The Truth About Big Wind’s Proposal to the Oklahoma Legislature

On January 19, the Wind Industry announced a proposal to the Oklahoma legislature for altering wind taxation policies.  The proposal suggests eliminating ad valorem taxes on Wind Generation facilities in exchange for paying a gross production tax or an electrical generation facility tax.

While the proposal purports to offer a solution to the state’s budget shortfall, it is further evidence of the industry’s practice of misconstruing facts and communicating half-truths in an effort to reduce their contribution to Oklahoma.

Here are the facts.

1. The Ad Valorem Proposal is a Scam 
Prior to 2017, all wind projects qualified for a 100 percent ad valorem tax exemption for 5 years from the date they first produced electricity.  The Oklahoma constitution requires the taxes that should have been paid to counties, schools, fire districts, etc. be reimbursed by the state General Fund.  In other words, Oklahoma taxpayers pay the Wind industry’s taxes for the first five years of operation.  Through the efforts of many concerned citizens and legislators, this government handout ended December 31, 2016. However, wind farms operating prior to that date continue to receive the full five-year exemption.  Seventy-two percent of the wind facilities operating in the State were still exempt from ad valorem taxes in 2017, costing the state more than $50 million. The last payout on this plan should occur in 2022.  Now that Big Wind is finally beginning to pay its own property taxes, they want to eliminate that cost under the guise of helping the state budget.  Don’t be fooled. Eliminating the tax now means many wind companies will never pay any ad valorem tax.

2. The Claim it Achieves Parity is Nonsense
The Proposal is made under a claim of “parity” with the oil and gas industry.  However, oil and gas companies pay personal property taxes on the equipment used to produce the wells, as well as a gross production tax on all hydrocarbons produced from the well.  This tax is paid in lieu of an ad valorem tax on the value of the wells and hydrocarbons in the ground. The Ad Valorem Tax on Wind Facilities is similar to the personal property tax paid by oil and gas producers because neither owns the land from which the energy is produced.  Eliminating the ad valorem tax in exchange for instituting a production tax on wind-generated electricity in the name of “parity” is nonsense because oil and gas already pays taxes on both production and personal property.

3. The Cost of Wind Subsidies Greatly Exceeds any Savings from the Proposed Changes in Taxation
What can’t be overlooked is that Big Wind still receives three massive tax subsidies from the State of Oklahoma:  Zero Emissions Tax Credit for facilities in operation before July 2017, expected to cost the state $930 million over the next 10 years, Ad Valorem Exemptions for facilities in operation before December 31, 2016, expected to cost the state more than $150 million over the next four years and an exemption from all sales taxes on the materials used to build the wind facilities. The proposed new taxes pale in comparison to the costs the state incurs for continuing to subsidize this industry.