Month: April 2016

Wind debate: Incentives blowing a hole in Oklahoma’s budget

By Jeffrey McDougall Published: April 29, 2016

Overly generous. That’s how the head of one of the nation’s largest wind energy trade associations recently described the wide array of tax incentives that the state of Oklahoma has given to the wind
industry.

Among our nation’s four largest wind energy-producing states — Texas, California, Iowa and Oklahoma — Oklahoma’s package of tax credits for wind energy development is excessive and unrivaled. Oklahoma checks almost every possible box, as we are the only state to offer a zero-emission tax credit, an ad valorem tax exemption, an investment tax credit and a manufacturers sales tax exemption, all with no cap on the subsidies wind energy developers receive from state government. Oklahoma is also the only state where subsidies are paid on energy production as opposed to sales, and we are the only one of those states where wind energy development isn’t overseen by state regulators.

The result of an unregulated and uncapped wind industry has been detrimental to state government and to Oklahoma’s economy as a whole. Lawmakers facing a budget crisis of historic proportions lose another $200 million each year because of tax credits for wind energy development listed above. In “Wind chill?” (News, April 24), Oklahoma Secretary of Finance Preston Doerflinger put it in simple words when referring to the overly generous tax incentives for wind, calling them “a huge liability at a time we just can’t afford it.”

As these overly generous subsidies are being called into question, the only leg the wind industry is purportedly standing on is that it is helping local schools. This could not be a more disingenuous argument. According to the wind industry’s own research, state reimbursements — not wind companies — are responsible for the vast majority of “wind industry payments” to schools.

Yet the wind industry is taking credit for ad valorem reimbursements the state makes for the first five years of wind developments, which is also the highest valuation period for these projects. If the state has been reimbursing county school districts for wind’s ad valorem taxes, then this hasn’t expanded the total funds to school districts at all — it has just forced the state to transfer dollars from the General Revenue Fund that otherwise would have been earmarked for school districts across the state to those rural districts near wind facilities. Robbing Peter to pay Paul does nothing to help
education.

Production tax parity on all forms of Oklahoma energy would prevent the state from picking winners and losers when it comes to energy production and, in the case of wind energy, prevent an untaxed, oversubsidized and unregulated energy source from further eroding the foundation of the Sooner State economy.

As Doerflinger pointed out, the wind subsidy “worked like a charm, and now it’s time for it to go.” It is time to end the blank check that wind development has received from state government and let wind start paying its share of energy taxes.

McDougall is president of Oklahoma City’s JMA Energy Co. and chairman of the Oklahoma Independent Petroleum Association.

Read on NewsOK

Tulsa World Editorial: Big Wind sucks money from the state

Imagine the outrage if the petroleum industry got tax incentives for drilling wells in Oklahoma, but never paid any taxes on the energy it took out of the state.

Imagine if that reverse taxation threatened to take Oklahoma’s already troubled fiscal situation even deeper underwater.

Imagine if all the oil and most of the jobs went to other states, and Oklahoma only got the derricks and the environmental problems the industry created.

All of that is true … but not about the petroleum industry.

Big Wind, a highly profitable industry dominated by out-of-state (and sometimes off-shore) companies, is taking the state’s wind energy and its money and leaving us little more than whirling windmills.

Last year, the Legislature phased out property tax exemptions to wind farms, but the state is still hemorrhaging money on special, zero-emissions tax credits.

The zero-emission tax credits are refundable, which allows Big Wind to amass more in credits than they owe in taxes and make a profit on the backs of the Oklahoma taxpayers. The sweetheart deal is also uncapped, meaning there is no limit to how much it could cost the state.

Every penny Big Wind sucks out of the state is money that won’t go to teachers, roads or public safety.

Windwaste, an advocacy group pushing for a more equitable taxation, says under the current tax law, recent wind farm generation growth announcements and projects in the works could cost the state more than $2.4 billion over 10 years.

Much of that money is going to foreign companies to create energy that is already sold to utilities outside of Oklahoma. The whole thing creates relatively few permanent jobs here.

Here’s the solution: First, moderate the tax incentives on wind energy. Cap the costs, and end the refundable corporate welfare. That leaves reasonable incentives in place for companies to create wind farms.

Then, put a severance tax on wind-created energy, just like the severance taxes on oil, natural gas, coal and timber. Wealth is being extracted from the state’s natural resources, and those raking in the profits need to pay their share of the cost of state government.

We love wind energy. Who doesn’t. It’s relatively clean, renewable and abundant in our state. We want more of it created in Oklahoma and elsewhere.

And we continue to advocate for more robust taxation of the petroleum industry, just as we did last year when that industry’s severance tax was being debated in the Legislature.

The petroleum severance tax is too low, and it ought to be raised. But at least the petroleum industry is paying a severance tax. Big Wind pays none.

It’s a bum deal for the state hidden in the camouflage of clean energy, and with Oklahoma facing an enormous budget hole we can’t afford it any longer.

via Tulsa World