The Senate Energy and Public Utilities Committee on Tuesday heard from representatives of school districts, the wind energy industry and county officials in support of SB232, introduced by Sen. Chris Widener, FAIA as a market signal to renewable energy companies – wind and solar – that Ohio has a simplistic tax structure for development.
The bill introduced would establish a process to allow companies to apply to the Ohio Air Quality Development Authority for an exemption from the state tangible personal property tax (TPPT) and instead pay a flat, annual fee of $6,000 per megawatt of installed capacity for the life of the facility. To be eligible for this arrangement, the company must be under construction by 2011, operational by 2012 and must commit to create jobs in Ohio. (See The Hannah Report, 2/24/10.)
“SB232 will create a competitive tax structure for renewable energy projects, such as wind development. It will generate clean renewable electric energy for thousands of homes and businesses and pay millions in tax revenue to our schools and local government,” said John Hohn, vice president of economic development for Hardin County Chamber and Business Alliance.
Hohn said the Hardin County wind farms will create needed construction and manufacturing jobs and establish permanent operational and maintenance jobs.
Dayna Baird, representing American Wind Energy Association’s (AWEA) 2,000-plus members, said Ohio has become a focal point for wind developers for reasons beyond its strong advanced energy portfolio standards (AEPS).
“Ohio was ranked in the top 20 states for wind resource by the Department of Energy – in other words, we have good wind,” Baird said.
She explained that while Ohio has good transmission lines, a strong manufacturing base, and a centralized siting process through the Ohio Power Siting Board (OPSB), one obstacle for developers is Ohio’s tax structure for public utilities, including wind, even at small scale.
Currently, Baird said, capital costs for equipment are taxed, but not the cost of fuel.
“Fuel is a significant portion of cost for traditional utilities. For wind energy, fuel, or wind, is free and almost all of the capital costs for a wind project lie in the equipment, creating a disparity from the start.”
Baird also agreed that the fixed $6,000 per MW annual payment in lieu of the current tax structure would clearly place Ohio in competition with neighboring states, while at the same time provide revenue transparency and consistency to local taxing jurisdictions.
Jim Bowser, representing Upper Scioto Valley Schools, said the six wind companies who have proposals currently pending at the Ohio Power Siting Board, has leased 480,000 acres in his and surrounding counties. He said there is $220,000 in additional income going to the residents of that land.
Bowser said with Widener’s bill, concerns were put to rest thus far as to the impacts of reduced tax revenue for school districts and that “25 percent of something is better than 100 percent of nothing. They need to plan as we need to plan.”
“When the governor announced in his State of the State Address his plan, schools got pretty upset,” said Anthony Ehresmann, Champaign County community advocate, Ohio Farm Bureau Federation member and candidate for Ohio House.
Sherri Haushalter, vice president of finance and administration at Robinson Fin Machines, said her company has been working with General Electric on wind turbines and makes the primary surface heat exchanger for wind projects.
“Because we are the sole source for this turbine component, we have seen our business grow with the industry,” Haushalter said. “We are excited about seeing actual project development here in Ohio, especially in this portion of the state where the company is located.”
Members of the committee also heard from a few wind energy companies, including Everpower, JW Great Lakes Wind LLC, and Horizon Wind Energy. All of these wind energy developers have proposals either approved or pending with the OPSB.
While these companies have plans to move forward developing wind energy in Ohio, they said that a competitive tax environment is still needed to ensure a continued development of the state’s wind energy industry.
Roby Roberts, director of government affairs for Horizon Wind Energy, said, “The tangible personal property tax fro a wind farm in Ohio is four to five times greater than in neighboring states. These rates make building projects in Ohio uneconomical and discourages investment.”
Roberts said that some developers have explored Enterprise Zones or using Ohio Air Quality Development Authority financing bonds as a way to make projects economical but these were not designed for large wind projects.
“The legislation also ensures that wind farm developers will create a minimum number of jobs per project, upgrade roads to at least their pre-construction condition and participate and contribute to local emergency responders and services,” Roberts added.
Jack Shaner of the Ohio Environmental Council provided written proponent testimony, which said the council gives the bill a rating of “three frogs,” which is reserved for legislation that will help resolve a serious problem that threatens Ohio’s environment and/or demonstrates significant leadership for the state’s future.