January 31, 2003
PIERRE - Gov. Mike Rounds wants legislators to encourage wind-energy companies to locate in South Dakota by exempting the propellers and generation units from property tax.
The governor said Thursday that he'll sponsor a bill to remove those elements from the provisions used to value most utilities. Instead, some of the property would be subject to local tax. Other equipment would be considered business personal property, which isn't taxed.
"Our intention is to promote wind power in South Dakota, and this is one attempt to do so," Rounds said. "We simply want to make it clear we are inviting investment and business to the state."
The proposal isn't as sweeping as tentative proposals Rounds and other wind-energy advocates talked about at the beginning of the '03 Legislature.
Then, the talk also included breaks on sales taxes and contractors excise taxes. Some legislators have suggested they'll continue to pursue those kinds of tax incentives.
"We have made no changes in the sales tax or contractors excise tax with this agreement," the governor said Thursday.
Even so, an official with one of the companies involved in trying to get a $40 million wind-energy operation going near Highmore said the bill would encourage that development, which could become a 27 tower operation capable of producing up to 40 megawatts of electricity.
The goal is to have the Highmore facility operating by year's end to take advantage of a federal tax break that ends when the calendar year does, said Ron Harper, chief executive officer of Basin Electric of Bismarck, N.D.
"We are delighted you are moving this bill forward," Harper said during a news conference at which Rounds announced the plan. "This is one of many phases necessary to bring it forward."
Rounds said the effect of the bill would be to have the land, foundations and towers involved in the wind facility subject to local property taxes. The propellers and the power-generating unit atop each tower would be tax-free. It was estimated that the result of the change in taxing methods could mean nearly a 70 percent property tax savings for the operation.
FLP of Juno, Fla., is driving the attempt to put a wind-energy facility in central South Dakota. The company is a national leader in harnessing the wind to generate electricity. Its goal is to have up to 27 towers, about 300 yards apart, along a ridge about 10 miles south of Highmore in Hyde County. FLP would sell the power to Basin Electric, which would resell it. If legislators pass the governor's proposal this session, "they may be in a position to break ground this spring," Harper said.
Rounds said the Public Utilities Commission would have oversight on leases between the company and area landowners.
Each tower costs about $1.5 million to put in place, Harper said, and is capable of producing about 1.5 megawatts of power, enough to meet the electric needs of 100 homes. A tower generates about 30 percent to 35 percent of the time, he said.
Jeff Nelson of East River said the 40 megawatts of total production would be the equivalent of two years' worth of power needs for a city the size of Madison.
The community uses about 17 megawatts of power a year at the highest level of demand, he said.
Rounds said the state hopes to become a host to other such companies.
"We have businessmen here who have offered to invest their money, and we're going to do our best to be competitive with any other location for this purpose," the governor said. "We hope that others will come and join them here. There are other concerns that people will express. Part of it is that these organizations are coming to where they find the most opportunity to eventually make a profit, which means the areas most conducive to wind power.
"They've come in. They've offered to invest in South Dakota. They've indicated what would not make us competitive. We've done our best to see that we've tried to fix that situation, and this is our proposal. They feel comfortable with it."
This article is used with permission from The Argus Leader.
This article was copied from southdakotaelections.com and was originally published on 01/31/03
Reach Terry Woster at 605-224-2760 or twoster@midco.net
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