May 20, 2016
South Dakota

Turbine talk: Wind farms face changes in technology, taxes

BY RANDY DOCKENDORF | Yankton Daily Press & Dakotan | May 18, 2016 | www.yankton.net

TRIPP – The Prevailing Winds energy project hasn’t broken ground yet, but manager Roland Jurgens is looking 10 years down the road.

That’s because a new state law will change the treatment of wind farm taxes for school districts during the next decade and beyond. The change has already generated objections from school districts receiving wind farm taxes.

“I don’t think the debate is done,” Jurgens recently told the Bon Homme County Commission.

The 2016 Legislature passed the law, which goes into effect July 1. In the Yankton region, the regulation affects not only Prevailing Winds but also the neighboring Beethoven wind farm in the Tripp-Avon area.

The Beethoven wind farm covers land in Hutchinson, Charles Mix and Bon Homme counties, Jurgens said. Prevailing Winds turbines would operate to the south, he added.

During the recent Bon Homme County Commission meeting, County Auditor Tamara Brunken reported on Beethoven wind tax revenue. She provided a breakdown of payments received by various entities.

Area school districts are among those receiving additional revenue from the wind farms, Brunken said. She pointed to the Tripp-Delmont school district as one of the beneficiaries because of the location of Beethoven wind turbines within its boundaries.

The revenue from area wind projects looks to increase in the future, particularly when Prevailing Winds comes on line, she noted.

Currently, school districts receive wind farm taxes and other outside income on top of their state aid payments. The wind farm taxes are treated as a bonus for schools hosting the energy projects.

However, the 2016 Legislature changed state aid calculations, Jurgens said. The new formula equalizes other revenue among all public school districts.

The six sources of “other income” include gross receipts tax on utilities, local revenue in lieu of taxes, county apportionment of revenue from traffic fines, county revenue in lieu of taxes, wind farm tax and bank franchise tax.

“For the first five years, schools will continue getting the same dollars generated by wind farms,” Jurgens told Bon Homme County officials. “For districts like Avon and Wagner, it will hold them harmless so they don’t see a decline in their dollars.”

The next five years will involve a “step down” process, he said. “It’s referred to as a glide path, and it’s supposed to let you make a transition during years 6-10.”

By the tenth year, school districts should see a rise in state aid offsetting any decreases in wind farm taxes, Jurgens said.

Schools can take temporary measures – described as an “alternative local need option” – to raise additional funds during the transition, he said. “School districts can opt out until the state aid catches up,” he noted.

Because of its size, the Prevailing Winds project requires approval by the South Dakota Public Utilities Commission (PUC), Jurgens said.

“We’re building Prevailing Winds so it has the potential of producing 200 megawatts. We need PUC approval for anything over 100 megawatts,” he said.

“We’re working on the state permit. Once we get it submitted, there will be more information down the road.”

Company officials are shooting to get their permit application submitted in 30 days, if possible, he said.

“We’re trying to get permission done before the end of the year,” he said. “We’ve received positive news so far, and we’ll keep plugging away to get things done. We’re looking at construction in 2017-18.”

The Prevailing Winds project, if constructed, would generate more than $100 million in economic benefits, according to company officials. The project would use less than 80 acres of land and would produce economic benefits for local landowners, local communities and the state, the promoters said.

PUC chairman Chris Nelson confirmed to the Press & Dakotan that Prevailing Winds hasn’t yet submitted an application. If a permit is sought, the criteria are provided in state law, he said.

The applicant must prove the proposed facility will comply with all applicable laws and rules. The facility must not post a threat of serious injury to the environment or the social and economic condition of current or expected inhabitants.

In addition, the facility must not substantially impair the health, safety or welfare of inhabitants. Also, the facility must not unduly interfere with orderly development of the region.

Besides the state permit, Prevailing Winds organizers said they would fall under a new Bon Homme County wind energy ordinance.

“I can’t speak to any county-level requirements,” he said. “We simply don’t track the requirements of each county.”

The PUC application process looks to include a public meeting in the project area – likely at Avon – followed by the PUC hearing in Pierre, Jurgens said.

The Beethoven and Prevailing Winds projects come at a time of great wind energy growth in the region, including Nebraska, Jurgens said.

“We have 1,000 to 2,000 megawatts of wind energy within 100 miles of here,” he said, adding it raises the issues of demand and transmission.

Wind energy developers are taking advantage of new technology that is rapidly changing the industry, he said. Also, sites are setting records across the United States because of wind patterns, he added.

The landscape of wind energy is constantly changing, with new issues always blowing in the wind.

With so many new developments under way, the Prevailing Wind organizers must stay flexible, Jurgens said.