South Dakota governor signs bill to encourage wind project development

Basin Electric Power Cooperative said March 27 that South Dakota electric cooperatives saw two of their bills signed by the governor out of this year’s legislative session, with one veto.

“It was a very successful legislative session in South Dakota,” said Steve Tomac, Basin Electric senior legislative representative.

SB 131, the “Stray Voltage” bill, was unanimously passed March 13 and later signed. It establishes provisions regarding stray electrical current and voltage remediation, creating guidelines that benefit distribution cooperatives.

Also passed March 13 and signed the same day by the governor was SB 180, the “Wind Tax” bill, which is designed to attract more wind energy development to South Dakota. Current wind development law puts the state at a disadvantage to other states because of an escalator clause that, starting in 2008, put market price of wind on an unsustainable path. “This bill reduces the production tax and removes the production tax escalator on existing wind projects, which is good for electric co-ops,” Tomac said.

Gov. Dennis Daugaard, on the other hand, vetoed SB 136, the “Tax on Tax” bill, which excludes municipal sales and use taxes from the gross receipts used to determine the tax liability of electric cooperatives. Tomac said the Legislature will reconsider SB 136 on March 30.

The South Dakota Wind Energy Association (SDWEA) said on its website that SB 180 addresses problems with the Gross Receipts Tax that have contributed to a drop in new wind production. “There has been some wind energy development in the area over the last two years, but surrounding states have seen considerably more development than South Dakota,” said SDWEA Executive Director Paul Bachman. “After talking with national and local wind developers we discovered that the current tax structure in South Dakota puts the state at an economic disadvantage compared to Minnesota, Iowa, North Dakota and Nebraska.”

Over the 25 to 30 year life of a wind project, the association said that the existing tax structure escalates to a point where the overall cost of building a project in South Dakota is higher than in neighboring states. “Wind developers have simply chosen to cross the borders to build more cost-effective projects,” Bachman said.

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.