OKLAHOMA CITY – New plans to cub tax incentives for wind farms are churning controversy, as green energy supporters say sudden limits could imperil the industry.
But newly elected Sen. Michael Bergstrom, R-Adair, who has filed a measure to cap annual payouts to wind farms at $25 million, said it’s time to face reality.
“As I started digging into it, I started realizing that this credit could bankrupt us,” he said.
The subsidies, known as zero-emission tax credits, are shaping up to be contentious as a $868 million budget shortfall will vex lawmakers who are struggling to fulfill promises made years ago to a then-fledgling industry.
“Where we’re at in our budget and revenue, we can’t afford to be paying out tons of money to that,” said Bergstrom, a former teacher, who noted he campaigned on the issue.
Critics of the tax incentives say they’ve worked too well, ballooning out of control as the number of wind farms and their energy output have blown away predictions.
One reason is that Oklahoma, unlike other states, didn’t cap incentives for the industry. As a result, a state with no wind farms in 2002 now has 30, mostly in rural areas in western Oklahoma. Still more are on the drawing board.
The state offers producers incentives for the first 10 years of a wind farm’s operation. Companies use that to lower tax payments, then cash in unused credits.
In 2014, the state 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 Oklahoma Tax Commission.
“That’s a whole lot of money that’s still sitting there that they could claim,” Bergstrom said.
All told, the state once offered four kinds of tax incentives to the industry, including exemptions on property and sales taxes. Two of those expired at the end of last year.
Bergstrom said he wants to use savings created by capping the tax credit to pay for $5,000 pay raises for more than 40,000 public school teachers, spread over three years.
But opponents of limiting the incentives say changing the rules is unfair to an industry that came to the state based on promises made by previous lawmakers.
The wind industry pays millions of dollars in property taxes, boosting rural school districts and local governments, said Laura Fleet, director of public policy for The Wind Coalition, a trade association.
“The bill in question will halt that economic progress, plain and simple,” she said in an email. “The Legislature must find a more feasible and equitable manner to implement the goal of Sen. Bergstrom’s legislation.”
Brent Kisling, executive director of Enid Regional Development Alliance, said the incentives’ returns outweigh the costs to the state.
Garfield County alone has seen a $500 million investment in wind farms. Every new turbine represents new dollars for public schools, he said.
As the industry matures, new service companies and ancillary businesses are coming to the area, bringing new jobs.
“You certainly wouldn’t want to reduce the incentives on businesses that are already existing in the state,” he said. But reducing the wind incentives, he said, could be seen as pulling “the rug out from underneath them.”
Kisling said he doesn’t object to capping wind or solar incentives, but he believes the limit needs to be much higher – perhaps as high as $100 million.
Richard Mosier, a member of Wind Waste, a Claremore group seeking to curtail credits for the wind energy, said his group applauds the proposed cap. But it doesn’t go far enough, he added. He’d like to see the credit ended for new development as early as July.
Under current law, producers are eligible for the credit as long as they’re in operation by Jan. 1, 2021.
Mosier’s group notes power purchase agreements indicate more than 60 percent of wind energy produced in Oklahoma leaves the state.
Taxpayers, he said, shouldn’t be subsidizing energy used elsewhere.
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