Legislation to end the state’s renewable energy production tax credit will likely be heard next week at the Oklahoma Capitol.
The credit is available for solar, geothermal and hydroelectric power generation, but wind is by far the most prevalent industry that claims the incentive. Wind energy makes up about 90 percent of all renewable resource production in Oklahoma.
Two bills that would end the credit were scheduled for a hearing in a House subcommittee Wednesday. After the meeting began, however, the chairman announced that the bills were withdrawn from his committee and would be assigned to the House Appropriations Committee for consideration as early as next week.
The bills would either draw down or immediately end companies’ eligibility for the credit, which costs the state more than $65 million per year in unpaid tax revenue.
State Rep. David Brumbaugh, author of House Bill 2246, said the cost is much more than officials first had in mind when they created the credit. He also said that wind generation has exceeded the goal set by former Gov. Brad Henry that renewable energy should make up 15 percent of the state’s power generation by the year 2015. It’s now at 20 percent, Brumbaugh said.
“They knew this day was going to come,” Brumbaugh said of the wind industry. “Let’s deal with this, but let’s deal with this in a way that’s incremental, it’s fair, it’s reasonable.”
His bill, if adopted, would begin limiting the amount that power generation companies could claim for wind energy produced until 2021, when the credit amount would be reduced to zero.
“We’re winding it down. We’re saying there’s no free lunch anymore,” said Brumbaugh, R-Broken Arrow. “And when you’re at 20 percent (of production) here and you’re supposed to be at 15, you’re not an industry in infancy anymore.”
The other legislation, House Bill 2272, would limit the production claims to just $7 million and limit eligibility to already-constructed wind farms.
Jeffrey Clark, president of the Wind Coalition, criticized the bills as an attempt to promise an industry one thing and do another.
“The concept of capping these incentives sends a message to investors in all industries that if the state of Oklahoma offers you an incentive to invest in the state, beware,” Clark said. “They may turn around and pull back some of what they committed to you as an investor after they get the benefit.”
As lawmakers consider how to fill the $878 million budget shortfall in next year’s budget, one of the most popular ways to generate revenue has been to eliminate the wind production tax credit. Clark said that argument is a red herring.
“Wind tax credits are a very small part of the budget problem,” he said. “When this economy in Oklahoma crashed, we were one of the few industries investing.”
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