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Fight over wind power ramps up in Texas

Last fall, Keith Uhles, an engineer with the oil-and-gas firm CrownRock Minerals, invited other young West Texas professionals to join him at a popular Midland Mexican restaurant for a conversation about renewable energy subsidies.

The event promised to explore ways to reduce the “public costs and restore transparency and meaningful public participation” to renewable energy policy, according to the invitation. It was organized by the Midland Liberty Leadership Council – Uhles is the chairman – an arm of the Texas Public Policy Foundation, the conservative, influential Austin-based policy institute.

The dinner, held in the de facto capital of the Texas fracking boom, was part of a much larger effort to slow the progress of wind energy in Texas. An American-Statesman investigation has found that oil and gas and other fossil fuel interests, working in league with the nonprofit foundation, are funding an effort at the Capitol to stamp out state subsidies, pegged at more than $1 billion per year, that benefit renewable energy.

The Texas Public Policy Foundation, with annual revenue approaching $20 million, launched a barnstorming effort over the past year and recently has produced videos to criticize the renewable energy industry. This legislative session, according to Texas Ethics Commission filings, the foundation has employed more than 20 of its staffers as lobbyists, paying them as much as $395,000, to target renewable energy subsidies, among a range of bills that align with the group’s small government focus.

The initiative comes as wind energy has transformed over the last few decades from a boutique alternative energy source to a full-blown, big-business competitor to fossil fuels. At stake is the lucrative and volatile fuels market, especially for electrical power generation.

“When the wind is producing electricity, that does mean that something else isn’t, mostly coal and natural gas plants,” said Joshua Rhodes, a researcher at the University of Texas’ Energy Institute. And that “also means they are not getting paid.”

The latest anti-renewable-energy push, which recently brought the foundation to Georgetown to shine an unflattering light on that city’s green energy purchases, is an extension of a years-long effort that has already seen the foundation, with mixed success, beat back efforts to regulate the electricity market.

This spring, Texas lawmakers are considering a series of bills to prolong tax abatements that have been a boon to the wind industry – as well as measures, supported by the foundation, to end them altogether. The outcome, it appears, will depend on the political clout of the foundation and its allies – who face resistance not only from wind company executives but also officials from heavy industry that benefits from the same tax break programs.

Bill Peacock, the foundation’s vice president for research, says his group is “looking to bringing transparency to the entire” tax abatement program that benefits renewable energy.

But the organization is unwilling to identify the source of the money behind its efforts to end renewable energy subsidies.

“They’re elected officials – they’re using my money, your money,” Kevin Roberts, the foundation’s executive director, told the Statesman. “This is a private foundation. I would defend just as vociferously the Sierra Clubs, the ACLUs,” when it comes to not disclosing donors.

As for the foundation’s long relationship with fossil fuel interests, he’s unapologetic about how it powers the think tank’s agenda.

“We’re successful and raise a lot of money,” he said, “and if oil and gas companies gave us more money than they do, we’d be really dangerous to the American left.”

Oil and gas ties

The Uhles event was scheduled during a full-court press by the Texas Public Policy Foundation, and reflects its deep ties with fossil fuels. The CEO of CrownRock is Tim Dunn, an oil-and-gas man who is vice chairman of the foundation’s board and who has long bank-rolled the scorched-earth conservative political action committee Empower Texans and some of the most conservative lawmakers at the Capitol.

The previous evening, Sept. 19, the organization hosted an event in Midland called “Renewable Energy Subsidies: A Bad Deal for Texas.” Among the panelists were Mark McBride, a Republican state representative from Oklahoma, who led the legislative fight there against renewable energy subsidies – and whose chief campaign patron has been Harold Hamm, a billionaire Oklahoma oil-and-gas executive who helped bankroll a group called the Windfall Coalition, which campaigns against wind energy incentives and proposed wind farms straddling Oklahoma and Texas.

“He’s looking at his billfold every morning, thinking, ‘They’re taking this much money out of my pocket every day,” McBride told the Statesman about Hamm.

At roughly the same time, other prominent industrial players were working with the foundation to boost the anti-renewable effort in Texas.

Several people involved in lobbying at the Capitol said the chief lobbyist at Koch Industries, which operates oil refineries in Texas and has opposed wind energy, brokered a meeting at the Texas Public Policy Foundation with manufacturers, other oil and gas operators and chemical companies to discuss corporate subsidies.

The Charles G. Koch Foundation, whose mission is “to advance social progress and well-being through the study and advancement of economic freedom,” contributed $1.9 million to the Texas Public Policy Foundation in 2017, according to IRS records filed by the Koch Foundation.

Related Koch family foundations gave hundreds of thousands of dollars to the foundation for research and education work over the last 15 years.

A spokesman for Koch Industries declined to comment.

Asked whether Hamm is a donor to the wind energy fight it is waging, Texas Public Policy Foundation general counsel Rob Henneke told the Statesman he would not comment on who donates to the organization.

Hamm and officials at his company Continental Resources did not return requests for comment. Uhles and Dunn declined to comment.

Roberts said the foundation put out papers opposing renewable energy subsidies as long ago as 2005.

“That preceded any conversations with anyone in the oil industry,” about donating to work on the project, he said.

“Donors come to us and say ‘I really appreciate work you’re doing here,’” said Roberts, who said the foundation does not allow donors to dictate what issues it should take up.

“We are first and foremost a research institution,” he said. “To take the next step and explicitly state or imply that we’re working on XYZ issue only because person ABC is giving us money is 180 degrees from the truth.”

Tax abatements

More wind power is generated in Texas than in any other state. In 2018, nearly a fifth of electricity – 18.6 percent – used in Texas was generated by wind power.

The growth of Texas wind power dates to a 1999 mandate by the Legislature that utilities get a portion of their power from renewable sources as part of a grand compromise to deregulate the state’s electric industry.

The subsequent success of the industry, helped along by a key federal tax credit now being phased out, has made it a target. In recent years lawmakers with ties to fossil fuels and with the support of the Texas Public Policy Foundation have tried – unsuccessfully – to nix any renewable energy mandate or tax incentives.

Generally, those efforts have been beaten back by environmentally-minded Democrats and rural Republicans whose county tax bases benefit from the wind turbines.

But last session, in the state’s first push back on wind generation, lawmakers agreed to restrict wind turbines near military bases.

That law prohibited wind farm owners from receiving a property tax abatement if their wind turbines are located within 25 nautical miles of a military aviation facility located in Texas.

The bill’s author, state Sen. Donna Campbell, R-New Braunfels, said the measure addressed concerns that the turbines could interfere with radar and flight paths.

Wind company officials cried foul, arguing the bill was a way to cut their projects out of tax benefits. They argued the military, through the Department of Defense, already had methods of determining obstacles near its facilities.

Testifying for the bill were members of the Texas Public Policy Foundation and a Corpus Christi business group; it was opposed by environmentalists and wind power groups.

In a sense, that measure was a test balloon for the bigger fight this session over two lucrative tax incentive programs, named for their place in the tax code:

• Chapter 312 abatements exempt all of part of the increase in property value from taxation for as long as a decade.

• Chapter 313 abatements limit taxes for 10 years for school district maintenance and operations in exchange for property improvements and job creation.

The Legislature established the programs in 2001 because, according to the law’s advocates, the state’s heavy reliance on property taxes was making it difficult to attract large industrial projects, for which property taxes are a major expense.

But during the past decade, many of the beneficiaries of the programs have been renewable energy companies, most of them wind projects, as rural parts of Texas, hungry for economic activity, have made use of it.

And even as the tax incentives provide a boost to the tax base in rural counties, they come at a cost to all Texans. A 2016 Statesman review of the 313 abatement program, which is set to expire in 2022 unless the Legislature renews it before then, found that the state would have to pay schools $1.45 billion to cover the tax benefit received by more than 175 renewable energy projects.

Each company receiving a tax break is supposed to create at least 10 jobs. But the Statesman investigation found that the vast majority of renewable energy projects, which require far fewer people to operate than a manufacturing facility, have won waivers that allow them to sidestep that state requirement.

The 312 abatement is set to expire this year unless the Legislature extends it. A 2018 report by the comptroller found that the program was taking $25.5 billion off the property tax rolls from 2016 through 2027. Eleven percent of the businesses receiving tax breaks are in the energy sector, including wind projects in more than a dozen mostly rural counties.

All forms of energy benefit from some kind of government subsidy. According to a 2016 report by the U.S. Congressional Budget Office, roughly three-fourths of the projected cost of federal tax preferences for energy in 2016 – $10.9 billion – was for renewable energy and energy efficiency. Fossil fuels accounted for an estimated $4.6 billion in tax preferences.

A 2018 analysis of state financial support for electricity generation in Texas, by University of Texas researchers, found that the state doles out energy subsidies worth nearly $3 billion annually. Including a massive build-out of transmission lines to bear wind power from rural areas to the state’s cities, wind receives 70 cents out of every dollar of state-level subsidies; not counting that transmission-line build-out, wind gets as much as 20 percent of state-level subsidies.

But folding in tax credits and deductions, preferential tax rates, and other handouts that include fuel extraction, fossil fuels receive approximately twice as much annual support in Texas as renewable energy overall, according to the analysis.

Still, Texas Public Policy Foundation officials say the state renewable subsidies are out of control, and are calling for a three-month waiting period for counties, cities and other taxing entities to finalize tax abatement agreements “to allow for citizen input” and are demanding that state lawmakers “stop local governments from hiding the details of the incentives they offer businesses” – though local officials already hold public hearings and they say that contract details need to remain secret for competitive reasons.

“When you incentivize one area of generation, you’re disincentivizing innovation,” state Sen. Kelly Hancock, R-North Richland Hills, said at a panel discussion in January hosted by the foundation.

Hancock has filed a bill requiring the state Public Utility Commission to examine the prospect of eliminating renewable energy subsidies.

The foundation hired a blue-chip Austin public relations agency, Crosswind, to promote some of its anti-renewable energy work and dispatched a recent Texas State University graduate, Cutter Gonzalez, to travel the state to talk with Texans about the abatements. In late February he was in Pawnee, to talk with residents “about what they can do to stop crony tax deals.”

In March, the foundation launched a six-figure ad buy on talk, country, and contemporary Christian radio channels in Austin and other major Texas media markets to criticize “massive corporate property tax breaks for renewable energy projects.”

And the foundation produced a video shown at its events and posted on YouTube – “End Renewable Energy $ubsidies” – that makes wind turbines out as a frightening menace looming over rural Texas. The videos involve older Texans, at home, anxious about the noise of the turbines next door.

“We’ve enjoyed living in the country,” says one woman, who is not identified. “It’s peaceful, it’s quiet it’s serene. It’s no longer like that here.”

One of the wind turbines, another unidentified person says, “was squealing. It was just horrific. I was here by myself a while. I just screamed.”

Fighting back

Wind energy companies have geared up this legislative session as well, hiring at least 20 lobbyists, paying them as much as $1.2 million, as they seek to keep subsidies in place. Apex, a Charlottesville, Va., company, brought Rep. Hugh Shine, R-Temple, out to Fort Hood to show off a solar energy project that’s tied to a Panhandle wind energy project that benefits from the tax abatements. And joining with chambers of commerce from Lubbock to Pharr to Lamesa, the wind companies have hired a PR company of their own and launched a coalition called Powering Texas.

The coalition website claims the power generated by wind turbines in 2017 was enough to power 6.2 million homes, and that $42 billion in capital investment supports 24,000 jobs.

Wind energy groups are jabbing back at the foundation.

“In their obsession w/ attacking energy incentives (for renewables, not their donors), some groups neglect key facts,” Jeff Clark, president of the Advanced Power Alliance tweeted in March, during a hearing on a bill by Rep. Jared Patterson, R-Frisco, that calls for the Public Utility Commission to examine waysfederal tax credits for renewable energy production distort the power market. The bill was developed with input from the Texas Public Policy Foundation, according to Peacock, the foundation vice president.

Texas energy of all sorts, Clark argued, “is supported by wide variety of incentives, subsidies, exemptions, liability caps, loan guarantees, capital access programs, and much more. One small group in #TXLege wants to study renewables only. Show trial.”

Instead, Clark said he supports a subsidy study of all forms of energy.

With big energy companies getting into the wind business – ExxonMobil and Shell both have wind power interests – the effort to end renewable subsidies faces an uphill climb. The Texas Oil and Gas Association, which tends to follow the tune of big corporations like Exxon, is on board with a renewal of the Chapter 312 abatement program. Exxon also benefits from 312 agreements at some of its refineries, according to records at the state comptroller’s office.

“Chapter 312 is an important economic development tool for local leaders in Texas,” Oil and Gas Association President Todd Staples told the Statesman. “We know legislators will debate the various aspects of the program and we agree that accountability and transparency are important. We need for lawmakers to renew (the program) for Texas to remain competitive with other states for major industrial projects that undoubtedly benefit us through job growth, investment, and sales tax growth.”

Other business trade associations have come out in favor of the incentive programs.

The Texas Association of Manufacturing and representatives of other industries “met with TPPF before the session to voice their concern regarding the Policy Foundation’s ongoing campaign against critical economic development tools that are at the core of keeping our state globally competitive,” Tony Bennett, president of the manufacturers group, told the Statesman.

Bills that would extend both tax abatement programs are scheduled for debate and a preliminary vote in the Texas House on Monday.