Walz working for wind energy

By Mark Fischenich
The Free Press

June 15, 2007 12:10 am

— Average Minnesotans could get into the wind energy business under changes to federal tax laws being pushed by Congressman Tim Walz.
The current tax credit for investing in wind turbines favors large corporate investors and is essentially worthless to farmers and other typical people who might be interested in investing in the fastest growing source of electricity in America.
“We just think this levels the playing field and allows regular people to get involved with this,” said Walz in a conference call with southern Minnesota reporters.
Walz, a freshman Democrat from Mankato, said the legislation is a textbook example of how the democratic process is supposed to work. The idea was brought to him by constituents in the 1st District, he drew up a bill and is now attempting to build a coalition of support in the House.
He signed up a major ally when Congressman Collin Peterson, a fellow Minnesota Democrat who is chairman of the House Agriculture Committee, agreed to be the co-sponsor. So Walz is optimistic about it becoming law.
“The payback on this is going to be incredible over the years,” he said.
One of the people who pushed the idea is Dan Juhl, a wind-energy developer from the southwestern Minnesota town of Woodstock. Juhl said the change in the tax credit will allow anyone looking to invest in wind energy a better chance to make a profit from a power source that is traditionally an annoyance.
“You and I and people who live out here and have to put up with this wind will like it a lot more,” Juhl said. “It’s like hog barns — they don’t stink if you own one.”
Juhl expects to see hundreds of turbines going up in western and southern Minnesota in coming years, largely because the state Legislature and Gov. Tim Pawlenty passed a new mandate this year that utilities in the state generate 25 percent of their electricity from renewable sources by 2025. For the state’s largest utility, Xcel Energy, the standard is set higher at 30 percent.
The new tax credit would make it easier for groups of farmers, small business owners and other residents of the region to participate in the anticipated boom, Juhl said. Previous wind developments have been done mostly by large corporations, many of which aren’t even based in the state.
The two biggest counties for wind energy production — Pipestone and Lincoln counties along southwestern Minnesota’s Buffalo Ridge — generate $60 million in income from their wind farms.
“Most of those wind farms are owned by foreign multinational corporations and that’s where the revenue stream goes,” Juhl said.
The reason is because the federal tax credit is an important cash-flow consideration in gaining financing for the initial purchase and construction of the massive towers and turbines, he said. But the tax credit — 1.9 cents per kilowatt hour generated — is allowed to offset only investment earnings and other passive income.
For average people, the tax credit (which tops out at $40,000) would be significant only if it also offset earned income. That’s what Walz’s Wind Energy Promotion Act would allow.
“It just opens it up so more people can use it,” Juhl said.
He predicts that wind turbines will be sprouting across a broad section of southern Minnesota based on a wind study by the U.S. Department of Commerce.
“Almost all of southern Minnesota and western Minnesota has commercially developable potential for wind energy, and that includes the Mankato area,” he said.
Who owns the turbines could depend on Walz’s legislation, according to Juhl. Because the legislation doesn’t expand the size of the pool used to finance the tax credit, it could shift some of the benefit from corporations now using the credit to average investors.
Juhl expects those corporate interests to oppose the bill.
“They don’t like to share,” he said. “Their mama didn’t teach them to share. So be it. I think we’ve got a good chance to get this passed.”