Nebraska governor reluctantly offers ‘corporate welfare’ to wind

The Sierra Club on June 5 celebrated the fact that the prior day, Nebraska Gov. Dave Heineman signed LB 104 into law, granting new tax breaks for wind energy companies looking to develop in the state of Nebraska.

Ken Winston of the Nebraska Sierra Club said: “With Governor Heineman’s signature of LB 104, passed by the Nebraska State Legislature, the doors to wind energy development and huge economic opportunity are opening for Nebraska.”

Winston said that Nebraska has the fourth-best wind energy resource in the nation, but has lagged behind neighbors in wind development for too long.

Heineman said June 4 that he reluctantly signed the bill because part of it kept state sales taxes from going up, while he called the renewables portion of the bill “corporate welfare” that would go to an unnamed Kansas company. He pointed to the Platte Institute‘s take on the bill in calling it corporate welfare.

The Platte Institute, a limited-government think tank, said in a June 4 statement about the bill: “That this measure is targeted towards big business is clear from the fact that proponents have emphasized that this incentive would help the state close a business deal with TradeWind, a wind energy company from Lenexa, Kansas.”

The Institute added: “If taxes are keeping wind energy companies from moving to Nebraska, then advocates of wind energy should advocate lowering taxes to levels that would make Nebraska attractive to all businesses, including wind energy companies. To selectively allow some companies tax breaks while expecting others to pay is a clear expression of corporate welfare.”

A May 22 legislative fact sheet said that LB 104 amends the Nebraska Advantage Act to add a business engaged in the production of electricity by using one or more sources of renewable energy to produce electricity for sale. Renewable energy sources include but are not limited to: wind, solar, geothermal, hydroelectric, biomass, and transmutation of energy. Transmutation of energy is not defined in the bill but is generally understood to mean the conversion of one chemical element into another, typically by a nuclear reaction.

LB 104 also amends the Nebraska Advantage Act to provide that the investment level for a Tier 5 project that produces electricity for sale from a renewable energy source is at least $20m.

The state Department of Revenue has indicated that due to the capital intensity but limited employment requirements of renewable energy projects, only major wind farms would qualify under the investment and job creation thresholds of Tier 5 of the Advantage Act, the fact sheet noted. The Department also reported that while long-term fiscal impact depends in part on the continuation or termination of the federal wind energy production tax credit, they assume four wind projects – two 200-MW projects and two 75-MW projects – will start construction sometime in fiscal year 2013-14. If the federal credit is renewed, the Department expects additional wind farms will be constructed in three to five year increments thereafter.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.