SALEM – Wind, solar and ethanol projects were among the dozens of renewable energy projects referred for investigation to the Oregon Department of Justice by auditors of a discontinued state tax credit program, according to a list released last Friday.
The list was compiled by Marsh Minick, P.C., a private firm that conducted an audit of the Department of Energy’s Business Energy Tax Credit (BETC) program under contract with the Oregon Secretary of State’s Office.
That audit was released in early September.
Auditors didn’t find “direct evidence” of fraud, they wrote in their audit report, but said they found “circumstantial evidence” suggesting suspicious activity in a number of BETC projects.
According to the documents listing those projects, there were several projects that exceeded limits on eligible costs.
Oregon statutes limited eligible costs to $20 million per renewable energy facility per year.
Representatives of two groups identified as having projects exceeding eligible costs in the report, Klondike Wind Power and Pacific Ethanol, on Friday defended the projects that received the tax credits.
Klondike Wind Power, known as PPM Energy, Inc., later becoming Iberdrola Renewables, Inc., which then was renamed Avangrid Renewables, had four projects. According to the report, each of them were treated as distinct facilities, qualifying them to receive four times the eligible costs.
Art Sasse, a spokesman for Avangrid Renewables, said the following about the Klondike Wind Power projects in a statement late Friday:
“We’re happy to work with the DOJ to show that we followed both the letter and spirit of the law whenever we utilized the BETC. We built four distinctively different wind farms at our Klondike complex, with each phase of construction representing a different time frame, with placed in service dates that are years apart, with various models of turbines and different customers for each wind farm.”
Pacific Ethanol had two project files in Boardman, Ore., one for ethanol production, and another for ethanol distribution, according to the report.
The auditors noted that the two projects had “similar yet different names,” were located at the same site address and had the same applicant. Those factors raised “red flags” under state administrative rules.
Together the projects had eligible costs totaling $29 million, according to the auditors’ report, exceeding the $20 million limit.
Paul Koehler, a spokesman for Pacific Ethanol, said that the Boardman plants continue to operate.
“I think the Boardman, Ore., ethanol project is a very good example of the use of the Business Energy Tax Credit,” Koehler said.
Cascade Grain Products, Willow Creek Energy and the Portland General Electric Company were also identified as companies with a project or projects that exceeded eligible costs.
Media representatives of these three companies – or companies that subsequently acquired them – could not be immediately reached for comment late Friday.
Cascade Grain Products had two projects: an ethanol production facility and an ethanol distribution facility.
Willow Creek Energy, a subsidiary of Invenergy LLC, had a project that was approved for a tax credit with eligible costs of $22 million, as did Portland General Electric. The specific nature of these projects was not identified in the auditors’ report.
Solar World AG had two projects that exceeded eligible costs. Those two projects had originated as five projects, according to the report. The five original projects were merged into two.
A spokesman, Ben Santarris, said that his company operates according to the “highest ethical and legal standards.”
Auditors stated that in emails, state officials agreed to approve eligible costs that differed from what was permitted under state statute.
The auditors also identified several “projects of concern” in the list released Friday by DOJ, but noted that its list of “concerning” projects was not comprehensive.
“Due to the volume of projects where red-flag activity was observed, investigative efforts were motivated by perceived risks,” the auditors wrote. “This should not be considered a comprehensive list or a complete investigation.”
There are 15 headings in that section of the report, which list individuals or companies, some of which had multiple projects.
A joint legislative committee has been tasked with making recommendations for the future of the department. Their next public meeting is Nov. 4.
“We’re committed to working with the DOJ on any next steps they take,” Oregon Department of Energy Spokeswoman Rachel Wray said in a statement Friday.
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