Governor Kristi Noem’s administration has changed state government’s policy on reinvestment payments to renewable-power projects.
State Economic Development Commissioner Steve Westra summarized the different approach in a statement he issued this week:
Wind and solar energy projects are important factors in expanding renewable energy solutions. We support the renewable energy industry, but when we consider state incentives for such projects under the reinvestment payment program, it is important our incentive reflect the project’s overall impact. Going forward, we will be focused on ensuring incentivized projects, including the end-users of that power, create substantial job opportunities and economic activity in the State of South Dakota.
Steve Westra, South Dakota Economic Development Commissioner
His statement came after the Governor’s Office of Economic Development staff recommended denial of a reinvestment payment application from Triple H Wind. The state Board of Economic Development met in executive session and then voted 8-3 in public to deny it Tuesday. Westra wasn’t on the teleconference but some of the GOED staff were.
Last year, members of the state board approved six wind farms for reinvestment payments – including one twice – that totaled more than $36 million to be provided from state government back to the projects. The board didn’t deny any.
Engie filed the application. The project’s lead developer, Casey Willis, said Friday the amount of the application was confidential but was consistent with awards other wind projects received from South Dakota’s program for their overall amounts of capital investment.
Willis said he didn’t expect the board’s decision.
“Given that this is an incentive program that has been available for a while now, the fact that the Triple H Wind project meets the program’s renewable project requirements, and the fact that tax payment requests like Triple H’s have been granted by the state for many wind projects, the decision to deny our application in its entirety came as a surprise,” Willis wrote in an email.
He said Triple H is intending to refile a new application for reconsideration as allowed by state law. “Our new application will fully address any articulated concerns of the Board of Economic Development in denying our initial application,” Willis said.
As for Westra’s statement – also issued by email – Willis had this response:
“We are surprised that Commissioner Westra’s statement did not make note of the information submitted in our application that the Triple H Wind Project would employ approximately 200 people during construction and create 17 to 19 operational jobs, which we believe would directly benefit Hyde County. “
Willis said that on an annual basis the project would generate approximately $1.5 million to landowners, $1.3 million in property taxes, operational payments to the state Office of School and Public Lands for easements and other indirect benefits associated with increased use of local services.
“We believe that the Triple H Wind Project will be beneficial to Hyde County and the state as a whole and that those benefits are entirely consistent with other wind projects located in South Dakota that received approvals for their reinvestment payment applications over the past year,” Willis said.
Republican Kristi Noem defeated Democrat Billie Sutton 51 percent to 48 percent in the November general election. She took office January 5. Republican Governor Dennis Daugaard could not serve a third consecutive term. The South Dakota Constitution limits governors to two consecutive terms.
Daugaard’s economic development commissioner was Scott Stern from September 1, 2016, through December 1, 2016. Noem, a former legislator and a four-term member of the U.S. House of Representatives, chose Westra, a former legislator from Sioux Falls.
The reinvestment payment program was part of the Building South Dakota legislation that a coalition of state lawmakers passed in 2013. Governor Daugaard didn’t like the bill, but it included at his request the concept of the reinvestment payment program.
Lawmakers gave the state board the authority to administer the reinvestment program and determine the percentages of state sales and use tax, if any, that should be repaid to large projects.
A factor the board considers is the likelihood the project would have located in South Dakota.
The state Public Utilities Commission approved the Triple H project in July. It will have up to 92 turbines spread across several townships three miles south of Highmore in Hyde County.
The commission’s news release noted: “Upon completion of the wind facility, it will supply Walmart with 150 megawatts of energy and 48 megawatts will be sold to a confidential institutional buyer. The remaining 52 megawatts will be sold on a merchant basis.”
A commission map updated through August shows wind projects in South Dakota
Wind projects that received reinvestment payments last year were:
Coyote Ridge and Deuel Harvest in December;
Phillip Wind in October;
Prevailing Wind Park in June and September;
Crocker Wind in July; and
Willow Creek Wind in June.
Westra’s arrival marked other changes. He announced in May that sales and use tax rebates would be available for livestock programs.
Noem had previously moved the state Value-Added Finance Authority to GOED from the state Agriculture Department. The authority makes agricultural-financing decisions.