BOISE – A wind energy industry lobbyist pushing to extend Idaho’s sales tax rebate for alternative power developers made it clear: If the extension died, Roy Eiguren told lawmakers on April 7, so would hundreds of millions worth of his company’s projects.
“Your client would announce tomorrow that they are canceling those projects?” asked Sen. Joe Stegner, R-Lewiston.
“That would be correct,” answered Eiguren, lobbyist for Exergy Development Group.
The extension failed 18-17 in the final minutes of the 2011 session, but Exergy has retreated from its threat. James Carkulis, the company’s founder, now says he’ll follow through due to existing commitments, even if the rebate’s death wipes out profit margins from more than 100 megawatts of wind power he’s now hoping to install in Southern Idaho.
“It will be more than likely unprofitable for Exergy,” Carkulis said. “That said, we are a company that strongly believes in honoring our contractual obligations.”
Idaho’s rebate, originally passed in 2005, will now expire on June 30 – not just for Carkulis and other wind developers who emerged as a lobbying force over the last three months, but also for other alt energy wildcatters building landfill gas, anaerobic digesters and geothermal power projects.
The brinkmanship Exergy employed to keep it alive is nothing new to the Idaho Legislature, especially when millions are at stake.
Grocery chain Albertsons Inc. did it in 2005, threatening then-Gov. Dirk Kempthorne’s administration it would move elsewhere without lucrative concessions. Lawmakers went along, but Albertsons was sold just months later to an out-of-state competitor.
Stegner, who opposed the extension on grounds that companies should sink or swim in a free market, believes wind companies’ threats to blow out of Idaho may have been hyperbole to scare lawmakers. With wind developers, a majority in the Senate just didn’t blink.
“It’s logical that companies are going to tell us that they are vitally important,” Stegner said. “The responsibility of the Legislature remains one of a certain amount of caution and a certain amount of suspicion when it comes to these types of tax incentives.”
Eiguren told the Associated Press that “since the vote, (Carkulis) has been re-evaluating the projects.”
According to a Boise State University study last month, a 160-megawatt wind farm will qualify for $12 million in state tax rebates while generating $77 million in state and local taxes over 25 years. Wind developers argue this tradeoff benefits the public.
But Stan Hawkins, a former eastern Idaho Republican state senator who practically lived in Boise this winter to champion stricter limits on Idaho’s wind industry, argues turbine developers have expanded thanks to state and federal incentives like tax credits, cash grants and favorable depreciation rules.
These help make non-polluting wind projects more competitive with coal- or natural gas-fired electricity, but Hawkins insists the proliferation of tall, white turbines is driving up utility customers’ rates and encroaching on private property rights of neighbors who live in their shadow.
“This is creating a wealth machine for risk takers that foists the risk on ratepayers and taxpayers,” he told the AP. “Tax avoidance, essentially, that’s what this is all about.”