House passes bill to reduce wind energy tax credits

OKLAHOMA CITY — A bill by Rep. Earl Sears, R-Bartlesville, that would reduce the amount of tax credits the wind energy industry receives and eliminate the credits in 10 years has sailed through the Oklahoma House of Representatives.

In an unanimous 89-0 vote, the House passed House Bill 1554 on Monday afternoon after an amendment by Sears was offered that changed the structure of the tax cut for Oklahoma wind energy producers.

The bill is co-authored by Rep. John Bennett, R-Sallisaw, and Sen. Mike Mazzei, R-Tulsa.

According to Sears, the bill reduces the wind energy tax credit to one-fifth of a cent per kilowatt hour starting in 2016 and would end the credit in 2025. The current structure of the tax incentive is that the industry receives a half of a cent per kilowatt hour. With the Oklahoma state budget facing a $611 million shortfall, Sears said it is time to have these tough discussions about which tax credits are working and which need to potentially end.

“I support tax incentives; however, the tax credits for wind power are overly generous and must be modified for all new wind power development projects in the state,” Sears said earlier in the legislative session. “The cost of these wind subsidies is mounting at an alarming rate and if we do not address the policies now, Oklahoma will suffer the consequences.”

The original version of the bill would have gradually reduced the amount of Zero Emissions Tax credits for new industrial wind facilities from a half-cent per kilowatt hour for energy produced in the first year to one-tenth of a cent by the fifth year, and require approval by the legislature to reauthorize in 2020.

Sears offered an amendment to the bill that changed the structure from a gradual reduction over five years to a one-step process and extended the sunset to 10 years.

“The amendment was through negotiations with the wind industry,” Sears told the Journal-Capital on Monday night. “They (the wind industry) wanted it over 10 years and they only wanted a 30 percent cut in the credit. I was able to amend it to the 10-year time frame, but make it a 70 percent cut.”

Sears said negotiations are likely to continue between now and the time the bill gets to the Oklahoma Senate for consideration. According to Sears, the actual cut to the tax credit will be somewhere between 30 and 70 percent.

“As the bill continues its journey, we will still negotiate in good faith to make sure we handle the issue the best way,” Sears said.

The bill now heads to the full Oklahoma Senate.