At the recent AWEA Ohio Wind Energy Summit, Dayna Baird Payne, President of Government Edge, a lobbying group, presented an overview of the last five years since the RPS took effect in Ohio. “Most don’t know that it passed almost unanimously, only one vote in opposition,” says Payne. “However, we noticed a little problem after passage in the state’s slightly outdated tax code. It never contemplated the existence of wind farms and renewable or alternative-energy projects. Wind farms were covered under the tax code as a public utility. When assessing the tax burden, we recognized that Ohio’s tax code resulted in a per megawatt tax of $40,000 to $45,000. Nobody would build a wind farm facing that penalty,” adds Payne.
Neighboring states provided some guidance for an adjustment. “Annual tax burdens there were about $4,000 to $5,000 per megawatt in Pennsylvania, $9,000 to $10,000 in Indiana, and about $11,000 in Illinois. That said Ohio was not going to be competitive for job development,” she says. To the rescue came Ohio State Sen. Chis Widener, motivated with the recognition that state development needs capital investment and job creation. “We worked together on Ohio Bill 232 which passed. It established a middle ground of $9,000/MW in local government taxes. And to qualify for the new tax rate, half the work force had to be Ohioans. This included during construction of each project, build-up and repair of county roads, training and equipping emergency first-responders, and more.”
As soon as that bill took effect, says Payne, the two big projects operating today broke ground, Blue Creek and Timber Road. “It’s rare to see a piece of economic development legislation pass and quickly result in $775 million in capital investment and job creation.”
Since passage of Bill 232, the RPS has been amended several times to deal with uncertainty in terms of initial structure. It has seen the addition of coalmine methane, and waste heat recovery, even co-generation heating plants from two universities. This involved a lot of discussion at the state house. Some things did not find its way into the RPS such as siting and set-back issues. The possibility of multiple Renewable Energy Credits or RECs to different types of projects was also considered.
“So there is a lot action on the policy front. The message that comes across loud and clear is that the RPS is working,” she says. “We have two projects in ground totaling over 400 MW, providing $3.6 million annually in local property taxes, $2.6 million annually in lease payments, and a huge economic boom during the construction years. Also, 50 or 60 local businesses were employed in building the projects with over 2,000 Ohioans put to work.”
Additional good news is that there are seven other projects that have received their Ohio Power Cycle Board certificate which means they could break ground soon. “Those projects total over 800 MW for about $1.6 billion in capital investment, $7.2 million in annual tax payments, and over $6 million in annual land-lease payments. And the numbers do not include the 500 or 600 MW in the queue going through the application process.” So the policy is working, she adds, and it’s leading to the investments and job creation hoped for. What’s more, all the state utilities have hit their renewable-energy benchmarks or exceeded them by a couple years. “Here’s hoping we don’t have quite so many little battles and have stable policy to continue investments in Ohio.”
Filed Under: News, Policy, Projects