Susan Smith, Community News Service Editor
PIERRE (CNS) – Gov. Mike Rounds proposed a tax break for wind energy projects Jan. 30 that he thinks will encourage companies to bring the industry to South Dakota.
The bill was drafted to accommodate a 40-megawatt project proposed by FPL Group, Inc, a subsidiary of Florida Power & Light Company.
Basin Electric Power Cooperative will buy the power generated and East River Electric Power Cooperative will distribute it to its East River member systems.
The wind farm will generate power from an estimated 27 turbines that will go up near Highmore. Wind farms begin generating power when the wind blows 9 mph and stop at 56 mph. They aren’t at peak production until wind speeds hit 33 mph.
Instead of centrally taxing the towers, Rounds said his bill would tax the towers and concrete bases as real property. Equipment connected with utilities like transmission lines typically are centrally assessed. Rounds said the generator and propellers on top of the towers wouldn’t be taxed.
“It’s a change in the way that we tax this wind energy type of a project … as an item that we think future wind generators may see as very appropriate for them to invest in South Dakota,” Rounds said.
Rounds said his proposal won’t result in reduced rates or change the way real estate is taxed. It will make South Dakota a more favorable location for wind energy projects.
“In doing so they have indicated to us that it provides them with the competitive advantage that they would find in other states and at the same time we keep our traditional real estate property taxation method in place and we don’t harm the other methods that we currently use for other types of utilities,” Rounds said.
When FPL announced its proposed project in the fall of 2002, it asked for a 70 percent break in property taxes. Rounds said his bill does that.
“We’re pleased with it [the bill], we’re putting it in and we believe it’s a work of consensus,” Rounds said.
An informal committee worked on the proposal for about two weeks.
Wind turbines generate power about 30 percent of the time, so a more stable power source is needed. An identical wind farm is planned for North Dakota. That state gives the 70 percent tax cut. Basin Electric has contracted to buy the power from both farms for the next 25 years. It costs about $1.5 million to construct one wind turbine.
“We are delighted that you’re moving that bill forward and again taking that proactive approach,” Ron Harper, the CEO of Basin Electric Power Cooperative, told Rounds.
“It’s a major step forward and we are very confident that this project will come to fruition,” he said.
#1.887488:2056383111.jpg:wind.jpg:Gov. Mike Rounds and Basin Electric Power Cooperative CEO Ron Harper brief members of the press about a bill that will provide a 70 percent property tax break to a 40-megawatt wind farm to be constructed near Highmore.:CNS