Duke Energy Sues (Not a Bakken Story)

Updates

September 19, 2012: update here.

“If they [Duke Energy] win this appeal, they will have paid an average of $1.4 million per year and will be on a pace to pay $7 million over five years,” Schell wrote to Mead. “Duke has effectively cut their Wyoming tax burden in half. Keep in mind that they have also paid no production tax and that the project was exempt from Wyoming sales tax.” 

For construction of the wind farm, Duke Energy was eligible for a state renewable resource tax credit, said Ed Schmidt, director of Wyoming Department of Revenue. The cost of the wind farm was $173.2 million. But Duke Energy did not pay full price for the wind farm’s equipment. “A significant portion of that would have been exempt” from state tax because of the renewable resource credit, said Schmidt.

While updating this article, I noted this from an earlier post:

February 20, 2012: wind projects in Wyoming slowing down, on hold; starting to use the word "abandoned." Hmmm.

Original Post

From the BillingsGazette.com:

Duke Energy was able to get permits, at least in part, by testifying that the state would benefit from the property tax revenue generated by the wind farms.

The county of Converse, for example, was led to believe on the basis of Duke Energy statements, that they coulda, woulda, shoulda received approximately $2.8 million in property taxes per year and about $13 million over the next five years. But when Duke Energy got the bill for about the amount they said they expected to pay, .... drum roll ... they sued.

The company says it now believes it owes about half as much as it previously estimated.

Regardless of the legal issues, two derivatives follow:

• Just a reminder that wind energy can't compete without subsidies; 
• Increasing costs for wind energy (in this case, increased property taxes), will increase subsidies

It doesn't take a whole lot of thinking to determine who is going to pay for those subsidies.

Meanwhile, the country is swimming in natural gas, which is phenomenally cheap, and pretty close to "going green."

Duke Energy has four wind farms in Wyoming (property tax assessments):

• Campbell Hill wind farm, Converse County ($23 million)
• Silver Sage wind farm, Laramie County ($9 million)
• Happy Jack wind farm, Laramie County ($6 million)
• Top of the World wind farm, Converse County ($3.4 million)

Why does this story not surprise me?

Because .... it's only make believe....

It's Only Make Believe, Glen Campbell, cover (Conway Twitty)