Energy, Environment, West Virginia Legislature

Senate Energy Committee OKs bill to raise property tax on windmills; negotiations to come

MORGANTOWN — The Senate Energy Committee passed a bill on Tuesday that would raise the tax on windmills — with the understanding that the current version isn’t the final word on the issue.

Wind turbines and towers are currently considered pollution-control facilities and taxed as personal property at salvage value — 5% of the original cost based on 79% of the full value of the property. That 5% figure depreciates annually.

SB 231 would change that to tax wind turbines and towers and the attached components as real property. A fiscal note with the bill says it would produce $6.1 million in additional annual revenue: $1.8 million for the General Fund, $2.5 million to the county schools and $1.8 million to the county commissions.

Committee chair and lead sponsor Randy Smith, R-Tucker, advised the members that his aim was to get the bill out of committee and on to Finance where the various stakeholders — the counties, the windmill companies and so on — could work out a compromise bill that might do such things as grandfather existing facilities.

Discussion showed how far apart the sides currently are.

Chris Hall, with Clearway Energy, the largest wind power operator in West Virginia, said this issue was negotiated and solved back in 2007. They came up with the salvage value formula in order to equalize the tax on a per-megawatt basis with coal.

The bill could raise the tax by a factor of 4.4, he said. Since all wind projects feed their power into the 13-state PJM grid, wind project can go up anywhere in that area. “This could really discourage investment in West Virginia and drive it to other states.”

Clearway built the Black Rock Wind Farm and re-powered Pinnacle in Mineral and Grant counties, he said, and invested $460 million in the state in 2021 alone. It’s now planning to re-power Mount Storm in Grant County.

The conversation got a bit politely contentious when bill co-sponsor Rupie Phillips, R-Logan, tried unsuccessfully to pin Hall down on the comparative federal subsidies between coal and wind. “I’m really tired of people saying that coal gets subsidized to the level of wind and solar,” he said.

And wind power didn’t contribute much in the 2022 Winter Storm Elliot or last week, he said. “Let’s don’t go there, because I get very hot on that subject.”

Returning to the origins of the 2007 legislation, Smith provided some background on what sparked it.

The EPA required coal plants to install hundreds of millions of dollars worth of pollution control equipment, he said. To avoid passing on the expense to customers, the pollution control equipment was taxed at salvage value. When windmills came along, they wanted the same tax break.

“My complaint has always been that the state did this to the counties,” he said, taking tax money from them (although the counties participated). He has nothing against windmills, though they’re not very efficient. “We’re trying to undo a wrong.”

The Tax Department pointed out some possible flaws in the bill. Among them, real property has to be attached to the ground in order to be taxed as real property. The bill specifies the wind turbines must be attached to the ground and the Tax Department said that may shift the tax burden from the wind project owner, which leases the land, to the landowner.


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