Kansas Senate panel considers limiting renewable energy tax exemption to 10 years

Kansas companies that produce energy from wind, solar or other renewable resources would lose their property tax exemption under a bill discussed by a Senate panel Monday.

Such companies have been exempt from property tax since 1999, but a bill discussed by Senate Assessment and Taxation Committee would instead give those companies a 10-year exemption starting with the launch date of each project.

Chairman and Republican Sen. Les Donovan of Wichita said the bill still would provide an incentive for renewable investment, but require those companies to pay their fair share.

If passed, the Kansas Division of the Budget estimates the changes would generate less than $4,000 in additional revenues in 2016, with the amount increasing as more energy plants reach the end of their 10-year exempt period. By 2025, the taxes would generate nearly $18 million per year, most of which would fund schools.

Opponents to the bill argued that tax incentives are necessary for the industry to expand, because the technology is new and at an early stage of growth. Most companies operating renewable energy plants have also already signed contracts to share some revenue with local governments in lieu of paying taxes.

But, Donovan discounted the idea that Kansas would see less investment in renewables because of it.

"I've been told I've got emails on this issue that if we don't continue to be very, very friendly to this type of energy production, they will just pull up and leave. All right, well don't we have something here that they really need? It's called wind," Donovan said.

But, Kimberly Svaty, a lobbyist for the Wind Coalition, an association of renewable energy companies, said other central Plains states offer similar wind conditions as Kansas, and many developers would likely look elsewhere without the full tax incentive.

Jeff Riles, manager of regulatory affairs for Enel Green Power North America, said that many renewable energy companies came to Kansas specifically because of the tax incentives and called the proposal "a bait-and-switch."

"To be clear, (the bill) makes doing business in Kansas completely unstable, incredibly unattractive and very costly," Riles said.

Across the Kansas Capitol, the House Energy and Environment Committee discussed a separate bill that would halt increases to the required proportion of renewable energy that Kansas utilities use to power the electrical grid.

Current law requires that 10 percent of electricity provided by utilities companies come from renewable energy sources. That mandate is set to rise to 15 percent in 2016 and 20 percent in 2020, but the bill would eliminate those future requirements.