Experts discuss alternative energy

South Dakota Public Utilities Commissioner Dusty Johnson and local utility experts agreed at Dakotafest Wednesday that a more even-handed tax policy is needed to encourage broader investment in alternative energy, and specifically, wind energy.

Present at the noon forum were Johnson; Jim Wilcox, director of government and regulatory service for Xcel Energy; Amanda Wangler, wind project manager for Basin Electric; and Scott Parsley, assistant general manager of member services for the Madison-based East River Electric Co-op.

“We need to focus on the big wind (projects), but we also need to focus on ‘small wind’ — those 40- to 50-foot wind turbines — so you can put electricity generation in your own hands,” Johnson said, adding that the focus must be done in a way that’s smart, fair and not a disruptive influence.

Taxes are cut by 80 percent for large wind energy producers, said Johnson, “but we don’t do a great job of cutting taxes if you want to be a small wind producer.”

Parsley explained that the current tax credit structure is set up so that larger corporations can take advantage of tax breaks, “but farmers can’t use that tax credit against direct farm income.” As a consequence, the three largest wind developers in the state are based in foreign countries, he noted.

“There needs to be a way to level the tax credit playing field,” said Parsley.

Johnson also said the vision of South Dakota powering the U.S. with wind may be possible, but unlikely, since other states will likely develop their own wind resources if possible. Hence, he said, the state needs to pay closer attention to local development.

Wilcox agreed.

There’s an unreasonable development expectation that South Dakota should be the Saudi Arabia of wind, said Wilcox, but “wind power, like electricity, is a commodity. Both need development, transmission lines and customers who want to buy your power.”

But Johnson also said that better transmission lines will be needed if the state is to realize the development of wind-generated electrical resources. The cost of those improvements shouldn’t fall solely on the shoulders of South Dakotans, Johnson said.

Johnson said the state is lagging in addressing tax policy. The PUC has tried to get more aggressive in recent months on that count and will back legislation for the 2010 session to offer tax breaks that will make it easier for landowners to purchase small turbines.

Small wind turbines are unlikely to save energy, “at least in the short term,” said Johnson, noting that it’s still cheaper to buy electricity from utility companies.

But there’s interest in development.

“I think that as a state government we want to facilitate that to the extent that it makes sense. Landowner associations need to work together to build a future for their individual projects,” he said.

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