Gov. Ted Kulongoski ordered a hurry-up review Tuesday of Oregon’s incentives for renewable energy companies in the face of ongoing criticism of the tax breaks.
In a letter to two state agency heads, Kulongoski asked for recommendations on whether the increasingly expensive Business Energy Tax Credit “is necessary for continued economic opportunity in renewable energy, and more specifically, wind energy.”
He said he wants the recommendations in his hands by the end of the month — an unusually rapid turnaround for such studies. Lawmakers already had been gearing up to reduce the tax credits when the Legislature meets in February.
The governor’s request comes on the heels of an investigation by The Oregonian that revealed state officials downplayed the estimated cost of the incentives before they were expanded by the 2007 Legislature at Kulongoski’s urging. It also comes as the newspaper is preparing to publish an investigation into the relationship between the tax credits and the wind energy industry in Oregon.
Kulongoski’s spokeswoman Anna Richter Taylor said the governor remains a staunch supporter of the incentives as a way to bring jobs and clean power to Oregon, but also thinks they need constant review.
“He’s concerned about whether the policy is delivering what we want to accomplish,” Taylor said. “If it’s not necessary to spend this money and still have a thriving wind industry, then let’s take another look at this policy.”
Since 2007, the cost of the energy tax credits has gone from about $10 million a year to an estimated $167 million for the 2009-11 biennium. Estimates for 2011-13 approach a quarter-billion dollars.
The Oregonian’s investigation showed that the state spent millions of dollars in energy tax credits on companies that went bankrupt, never operated, or divided their projects into multiple facilities to get additional credits.
Lawmakers, alarmed by the growing cost, approved a bill earlier this year that cut maximum incentives to large wind farms from $10 million to $3.5 million. Kulongoski vetoed the action, which would have saved the state an estimated $20 million in 2009-11.
Since then, lawmakers have vowed to take up the issue again when the Legislature convenes. On Thursday, the House and Senate revenue committees are expected to discuss potential legislation to rein in the tax credits.
“We’re already clearly on record that there are issues that need to be dealt with,” said Geoff Sugarman, spokesman for House Speaker Dave Hunt, D-Gladstone. “We are committed to fixing the issues.”
In his letter to Mark Long, head of the Oregon Department of Energy, and Tim McCabe, director of the Oregon Business Development Department, Kulongoski said recent changes in the economy, and energy policies elsewhere, should be factored into the review of the incentives.
“Our economy has begun to stabilize,” he said. Furthermore, neighboring Washington has begun a phase-out of tax breaks for wind companies, and California has upped its requirements for renewable energy, which makes electricity produced by windmills all the more valuable.
Earlier this month, Long issued a list of proposed new rules aimed at curbing the incentives. The rules would give the state more leeway to reject applications for the tax credits, define more closely what constitutes a single project and allow the state to reclaim money if the project fails to meet its promises.
Harry Esteve, Oregonian – http://www.oregonlive.com/politics/index.ssf/2009/11/governor_orders_review_of_ener.html