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Public Revenue from Wind Farms

Public Revenue from Wind Farms. May 2008 Susan Skalka. Current Public Revenues . Ppty Taxes: Determined by municipality, no standard calculation $153,995 to Searsburg in 2001, PPM offered $240,000 for proposed expansion

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Public Revenue from Wind Farms

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  1. Public Revenue from Wind Farms May 2008 Susan Skalka

  2. Current Public Revenues • Ppty Taxes: • Determined by municipality, no standard calculation • $153,995 to Searsburg in 2001, PPM offered $240,000 for proposed expansion • Sheffield will pay $520,000 annually to mitigation fund, ppty taxes • H.520, Sec. 5402c: Fee based on production • $0.00225 in fiscal year 2009 • $0.0025 in fiscal year 2010 • $0.003 in fiscal year 2011 and thereafter

  3. Potential Public Revenue • Capture economic rent on profits created not by producers, but by nature and the market • Different fiscal structures could be used • Economic analysis by energy economist would be needed to determine which would work best • Would need to not discourage production of wind energy • Instead of taxing production (which is a cost), take portion of economic rent (not a cost) • Revenue could go into a fund • Fund management would need to be discussed

  4. Proposed Guidelines • Progressive Profit Tax • Percent of royalties taken increases as profits increase • Fiscal Structure should take into account age of facility: • New and older facilities have smaller percentage, those in their prime have highest percent

  5. Estimates for Discussion • 2002 Study*: VT could produce 10% of electric energy from 6 wind-farms,with about 150 1.5 MW wind turbines = 225MW total • Vermont Net generation: 7,084,344MWH/year (EIA) x 10% = 708,434.4MWH/yr • =708,434,400 KWH/yr • Check: • 225,000 kW x 24hrs/day x 365 days=1,971,000,000 KWH/yr • x .35 (capacity factor) = 689,850,000kwh/yr • X * 5.6 cents per kWh est. cost * = $38,631,600 • Assume 6.6 cents per kwh* selling price** x 689,850,000kwh/yr = $45,530,100 - $38,631,600 = $6,898,500.00 • Assume 10.6 cents per kwh* selling price** x 689,850,000kwh/yr = $73,124,100 - $38,631,600 = $34,492,500 • Assume 30.6 cents per kwh* selling price** x 689,850,000kwh/yr = $211,094,100 - $38,631,600 = $172,462,500 http://www.revermont.org/windfarm_benefits.pdf* http://sciencepolicy.colorado.edu/moveabletype/mt-comments.cgi?entry_id=850**

  6. Conclusion Vermont should complete an analysis and be prepared to share profits/ economic rent with wind industry as profits from wind-produced power grow due to factors other than work put in by wind company.

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