Chairman Chris Widener (R-Springfield) set out in early March to move his SB232 at “March Madness” pace through the General Assembly to capture what neighboring states are cashing in on – renewable energy projects for wind and solar. The Senate Energy and Public Utilities Committee during a late hearing on Tuesday accepted a substitute bill that would create a new tax structure in the hopes of attracting business and becoming a leader in the renewable energy market.
With recent approval of three major wind projects in Hardin and Champaign counties by the Ohio Power Siting Board (OPSB) on Monday, Widener believes the last piece of the puzzle is creating a simple, transparent tax structure for developers to work with.
Some of the provisions added in the substitute bill were taken from the conditions made by the OPSB, including facility owners must not only restore roads to their condition before facility construction, but that bridges and culverts also must be restored. The oversight for the restoration will be coordinated between the county engineers, local jurisdictions responsible for the infrastructure and project developers.
Widener introduced SB232 as a market signal to renewable energy companies – wind and solar – that Ohio has a simplistic tax structure for development. To be eligible for this arrangement, the company must be under construction by 2011, operational by 2013 and must commit to create jobs in Ohio.
“SB232 will create a competitive tax structure for renewable energy projects, such as wind development. It will generate clean renewable electric energy for thousands of homes and businesses and pay millions in tax revenue to our schools and local government,” said John Hohn, vice president of economic development for Hardin County Chamber and Business Alliance.
Widener said after meeting with stakeholders on the issue, including school districts, local businesses, House members, the governor’s staff, the Ohio Department of Development (ODOD) and the Ohio Department of Taxation, the substitute bill captures the essence of his ideas with those in the House version – HB464 (Winburn). He said the Legislature and the Strickland administration are sharing ideas to bring new jobs to Ohio.
Going forward on this legislation, Widener said he does not believe his proposal affects anyone’s tax structure negatively.
The substitute bill adds and modifies the following provisions:
– Shifts responsibility for approving property tax exemptions from the Ohio Air Quality Development Authority (OAQDA) to the ODOD;
– Clarifies the extent of the property tax exemption for real property that is part of a tax-exempt renewable energy resource facility;
– Establishes a uniform payment-in-lieu-of-tax level of $7,000 per megawatt (MW) regardless of whether the facility owner is a public utility or not. (The introduced bill established levels of $5,000 per MW for utility-owned facilities and $6,000 per MW for non-utility-owned facilities.)
– Clarifies that failure by a tax-exempt facility owner to fulfill the requirements imposed by the bill may result in the revocation of the tax exemption;
– Specifies the property tax treatment of tangible personal property (TPPT) that is part of a renewable energy resource facility that does not qualify for tax exemption;
– Exempts renewable energy resource facilities from property taxation and any applicable utility excise tax if the aggregate nameplate capacity of the facility is 250 kilowatts or less specifying that such a producer is not a public utility for tax purposes;
– Imposes additional requirements on owners of tax-exempt renewable energy resource facilities, including the following: a majority of full-time employees must be domiciled in Ohio (although deviations from this may be allowed by ODOD for good cause); an annual report on employment must be filed with the department; and a certificate of completion of facility construction must be filed with ODOD.
– Specifies that if a tax-exempt renewable energy resource facility is installed or constructed on a portion of a tract of land valued at its Current Agricultural Use Value (CAUV), the remaining part of the land still qualifies for CAUV, and no recoupment charge applies, if the remaining portion of the tract continues to satisfy qualifications for CAUV treatment. Widener said that the CAUV was one of the reasons for increasing the cost per MW from $6,000 to $7,000.
– Specifies that any kind of real property that qualifies as a renewable energy source facility but having a nameplate capacity of 250 kilowatts or less is exempted from property taxation;
– Specifies that property that qualifies as a renewable energy source facility installed on public property is tax-exempt if its primary purpose is to supply electricity to the public body owning the property, even if some of nameplate capacity exceeds 250 kilowatts and some of the electricity is supplied to others; and
– Specifies that the tax exemption does not apply to any property that was used, or is part of a facility that was used, to supply electricity before the bill’s effective date.
Two amendments were added to the substitute version. One, introduced by Sen. Jimmy Stewart (R-Athens), added clean coal and advanced nuclear energy to the list of renewable energy sources. The second amendment introduced by Widener clarified the status of existing electric facilities.
Widener said that over the Easter break members should receive a comparison document from the Legislative Service Commission and he will have further hearings after break with the hopes of passage by the end of April.