November 29, 2014

$650 Million Deal; Elwood, Ind. Wind Farm SOLD

Saturday, November 29, 2014,

$6 Million in Local Property Tax Abatement Benefits; $650 Million Deal —

The Madison County ALERT is first to report that E.ON Climate and Renewables has agreed to sell 80% of its ownership in the Elwood, Ind. wind farm to Enbridge, Inc., a Canadian energy delivery company.

The Dusseldorf, Germany based E.ON is the world’s largest electric utility, generating over $165 billion in revenues last year. E.ON began acquiring land rights in northern Madison County, eastern Tipton County, and southern Grant County nearly four years ago in preparation to build its 8,500 acre, mega windmill farm near Elwood. The farm became operational in late 2012 with 126 turbines.

According to the deal, Enbridge will pay E.ON $650 million for an 80% majority ownership interest in the Elwood farm and one also in Texas. The Elwood Wildcat location generates 202 MW of electricity and the Magic Valley wind farm near Harligen, Texas generates 203 MW.

During 2011, E.ON requested local property tax abatements from Madison, Tipton, and Grant counties, saying local tax abatements were needed to make the project viable. The Kokomo Tribune quoted Andy Melka, assistant development manager for E.ON saying “The tax abatement is necessary for the project to move forward.”

Approval of E.ON’s tax abatement requests became the subject of community debate in Madison and Tipton counties. E.ON failed to receive unanimous approval in either county. Funding for local schools is the largest recipient of property tax money.

In Madison County, E.ON pushed for and received the maximum tax abatement of over $6 million in a 4-3 vote before the Madison County Council.

According to THB at the time, then Council President, Larry Crenshaw (R) joined the Democrat council minority to approve the maximum abatement amount. When Councilman David McCartney (R) requested the vote be delayed for the council to conduct more research, Crenshaw charged that McCartney “hadn’t done his homework.”

THB reported that then Council Vice-President, Mike Phipps (R) said there are three standards to be looked at when considering abatement: job creation or retention; amount of income tax increase the project brings; and the increase in taxable assessed property value. He said the project failed on two of those three. “If E.ON doesn’t come, someone else will,” Phipps said at the time. “This is the ideal place for wind energy. I’m not going to second guess what they may or may not do if they don’t get the abatement, I just think if they choose not to come, someone else will.”

“It is a $6 million abatement, and taxpayers are going to see three permanent jobs and less than $15,000 in an increase to local income tax collection,” Phipps said. “You can’t justify the maximum abatement they requested.”

On Friday, E.ON said in a statement announcing the deal that “The two wind farms are located in areas with favorable wind regimes.” Eckhard Rummler, CEO of E.ON Climate said: “Thanks to our excellent project portfolio and our capabilities, there is a vital demand in the market for assets built and operated by E.ON.”

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