Month: August 2016

Industrial Wind is Estimated to Cost Oklahoma $5.2 Billion

Ending the Subsidies by July 1, 2017 will cut our losses by $3.7 Billion

Industrial Wind could cost Oklahoma up to $5.2 billion in Zero Emission tax subsides between now and December 2030, based on wind projects already planned for connection to the Southwest Power Pool.

Cash payments to wind companies for Zero Emissions payments are projected to be $88 million in the 2016 tax year, $123 million in the 2017 tax year.  The number could sky rocket to $524 million annually as early as 2019 if all the wind energy projects seeking interconnection to the Southwest Power Pool and the projects necessary to supply power to the Plains & Eastern Clean Line transmission project are completed.

“If we don’t end the Zero Emissions Tax credit by July 1, 2017, the impact to our state budget will be devastating,” said Frank Robson, Oklahoma Property Rights Association (OPRA) and WindWaste founder. “Ending this excessive subsidy July 1, 2017 will cut our losses by $3.7 billion.”

While the industry receives four different tax credits, the Zero Emissions credit is the most costly. Each megawatt of production capacity built in Oklahoma potentially costs taxpayers $19,710 in tax credits per year. The 10-year wind tax credit is refundable in cash from the state treasury for 85 percent of face value if no income tax is owed.  New wind facilities will be eligible for this credit if completed before December 31, 2020.  Payouts will continue until the end of 2030. 

“When the Zero Emission tax credit was established in 2001, it was projected to cost no more than $1.6 million per year.  The cost has grown well beyond its original intent,” added Rick Mosier, co-founder of Oklahoma Property Rights Association (OPRA) and WindWaste.  “If we don’t pass legislation this year to end the credits July 1, 2017, Oklahoma will be obligated for the next 14 years for billions that we simply can’t afford. All of our newly elected senators and representatives will have left the legislature due to term limits before then.  We have written Industrial Wind a blank check payable by Oklahoma Taxpayers.”

In addition to the Zero Emissions subsidies, industrial wind also qualifies for the three additional state tax credits: a five-year Ad Valorem (property tax) exemption (eligibility ends in 2017 and is paid out until 2022); a fifteen-year investment tax credit based on up to 2 percent of the cost of the qualified depreciable property (eligibility ends in 2017 and is paid out until 2032) and a Manufacturers Sales Tax Exemption.

The Future: Billions of subsidized energy is being sold out of state

The announced Plains & Eastern Clean Line transmission project is planned to deliver 4,000 megawatts of wind power from the Oklahoma Panhandle to Tennessee, Arkansas and states in the Mid-South and Southeast. It will take at least 8,889 megawatts of additional capacity at 45 percent efficiency (the industry standard) to produce the required 4,000 megawatts of electricity.  Construction is estimated to begin in 2017, and could begin delivering electricity in 2019. The project will cost Oklahoma $175.2 million per year in Zero Emissions tax credits and $1.75 billion over the ten-year life of the tax credit.

Electricity in Oklahoma is distributed by the Southwest Power Pool grid. The Southwest Power Pool reported 12,410 megawatts of new industrial wind projects seeking connection to the grid at the end of July, 2016, an increase of more than 6,000 megawatts in new projects since February. These new projects represent more than a 200 percent increase in wind farms in Oklahoma, putting the state at risk of $245 million in Zero Emission tax credits annually and $2.4 billion over the ten-year life of the credit.

“Oklahoma taxpayers are paying billions to subsidize cheap power for the benefit of people outside of our state,” Robson added.

According to the American Wind Energy Association, eight new industrial wind facilities came online in 2015 with 1,402 megawatts in rated capacity. Power purchase agreements for 57 percent of that capacity were with power companies selling electricity outside of Oklahoma.

Industrial Wind pays no taxes, but receives cash subsidies

Through a combination of refunds, rebates and tax credits, wind companies with no income tax liability are receiving cash subsidies. Tax credits earned after Jan. 2014 can be returned to the state and Oklahoma sends a check for 85 percent of the credits earned.  

“We are paying a multi-billion dollar industry that pays $0 in taxes to the state of Oklahoma, millions in refunds,” Mosier added.  “Those subsidies are paid directly from the same budget that funds education, healthcare and public safety.  At a minimum, I think most Oklahomans would agree that an industry shouldn’t get back more in tax refunds than it pays into our state.”

Oklahoma Property Rights Association, WindWaste

Founded by local businessman and property owner Frank Robson, the Oklahoma Property Rights Association (OPRA) is a non-profit organization dedicated to providing information about the local effects of industrial wind energy.  WindWaste is an affiliated group focused on educating citizens about the impact Industrial Wind has on property rights and Oklahoma’s budget.