OKLAHOMA CITY – Lucrative incentives for wind farms are again spinning up controversy, as industry supporters argue for continued support from the state while critics question whether Oklahoma can afford it.
“Right now, Oklahoma is kind of ground-zero for debate over wind policy, wind subsidies,” said Lance Brown, executive director of the Partnership for Affordable Clean Energy.
Brown on Wednesday was promoting the group’s new report, “Oklahoma Depends on Wind,” which argues for the industry and advocates for tax incentives meant to encourage more farms filled with towering turbines.
The subsidies are expected to become a contentious issue for lawmakers next year, in light of a budget shortfall projected to be between $300 million and $400 million.
Critics of the wind incentives say they’ve worked too well, ballooning out of control as the number of wind farms and their production have blown away all predictions.
Oklahoma, unlike other states, hasn’t capped its wind incentives.
As a result, a state with no wind farms in 2002 now has 30, mostly in rural areas in western Oklahoma.
The state produces the fourth-most wind energy – more than 5,700 megawatts. More farms on the boards are expected to increase production by another 13,000 megawatts.
The state now gives producers a production-based incentive for the first 10 years of a wind farm’s operation. Companies use the incentive to lower tax payments, then may cash in unused credits.
In 2014, Oklahoma paid more than $59.7 million to wind producers – nearly triple what it paid two years prior.
Wind producers, meanwhile, reported generating enough energy to have claimed as much as $113 million, though it’s unclear why they didn’t claim it all, according to the state Tax Commission.
All told, the state offers four kinds of tax incentives to the industry, including exemptions on property and sales taxes. Two are set to expire at the end of the year.
The money that could’ve been claimed by wind producers might have been used to give teachers pay raises, said Richard Mosier, a member of Wind Waste, a Claremore group that seeks to curtail the wind energy’s credits.
“We’re not getting the benefit from our dollars spent … to justify the tax credits,” he said.
Mosier noted that power purchase agreements show more than 60 percent of the wind energy produced in Oklahoma leaves the state.
Taxpayers shouldn’t subsidize power used elsewhere, he said.
“I think it’s a poor use of the public treasury,” Mosier said. “Oklahoma needs the money, and they don’t need to be spending it on things that aren’t returning on their investment.”
But Brown’s group, which is based in Alabama and has advocated for industry-friendly policies since 2009, said its analysis shows Oklahoma receives more than it puts in.
“We’ve always said energy sources should be built where they work the best. This is a perfect example of this,” he said, adding that reneging on promised incentives will force wind producers to change their business models.
Less incentives, he said, “would either make their projects more expensive, or they would have to charge more for their purchase power agreements.”
Brown said subsidies have helped producers hedge against unstable prices, and allowed energy companies to be less reliant on fossil fuels.
Ultimately Oklahoma’s wind farms are expected to contribute about $1 billion to local governments and about $1.2 billion to public schools over their lifetime, according to his group.
Each year producers pay about $22 million in royalties to land owners, he said.
“As long as that is a good bargain for the Oklahoma customer, then we think it’s an investment that should be allowed to kind of run its course,” he said.
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