OKLAHOMA CITY – State tax incentives for wind energy producers were created when the industry was in its infancy and may need to be re-examined in light of lawmakers’ concern over their growing cost, the head of an industry trade group told members of a Senate panel on Tuesday.
The incentives have worked well over the last decade, luring 30 wind projects to 15 Oklahoma counties, providing jobs in often economically depressed rural communities and putting cash in the pockets of landowners, said Jeff Clark, executive director of the Wind Coalition.
“I would argue that for the $120 million invested to date … I think you’ve hit a home run,” Clark told members of the Senate Finance Committee.
But as the number of wind farms has skyrocketed, so has the projected impact of the tax incentives on the state treasury. Oklahoma went from three farms with 113 turbines a decade ago to more than 30 projects and 1,700 active turbines today.
“We want to work with you as an industry to keep Oklahoma competitive for investment and alleviate some of the anxiety you face as a result of the budget implications,” Clark said.
A five-year property tax exemption for wind assets is projected to cost the state $210 million over the next five years, according to an estimate from the Oklahoma Tax Commission.
A second subsidy called the zero-emissions tax credit paid directly to wind companies based on how much power they produce is projected in the same estimate to cost the state $80 million, but OTC Director Tony Mastin told legislators Tuesday that number could potentially be much higher.
“I’d say this estimate is probably pretty low,” Mastin said.
Calculating precise estimates based on recent collections is difficult, Mastin said, in part because the tax credits were temporarily suspended in 2010 and 2011 as the state recovered from the recession. Companies still accrued the credits and began using them on 2012 tax returns, artificially inflating the numbers and making it difficult to project a trend, Mastin said.
The Oklahoma Property Rights Association, a group pushing for more restrictions on the wind industry, presented estimates that show the tax credits could cost more than $108 million in 2013 and 2014 alone.
“There is no cap or control over the amount of tax credits the state will become obligated for,” said Rick Mosier, president of a Claremore real estate development company and a member of the association. “It’s a blank check that it’s up to you to decide if we can afford.”
A similar legislative study was held earlier this month in the House, and the Oklahoma Corporation Commission has launched a fact-finding mission into the wind industry at the request of legislative leaders. That inquiry is focused on potential regulations of the industry, including where wind farms can be constructed and what kind of notice they must provide nearby landowners.