invenergy beech ridge wind farm update west virginia wind working group – september 18, 2007
TRANSCRIPT
InvenergyBeech Ridge Wind Farm
Update
West Virginia Wind Working Group – September 18, 2007
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Invenergy Wind - Corporate
Overview Developer, owner and operator of large-scale wind power
generation projects in North America and Europe.
One of the ‘top 5’ wind energy developers in North America based on projects over built the last two years.
More than $1.5 billion in wind energy projects (over 1,000 MW) in operation and late stage construction.
Secured 1,300 MW of wind turbines from GE for 2007 & 2008 build program in the U.S.
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Beech Ridge Wind Farm
Northwestern Greenbrier County
Proposed 186 MW facility
124 GE 1.5 turbines (77 meter rotors)
Key landowner: MeadWestvaco
Target Schedule PSC Siting Certificate: August 2006 Start Construction: April 2007 Start Operations: December 2007
Expected Output: 570,000,000 kwh/yr
Economic Impacts $300,000,000 investment 200+ construction jobs 15-20 permanent jobs $400,000 /yr property taxes $200,000 / yr B&O taxes
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Beech Ridge Opposition
Anti-Wind MCRE CRW
Tourism The Greenbrier & Sporting Club Greenbrier Co. CVB
Elected Officials US Rep. Mollohan WV Senator Guills WV Delegate Canterbury WV Delegate Campbell Lewisburg Mayor Manchester
Numerous Local Citizen Organizations Greenbrier River Watershed Association Williamsburg VFW Williamsburg Ruritan etc…
Grassroots 2,000+ letters of opposition
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Beech Ridge Supporters
Labor (ACT)
Industry WV MFA WV Forestry Association
Environmentalists Sierra Club Coal River Mountain Watch
Local Government Rainelle, Rupert, Quinwood,
Richwood Greenbrier Co. Commissioners
Grassroots 700+ letters of support
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January 2007 PSC Order Key Finding: Granted Certificate for all 124 turbines 18 Pre-Construction Conditions, including
Compliance with USFWS, DNR, SHPO Decommissioning Minimum property tax guaranty Compliance hearing and affirmative PSC confirmation
11 Post-Construction Conditions, including 3 years of bird and bat studies
Technical Advisory Committee Mortality Monitoring Adaptive Management Testing
Minimal lighting No aerial herbicide spraying
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2005 November – Submitted Application
2006 April – Public Hearings (Fairlea) May – Evidentiary Hearings August – PSC Order
2007 January – Final PSC Order (Reconsideration Denied) February – Supreme Court Appeal April – Supreme Court Agrees to Hear Appeals Summer – Supreme Court Briefs Fall – Supreme Court Hearing Winter – Supreme Court Decision
WV PSC Permitting Timeline
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Appelees: Alicia and Jeffrey Eisenbeiss Mountain Communities for Responsible Energy
Appelants Public Service Commisssion of West Virginia Beech Ridge Energy LLC WV State Building and Construction Trades Council, AFL-CIO
Amicus Curiae MeadWestvaco Corporation Tom Vance Appalachian Power Company Utility, Telecommunications, and Energy Coalition of West Virginia West Virginia Oil and Gas Association West Virginia American Water Company
WV Supreme Court Appeal
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Potential Appeal Outcomes
Application Dismissed Beech Ridge reapplies
Order Remanded to PSC New PSC Order Eligible for reconsideration and appeal
Order Upheld Pre-Construction Compliance Eligible for reconsideration and appeal
InvenergyS.B. 441 –Implications for Wind
Energy
West Virginia Wind Working Group – September 18, 2007
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Senate Bill 441: Background
May 2001 Legislation B&O Taxes
Set “capacity factor” for wind at 5% Property Taxes
In West Virginia, pollution control equipment is taxed at salvage value – 5% of appraised value.
Classified wind turbines and towers as pollution control equipment.
Resulted in most of a wind project being valued at “salvage value”
2006 Sessions Governor’s Tax Modernization Project
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Business & Occupation Taxes
Applies to Industries Regulated by PSC Based on nameplate capacity Base rate of $22.78 per kilowatt Note: $20.70 rate for coal plants using
desulfurization technology Adjusted by legislated “capacity factor”
Fuel Old CF New CF Coal 40% 40% Wind 5% 12% Peaker 5% 5%
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Governor’s Original B&O Tax Proposal
Raise B&O Taxable Capacity Factor for wind (and only wind) to 20% Four times the effective B&O tax burden $170,000 in additional taxes per 100 MW Would have resulted in wind paying
50% more per MWh produced than coal-fired electricity and
300% more per MWh than gas-peaker fired electricity.
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B&O Taxes under Senate Bill 441
Coal-Fired Plant Wind Plant (Old System) Wind Plant (SB 441)Nameplate Capacity (KW) 100,000 100,000 100,000 Taxable Capacity Factor 40% 5.0% 12.0%Taxable Capacity (KW) 40,000 5,000 12,000
Base B&O Tax Rate* 20.70$ 22.78$ 22.78$ B&O Tax 828,000$ 113,900$ 273,360$ Tax Credits 414,500$ 57,450$ 137,180$
Net Tax Due 413,500$ 56,450$ 136,180$
Efficiency (%) 90% 30% 30%Annual Output (kWh) 788,400,000 262,800,000 262,800,000Tax / kWh 0.0005$ 0.0002$ 0.0005$ Tax / MWh 0.52$ 0.21$ 0.52$
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B&O Taxes under Senate Bill 441
B & O Tax Comparison
$0.52
$0.21
$0.52
$- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60
Coal-Fired Plant
Wind Plant (Old System)
Wind Plant (SB 441)
B & O Tax / MWh
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Property Tax (Old System) Pollution Control /Salvage Value
(as % of Capital Cost) Coal = 33% Wind = 85%
Appraised Value (as % of Capital Cost) Coal = 69% Wind = 19%
Assessed Value (60% of Appraised Value) Coal = 41% Wind = 12%
Property Tax Burden (per MWh generated) Coal = $1.96 Wind = $1.65
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Governor’s Property Tax Proposal
Eliminate classification of wind turbines as pollution control equipment Raises property tax burden to more than
five times then current payments Increases annual property tax burden
approximately $2,000,000 per 100 MW (20-year average)
Results in wind paying 50% more than coal per dollar of capital cost 400% of what coal pays per MWh produced
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Gov’s Proposal Would Have Made WV Uncompetitive with Neighboring States
Average Annual Property Taxes for Mid-Atlantic States with Operating or Permitted Wind Farms
(based on a typical 150 MW wind plant)
$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000
MD
PA
TN
WV (current)
WV (Governor's Proposal)
Sta
te
Average Annual Taxes ($)
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Property Taxes Under S.B. 441 Capped percentage of wind facility
assigned salvage value at 79% Impact varies depending on percent of
facility costs originally eligible for salvage valuation
Should result in wind paying more property taxes per MWh than coal
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Property Taxes Under S.B. 441Hypothetical Cap Salvage @ 79%
Coal-Fired Plant Wind Plant (Old System) Wind Plant (SB 441)
% Pollution 33% 85% 79%% Non-Pollution 67% 15% 21%
Reduced Value 5% 5% 5%Appraised Value 69% 19% 25%Assessed Value - 60% 41% 12% 15%
Fair Market Value 300,000,000$ 300,000,000$ 300,000,000$ Pollution Abatement 99,000,000$ 255,000,000$ 237,000,000$ Non-Pollution 201,000,000$ 45,000,000$ 63,000,000$
Appraised Value 205,950,000$ 57,750,000$ 74,850,000$ Assessed Value - 60% 123,570,000$ 34,650,000$ 44,910,000$
Tax @ 2.25%* 2,780,325$ 779,625$ 1,010,475$
Capacity (MW) 180 180 180Efficiency (MWh / year) 90% 30% 30%Annual Output (MWh) 1,419,120 473,040 473,040Tax / MWh 1.96$ 1.65$ 2.14$ % of Previous Tax Burden 119% 100% 130%* Hypothetical tax rate, actual rates will vary by County
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Property Taxes Under S.B. 441
Property Tax Comparison
$1.96
$1.65
$2.14
$- $0.50 $1.00 $1.50 $2.00 $2.50
Coal-Fired Plant
Wind Plant (Old System)
Wind Plant (SB 441)
Tax Burden Per MWh Generated