Oklahoma Gov. Mary Fallin signed two bills Monday that end the last large tax credit for wind generation and tighten the requirements for registering private-use airfields near wind turbines.
Fallin, who called for an early end to zero-emissions tax credit in her executive budget, said the wind industry was an “essential piece of my ‘all of the above’ energy strategy.” She said Oklahoma has become a national leader in wind energy.
House Bill 2298, by Speaker Charles McCall, R-Atoka, and Senate President Pro Tempore Mike Schulz, R-Altus, ends the tax credit for new wind development July 1. The incentive previously had a sunset date of Jan. 1, 2021.
“The zero-emissions tax credit was key to the growth of wind energy in Oklahoma, and I’m grateful to the industry for their ambitious successes, as well as their willingness to work with the state to address our challenging budgetary circumstances,” Fallin said in a news release.
The earlier sunset closes the program for new projects July 1, but projects that qualified before then will be able to take the incentive for up to 10 years. The incentive, worth 0.5 cents per kilowatt hour of electricity generated by wind, can be rebated at 85 percent of its value if a company has no taxable income.
As Oklahoma’s wind industry has grown in the past 15 years, so has the zero-emissions tax credit. Last year, about 25 percent of the state’s electricity came from wind generation, and the state ranks third in the nation for the amount of wind capacity with more than 6,600 megawatts.
Oklahoma paid out almost $60 million in zero-emission rebates in the 2014 tax year, according to the Oklahoma Tax Commission. That’s up from $18 million in 2012. The commission is still calculating the rebates for the 2015 tax year.
In a statement, McCall said the zero-emissions tax credit and other incentives allowed the wind industry to grow exponentially. He said HB 2298 could save taxpayers up to $500 million in the next 10 years.
“We need structural budget reform in Oklahoma, and one way we can get closer to that goal is to end tax credits that are simply unaffordable in our current revenue climate,” said McCall, who credited the wind industry with recognizing that the credit was unsustainable.
Solar incentive stays
While HB 2298 closes the incentive to new wind developments, in keeps it in place for utility-scale solar, geothermal and other zero-emissions technologies until Jan. 1, 2021. Keeping solar in the program was among the recommendations by the state’s Incentive Evaluation Commission when it released a report on the incentive last year.
Jeff Clark, president of The Wind Coalition, a regional trade group, said Oklahoma’s wind incentives have served their purpose well, attracting billions in private investment to rural areas, lowering electricity prices, creating new jobs and providing property tax revenue for rural school districts.
“As an industry, we are proud that these incentives worked so well for the benefit of Oklahoma, but we recognize that, as an industry matures, incentives should be examined and adjusted to reflect that growth,” Clark said in a statement. “We hope that other industries will recognize the state’s challenging fiscal situation and follow our lead.
“If if chooses to do so, Oklahoma can be a leader in the energy development that will drive our nation’s economy in the decades ahead. That includes natural gas, wind energy, solar power and energy storage.”
The Windfall Coalition, a group founded by oil and gas executives, praised the signing of HB 2298 but repeated its call for a tax on wind generation. The coalition hasn’t detailed how such a tax would work, or if it would apply only to wind generation exported from the state.
“Oklahoma needs to enact a production tax on wind, similar to that levied on oil and natural gas development, to ensure our state does not continue enriching its competitors at the expense of its taxpayers,” said Cliff Branan, executive director for the Windfall Coalition.
Branan said lawmakers should also end a manufacturing sales tax exemption used by wind developers. Senate Bill 334, by Sen. David Holt, R-Oklahoma City, would have ended that sales tax exemption but didn’t advance earlier this session.
End to ‘shamports’?
Also Monday, Fallin signed Senate Bill 593, which spells out how oil and gas companies and mineral owners should be notified of new wind developments and turbines. It makes some refinements to a wind turbine siting law passed in 2015.
SB 593, by Schulz and McCall, gets rid of a loophole that allowed property owners to register a private-use airport, putting them under the state siting law for wind turbines.
Wind industry representatives said some property owners were using the siting law to register what they called “shamports.” The Oklahoman last year documented the rise in registration of private air strips. Some of the registrants weren’t licensed pilots and said they were using the law to push back individual turbines from their property.
SB 593 tightens the turbine siting law by getting rid of the private-use airport designation. It keeps the siting requirements for wind turbines to be more than 1.5 nautical miles away from schools, hospitals and public airports.
Michael Teague, Oklahoma’s secretary of energy and environment, said HB 2298 and SB 593 were needed to ensure the state’s renewable energy development stays strong without hampering long-term budget stability.
“Wind is a key piece of the governor’s ‘all of the above’ strategy, but we have to do it the right way,” Teague said. “That includes the notification requirements, the setbacks and the tax incentives.”
WindWaste, a group founded by Claremore real estate developer Frank Robson, said it was disappointed in the passage of SB 593, calling it “further proof that this industry doesn’t have Oklahoma’s best interests at heart.” WindWaste and the Oklahoma Property Rights Association pushed for the original wind turbine siting law in 2015.