and on the House floor.

The bill was supported by the Idaho Association of Counties, Association of Idaho Cities, Idaho Tax Commission, individual county treasurers and county commissioners, according to Eskridge.

Simpson said the ultimate result of that bill’s passage is a detriment to the counties. “They’re being shortchanged on tax revenue at the detriment of every other property taxpayer.”

Simpson believes the production tax should either be eliminated or greatly increase it and use the income from that to offset the utility rate increases due to wind power.

The rate increase issue has been raised by Idaho Power Company. The company met with other energy companies and the Idaho Public Utilities Commission (PUC) earlier this month for three days to discuss a proposal by Idaho Power to take into account whether an alternative source—in this case, wind—is reliable, production can be raised or lowered based on demand and then the overall question on if the power is even needed.

Simpson believes the PUC is likely to make a decision on these issues in September. He feels the PUC will rule in favor of Idaho Power and the utility companies, to some degree at least. “I think the PUC, at least in part, is going to rule in favor of Idaho Power. I think the utilities have made a real good case” that ratepayers are paying for and subsidizing alternative energy that is not needed or wanted.

Simpson said while some people may see the wind industry as being on life support in the state because of a potential decision on rate pay by PUC, he disagrees. “You can’t say that wind is dead in the state. Rate pay is just one part of a bigger problem, and that being the whole wind industry.”

Former PUC commissioner Joe Miller, according to a story in the Idaho Statesman, called Idaho’s Power’s proposals “extreme and radical” aimed at “crippling future development and punishing existing power producers.” Miller, who represents Ridgeline Energy, a wind farm owner, said if the PUC adopts some of the Idaho Power recommendations future development of the industry would cease and hurt the financial viability of current projects. He said it was regrettable that the PUC’s own staff was backing those proposals.

Kristine Sasser, an assistant attorney general who is a part of the PUC staff, responded that the state is not required to ensure that renewable projects are financially viable.

Tauna Christensen, who works for the Energy Integrity Project in Idaho, says she fully supports Idaho Power’s position, specifically about wind energy.

But, she is not as sure as Simpson about what the commission will rule. “I have no idea what the PUC will do about this issue. In the past year, they have made some good decisions regarding wind energy and they have stood up to Big Wind on behalf of Idahoans. As I have sadly learned, sometimes it is not about doing what’s right, it’s about what is politically expedient.”

During the 2012 legislative session, Simpson proposed a two-year moratorium on any new wind projects breaking ground so that the issue could be studied more, a move Christensen supported. “I believe a pause—like the moratorium proposed by Rep. Simpson during the 2012 legislative session—would have been a good step in educating people, especially lawmakers, on this industry. I viewed it as a way to protect us from the federal government. This mess was originated by the federal government.”

Christensen and Simpson are on the same page as well about ratepayers footing the bill for something not of their doing, wind energy development. “The end consequence, that of increased power rates, is detrimental to Idahoans as a people and our whole economy,” says Christensen. “Our state legislators have only been hearing from one side, those with their hand in the money pot. It’s time for Idaho to look at our own facts and not rely on what is being fed to them by those standing to profit.”

While Simpson has led the discussion against wind energy for the past couple legislative sessions with support from Christensen, another ally is a former state legislator, Stan Hawkins of Ucon.

Simpson, Hawkins and Christensen all point to subsidies as one of the main problems with the wind energy industry. Hawkins and Simpson both told IdahoReporter.com that without the massive amounts of government subsidies, the wind industry wouldn’t even exist. Hawkins said it’s part of a failed environmental policy by President Barack Obama. “If the subsidies hadn’t been in place you wouldn’t see one wind turbine anywhere in this country. The ratepayers and the taxpayers have basically underwritten Obama’s environmental policy with regard to cap and trade, that’s the bottom line on this.”

Simpson said there are a myriad of alternative energy projects, but he noted one of particular concern, the 1603 Grant Program, which is part of the American Recovery and Reinvestment Act of 2009. Basically, for installing specified energy property, some of the cost (up to 30 percent) will be reimbursed by the federal government. The numbers are staggering.

Since the program started in 2009, some $13 billion has been awarded to projects for alternative energy. Of that money, the number of solar projects reimbursed versus wind is a ratio of nearly 59 to 1. However, the total dollar amount for wind projects, $9.216 billion, consumes more than 70 percent of the subsidies.

The total amount in Idaho received is $303 million, with just under $301 million going to 34 wind projects.