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O’Brien County learns wind energy cost figures  

Credit:  By LOREN G. FLAUGH, Correspondent | Storm Lake Pilot Tribune | March 2, 2017 | www.stormlakepilottribune.com ~~

As the O’Brien County Assessment of Wind Energy Conversion Property ordinance requires, MidAmerican Energy Company (MEC) recently reported to the assessor’s office the final net acquisition cost figure for the recently completed and commissioned O’Brien Wind Energy Project located in northern O’Brien County along Highway 18 near Sanborn.

MEC said that with the completion of the Ida Grove wind farm in Ida County and the O’Brien Wind Energy Project, MEC wrapped up work on two major projects adding 551 megawatts (MW) of wind generation capacity for customers.

“We are proud to do business in a state that leads the nation in the percentage of energy generated from wind,” said Michael Fehr, vice president, resource development for MEC. “Wind is a key element of our balanced approach to energy generation because it’s a renewable and clean source of energy.”

As part of MEC’s Wind X expansion program the Iowa Utilities Board (IUB) approved on August 21, 2015, 104 turbines are in the O’Brien Wind Energy Project that generate 250 MW of wind energy while 134 turbines are in the Ida Grove project that generate 301 MW of wind energy.

In its written order approving Wind X, the IUB set a cost cap at $1.61 million per MW for the completed project as a whole. This per MW cost figure was lower than the cost figure of $1.638 million per MW that MEC proposed. MEC reported that the Wind X project will provide more than $115 million in landowner payments each year and more than $160 million in property tax revenues over the next 30 years.

O’Brien County Ordinance #19 states that MEC must provide the County Assessor’s Office figures showing the total net acquisition cost of the O’Brien Wind Energy Project by Feb. 1st of each year once the last turbine is commissioned. Ordinance #19 incorporates a graduated property tax schedule where the first year is taxed at a 0% rate, the 3rd year is taxed at a 10% and that tax rate increases by 5% each year until the 7th year where it is capped at 30%.

Without a wind energy conversion property tax ordinance, the state centrally assesses all wind energy infrastructure. With this ordinance, the County determines the property tax revenues according to the wind farm’s net acquisition cost figure that MEC reports to the assessor’s office.

MEC recently filed the net acquisition cost figures with the county assessor, Lowell Dykstra. MEC reported that the net acquisition cost for the 250 MW wind farm came to $366,397,578. By dividing the 250 MW rating of the wind farm into that net acquisition cost figure, this shows that the per MW cost of the wind farm at $1.46 million, well under the IUB cost cap of $1.62 million.

So, the recent report from MEC indicates that the per megawatt cost of building new wind energy is still coming down, according to what MEC is experiencing. In 2008, the per MW cost for building new wind energy was at $2 million per MW. By 2014, the per MW cost had fallen to $1.8 million per MW.

The recently commissioned wind farm has 104 Siemens wind turbines spread out over three townships. By dividing 104 into the net acquisition cost figure, this shows the installed cost of each wind turbine $3,399,382. MEC said the cost for the wind farm interconnection substation in Lincoln Township came to $12,756,250.

So, with the 3rd year property tax rate calculated at 10%, Dykstra calculated that the property tax revenue from the wind farm will bring in $824,395 to the County’s tax coffers. In the fall of 2024, when the wind farm is fully assessed at 30%, MEC’s property tax payment to the county will total $2,473,184. The 30% rate is then capped for the balance of the wind farm’s useful life, perhaps another 20 years.

The school districts where turbines are located stand to benefit the most from the property tax revenues from the wind farm. However, this also means that what these school districts receive in state aid for education could be reduced due to the substantial wind farm property tax revenues going towards local education funding, Dykstra explained.

The three townships of Center, Lincoln and Franklin will also receive funds due to the property tax revenues from the wind farm. Northwest Iowa Community College will also benefit financially due to the property tax revenues that will be allocated towards the community college.

By adding both net acquisition costs for the $820,195,459.00, 500 MW Highland wind farm and the $366,397,678.00, 250 MW O’Brien wind farm together, then MEC’s wind energy investment in O’Brien County totals approximately $1,186,593,137.00 since August of 2013.

In the fall of 2024, when all 318 wind turbines are fully assessed at 30%, MEC’s yearly property tax payment could approach a staggering $8,173,378 per year. According to the auditor’s office, the Valero Renewable Fuels Co., ethanol production facility at Hartley is the next largest property tax paying entity in the county after the two wind farms at $645,280.

In an early article published after the final cost figures for MEC’s 500 MW Highland Wind Farm Project were reported to the county assessor’s office, O’Brien County auditor Barb Rohwer spoke to the potential benefit from the property tax revenues that flow into county coffers from the construction of a wind farm.

Rohwer said, “Building a wind farm cannot guarantee there will be property tax reduction, but it will mean property tax relief. What this will do for other people’s property taxes, to relieve their taxes, this is going to be quite an impact. What we can do for repairing roads and bridges and other stuff is going to be phenomenal.”

In a much more recent Jan. 24, 2017 O’Brien County supervisor’s discussion related to these future wind farm property tax revenues, current Board Chair Tom Farnsworth updated the other supervisors on the substance of an idea being kicked around at recent O’Brien County Economic Development Corporation (OCEDC) meetings.

Farnsworth said, “One of the ideas that was brought up over at a recent OCEDC meeting was that with all these windmills in the county-when all is said and done-is that we are going to have quite a bit of taxation revenues from the windmills.

“It was suggested that a committee be set up made up of representatives from rural, city and maybe someone from the board of supervisors to see if there’s anything else we could do with the wind farm revenues within the county to help, besides using it for reducing property taxes. I don’t think setting up a committee is a bad idea. It’s not binding or locked in or anything. ”

Farnsworth went on to say this idea was also brought up at a recent Farm Bureau meeting and they would like to have some representation on any committee. “I don’t think it’s a bad deal,” Farnsworth added.

Speculation over several suggestions of different services and entities was voiced where specific funds could be targeted. One idea mentioned was to use future wind farm property tax revenues to improve EMT and ambulance services in the county. No one spoke up in total opposition to the OCEDC suggestion of forming such a committee.

Source:  By LOREN G. FLAUGH, Correspondent | Storm Lake Pilot Tribune | March 2, 2017 | www.stormlakepilottribune.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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