Government Subsidies Give Owners “Windfall” Profits
The truth is that wind power is being pursued aggressively by businesses not because they believe that it is the best alternative to traditional energy sources, but because wind farms are first-rate tax havens thanks to enormous federal and state government subsidies. Larger corporations with taxable income to shelter take advantage of these opportunities by buying wind farms from the smaller companies who set them up. Without these tax breaks, it’s doubtful that any of these corporations would be endorsing wind power.
" Heaven knows that West Virginia has always stepped up to the plate to contribute to our nation's energy security. But, we now have a situation where speculators are staking claim to some of our most scenic areas and erecting these monstrosities that produce little energy and are made possible only by a tax credit." Honorable Alan B. Mollohan
Federal Subsidies
Accelerated Depreciation – One generous subsidy provides wind farm developers with a depreciation rate four times faster than the rate for other types of businesses. As a result, a company can fully recover construction, equipment and start-up costs in just five years instead of 20. In addition, the 2002 Job Creation and Worker Assistance Act will allow the developers to take a special 30 percent depreciation deduction in the first year for qualified asserts purchased between September 10, 2001 and September 11, 2004, if those assets are in service by January 1, 2005.
Production Tax Credit – A second generous subsidy provides wind farm operators with a production tax credit of $.0018 for every kilowatt-hour (kWh) of electricity production over the first ten years of a wind farm’s life. Even at an inefficient production rate of just 30 percent per year, this amounts to approximately $14 million per year. Without this tax break, wind production would not be economically viable.
State Subsidies Include
Reduced Property Taxes – In West Virginia, property taxes are assessed for landowners based on 60 percent of the fair market value of the property. In 2001, the state passed a tax break for wind farms which allows those properties to be assessed at just 5 percent of their market value, resulting in significantly lower taxes. This tax break is particularly detrimental to county school systems, which are dependent on property taxes for funding.
Business and Occupations (B&O) Tax – Although nearly all forms of electric generating units are valued at 40 percent of their capacity, in 2001 a tax break for wind farms has their rate set at just 5 percent.
Industrial Expansion and Industrialization Revitalization Credit – This tax credit further offsets a wind farm’s B&O tax liability up to 50 percent.
*excert from "Wind Energy Economics in West Virginia" by Glenn R. Schleede
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