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Tax Breaks for Wind Power Irk Some by Steve Law Portland Tribune, December 18, 2008

Jody Wiser is tilting at windmills.

While other Portland greenies and politicians are going gaga for wind power, the former Irvington Elementary School teacher argues the state is throwing away tax breaks to lure windmills that provide few permanent jobs and would locate here anyway.

"This is an astounding trick that's being played on taxpayers," said Wiser, volunteer leader of the group Tax Fairness Oregon.

Windmill projects are spreading like dandelions in the wind since the 2007 Legislature, at the urging of Gov. Ted Kulongoski, tripled the state Business Energy Tax Credit. Each windmill project now qualifies for $11 million in energy tax credits, up from $3.85 million. Since the increase, Oregon has conditionally approved tax credits for 10 windmill complexes, doubling the total number subsidized during the previous 15 years.

Rachel Shimshak, executive director of the Portland trade group Renewable Northwest Project, said the proliferation of windmills means the expanded state tax break is working as intended.

In a recent interview, Kulongoski said the Business Energy Tax Credit is helping make Oregon a world center of renewable energy, including windmills and solar manufacturing plants. After seeing Oregon lose a bidding war for a solar plant to New Mexico, Kulongoski said there's no doubt subsidies are needed to compete for the jobs and clean energy Oregon wants and needs.

Wiser has no beef with proposed subsidies to convince Vestas to expand its North American headquarters in Portland.

However, a Renewable Northwest Project study of seven new wind farms revealed that they created about 11 permanent jobs at each complex, for operations and maintenance. At that rate, the Business Energy Tax Credit is providing about a $1 million subsidy for each permanent job, once initial construction is done. Wind projects also qualify for federal and other tax breaks.

Wiser complains that windmill developers are milking the state by increasingly splitting their projects into multiple phases to collect $11 million in energy tax credits for each phase.

Under the Renewable Portfolio Standard, also enacted by the Legislature last year at Kulongoski's urging, Portland General Electric, PacifiCorp and Eugene Water & Electric Board must continuously increase the percentage of renewable energy they sell to customers.

That will assure that windmills locate here, Wiser said. Her group estimates that at least $44 million of the recent Oregon energy tax breaks are going to wind complexes that are selling their power to California, Washington and Idaho.

"Basically, we're using our state's tax money to help those states reach their renewable energy standards," she said. "Nobody else throws $11 million at every wind farm."

Across the country, renewable-energy mandates have proven the most successful strategy for luring wind power, said Glen Andersen, renewable-energy policy specialist for the National Conference of State Legislatures. Such mandates, combined with federal tax breaks, have helped make Texas the national leader in wind development, he said.

Teacher becomes activist

Wiser, who taught nine years at Irvington, thought long and hard about her life's mission after a series of demoralizing cuts to Portland schools throughout the 1990s.

"I walked into my school and I told the principal I'm quitting, because I think we have to do something about revenue," she said.

Wiser initially formed a campaign to protect Oregon's inheritance tax, under constant attack by Republicans as a "death tax." Later she formed Tax Fairness Oregon, which, among other areas of focus, campaigns to end what it perceives as wasteful tax breaks.

Her new campaign against windmills seems an apt metaphor for her Don Quixote-like quest. Tax breaks tend to remain on the books for decades in Oregon. The Legislature needs a 60 percent supermajority in the House and Senate to raise taxes in Oregon, and attorneys have ruled that ending tax breaks also requires a 60 percent vote, because the net result is higher taxes.

Markets shift continually

Defenders of Oregon's wind power tax breaks say Wiser fails to understand the complex energy market and the full benefits provided.

Windmill operators typically pay $2,000 to $7,000 a year to farmers and ranchers for each turbine sited on their lands, according to Renewable Northwest Project. Rural counties, which face the loss of federal forest revenues, also benefit from increased property taxes.

Mike Grainey, director of the Oregon Department of Energy, said the overwhelming majority of wind power being produced in Oregon is being sold in-state. It's unrealistic, and perhaps illegal, to bar wind power companies from selling their power out of state, Grainey said. Electricity is bought and sold in a complicated multistate market, and Oregon winds up buying electricity from California during the winter months, he noted.

Wind is getting more competitive in price with other energy partly because of the tax credits, Grainey said. Coal power is still cheaper, but that poses air-quality problems and is a big contributor to global warming, he said.

State Rep. Phil Barnhart, D-Eugene, chairman of the House Revenue Committee in the Legislature, said he wants the state to begin "sunsetting" all tax breaks so they can be periodically reviewed to gauge the continuing need. He also hopes to cancel some tax breaks.

Barnhart has grown accustomed to hearing Wiser's testimony and ideas before his committee, and praised her diligence, including her critique of windmill subsidies.

"She's raised some very important questions that we need to explore, and get some answers to," he said.