Oklahoma House Says Yes To Early Phaseout Of Wind Tax Credits

Contributors
Written by David K. Burton & Binyomin Koff
on March 15, 2017 1 Comment
Categories : Featured, Policy Watch

On March 9, Oklahoma’s House of Representatives passed H.B.2298, which would end the state’s production tax credit for wind energy production three-and-a-half years earlier than current law.

This measure was first proposed in Gov. Mary Fallin’s 2018 executive budget.

The bill provides a July 1, 2017, sunset date for wind facilities to be eligible for the zero-emission tax credits. Wind facilities must be placed in operation prior to that date to be eligible for the tax credits. The rate of the tax credit is unchanged at 0.5 cents per kilowatt-hour.

Interestingly, the early deadline only applies with respect to electricity generated by wind. The bill retains the original Jan. 1, 2021, deadline for other zero-emission facilities, such as solar or geothermal facilities. However, the vast majority of zero-emission energy production in Oklahoma is from wind.

With the deadline to be placed in operation just three-and-a-half months away, should this bill become law, Oklahoma wind projects that are already in construction – and are relying on the tax credits – may not be able to be placed in operation in time to qualify for the state tax credits.

The bill passed the House by a 74-26 vote and now goes to the Oklahoma Senate, where the Republicans hold a 42-6 seat advantage.

Fallin also proposed in her budget a new production tax of 0.5 cents per kilowatt-hour on electricity generated by wind. This bill does not include the proposed production tax. As noted in previous coverage, the new production tax may be more difficult to enact because it would require a three-quarters majority to pass through the Oklahoma legislature.

David K. Burton is a partner and Binyomin Koff is an associate at law firm Mayer Brown LLP. This blog was reposted with permission from the firm’s Tax Equity Times.

Comments

  1. As a resident of SW Oklahoma, a tax payer, and frequent traveler throughout the state, I applaud Gov. Fallin’s desire to collect tax revenue from the wind industry. Our state has been inundated with wind turbines, unattractive at best, that offer virtually no benefit to the citizens of our state. The electricity generated by these machines isn’t feeding into our local grids, we are not seeing any reduction in the price of electric power at our homes. I travel all over the state, I have yet to hear one person say they think we, as residents of Oklahoma, are receiving any benefit from the wind turbines covering our landscape.
    Also, if a business cannot survive on its own, without tax subsidies and incentives from the government, it is following the wrong business model. And in the case of wind turbines, we at the local level see no benefit in providing tax breaks to an industry that we see no benefit from.

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