House adopts tax policy that wind developers say they need 

Most industries don’t like new taxes, but developers of wind energy projects welcomed one Thursday that would be imposed on their turbines.

They just weren’t crazy about the rate established in a bill that was endorsed by the House. They said they were glad the proposal would offer predictability about what their tax bills would be from one year to the next, but they would seek a lower rate when the bill is considered in the Senate.

“It’s a tax certainty,” said Andrew Perchlik, executive director of Renewable Energy Vermont. “It allows wind farmers to know exactly what their tax is going to be. We feel the number the House is coming up with is too high.”

The tax, established in a broader bill to encourage development of more renewable energy projects across the state, was the subject of a lot of behind-the-scenes back and forth between two House committees earlier in the week.

The goal was to tax wind generators based on the amount of electricity they produce, not on their real estate value, to help pay for schools.

“This is only for complicated electrical generating equipment, which can be very expensive and complicated to assess,” said Rep. Joyce Errecart, R-Shelburne, who brushed aside suggestions it was a subsidy to the industry. “This is no tax break here. This is tax simplification.”

Advocates said the wind generator tax was not unprecedented. The Vermont Yankee nuclear power plant is taxed on its electrical output rather than on its real estate value. That’s because there are no other nuclear plants in the state to which to compare it for setting a property value. There aren’t many wind generators, either, so advocates said the best solution would be a tax on the electricity generated.

“If there wasn’t an agreement, they would probably find themselves in court, like we did with the dams,” Perchlik said.

It’s difficult to assess the value of hydroelectric dams, too, and towns often have found themselves in court trying to defend the values they have set.

The big debate became what rate to set for the tax, which would replace the statewide property tax for the wind farms. The Natural Resources Committee proposed a rate of a third of a cent for every kilowatt hour produced. The tax-writing Ways and Means Committee proposed two-thirds of a cent. They compromised at about a half-cent, which advocates said was too high.

Gov. Jim Douglas, no fan of industrial wind farms, said he believed the higher tax was inappropriate.

“I’m not a fan of industrializing our ridgelines, but I don’t think we ought to tinker with our tax rates to discourage it,” Douglas said. “I believe the more appropriate level is a third of a penny.”

Advocates hope the Senate will go with the lower rate when it considers the bill, which also encourages greater agricultural energy production and expands consumers’ ability to generate electricity on their own and share it with the electrical grid.

The Senate is working on its own energy initiative, which like the House bill, would tie in to lawmakers’ goal to address global climate change. The Senate gave preliminary approval to a bill that would expand Efficiency Vermont, the utility that works with consumers to reduce their electricity use. The Senate bill would expand the utility’s portfolio so it could help to pay for improved insulation and other weatherization.

Advocates say improved weatherization would mean less propane, heating oil and other home heating fuels would be used and, therefore, less climate-changing carbon would be released into the atmosphere.

By Ross Sneyd
Associated Press Writer

boston.com

5 April 2007