Archive for Wednesday, January 21, 2004

Bill could ‘kill’ wind energy efforts in state

Committee to consider eliminating property tax break for equipment

January 21, 2004

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Efforts to create a Kansas wind energy industry could be blown away by a proposed change in tax law, supporters say.

"It would kill our efforts. I can say that unequivocally," said Kyle Wetzel, president of Lawrence-based K. Wetzel & Co., a consulting firm that works with manufacturers of wind energy equipment.

This morning, the Senate Assessment and Taxation Committee is to begin debate on a bill that would repeal a property tax exemption intended to encourage wind energy companies to build wind farms in the state.

The provision, in place since 1998, exempts from property tax all equipment used in the production of wind energy. Sen. David Corbin, a Towanda Republican who is chairman of the Senate committee, wants to remove the exemption after controversies over proposed wind farms have erupted in his district, which includes part of the Flint Hills.

Specifically, Corbin said he objected to the exemption being permanent.

"When people hear the exemption is forever and ever until the wind blows the earth away, they usually say 'wait a second,'" Corbin said. "That doesn't work that way for anyone else."

The tax breaks can be significant, given the amount of equipment on a typical wind farm. The state's largest wind energy operation, in Gray County, has 170 turbines and cost about $100 million to build.

Corbin said such wind projects should be subjected to a typical tax abatement process voted on by city or county commissioners. Most of those abatements are limited to 10 years.

But supporters of wind energy see the removal of the exemption as a major threat to an emerging industry in the state.

Wetzel, the Lawrence-based consultant, said repealing the exemption was "opposite" the direction the state needs to be headed. He said other states in the Midwest were more aggressively attracting wind developments.

And the results are beginning to show. Kansas installed no new wind power generation in the past year, while 10 other states in the Midwest installed a total of 1,300 megawatts of new wind power generators. Kansas has a total of 114 megawatts of wind power on line.

A tractor passes under one of the 200-foot-tall wind generators
near Montezuma. Montezuma is the home of the Gray County Wind Farm,
which cost about $100 million to build. State legislators today are
debating a bill that would repeal a property tax exemption for wind
farms.

A tractor passes under one of the 200-foot-tall wind generators near Montezuma. Montezuma is the home of the Gray County Wind Farm, which cost about $100 million to build. State legislators today are debating a bill that would repeal a property tax exemption for wind farms.

"We're starting to get a reputation as a state that wind power developers don't want to come to," Wetzel said. "Businessmen don't like uncertainty and that is what we have in Kansas right now."

Corbin said harming the wind power industry wasn't his intent with the proposed change.

"I'm not against wind energy," he said. "I'm looking at it from a tax point of view. Every time you exempt someone from the property tax rolls, someone else has to pay."

Wetzel, though, said the bill was largely driven by opposition to proposed wind farms in the Flint Hills. The largest proposal is an 8,000-acre farm near Beaumont that could have as many as 100 wind turbines.

"They want to kill wind energy in the Flint Hills but if it dies in the whole state, then that is fine with them too," Wetzel said.

Corbin's bill was introduced during the 2003 legislative session but never brought to a committee vote. He said he scheduled the bill for debate by committee members because he wanted to gauge its level of support.

Sen. Mark Buhler, a Lawrence Republican, said he was one committee member with questions about eliminating the exemption.

"Wind power is definitely an emerging industry and we need to be pretty careful about negatively affecting that," he said.

Corbin said that if the bill moved forward, a provision may need to be added to allow the handful of wind farms already operational to continue receiving the exemption.

The bill is SB 85.

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