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November 27, 2014

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Energy:

If you want our sunshine, you may have to pay extra

Assembly bill would tax renewable energy exported from Nevada

On one side, renewable energy companies argue Nevada needs tax incentives to attract the industry to the state.

On the other, a group of lawmakers question the long-term benefit of giant solar projects generating energy largely for out-of-state customers.

Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas, has decided a tax on renewable energy would ensure the state benefits from its abundant sunshine.

“In order for the renewables (developers) to get the tax abatements, they will have to support a fee for a long-term benefit for Nevadans,” Kirkpatrick said Monday.

Kirkpatrick’s Assembly Bill 522, introduced Monday, would extend tax abatements for renewable energy projects, while taxing renewable energy per kilowatt hour.

The tax would initially pay to operate a new Nevada Energy Commission. The agency would regulate renewable energy projects and replace the Energy Office, currently overseen by the governor.

Kirkpatrick said as the state’s renewable energy industry grows, some of the tax revenue would be directed to a fund to reduce Nevadans’ electricity bills and pay for rebates to encourage homeowners to convert to renewable energy systems.

The measure would also require that 30 percent of the materials used in the construction of a renewable energy project be purchased in Nevada.

The legislation is likely to face fierce pushback from renewable energy developers and advocates, who argue that Nevada needs to lower barriers to such projects to remain competitive with neighboring states offering incentives for renewable energy projects.

Rose McKinney-James, head of the solar advocacy group Solar Alliance, said she had yet to review the bill. But “I’d be reluctant to support any additional burden on renewable energy,” she said.

Some have suggested that a tax on renewable energy would kill the industry in Nevada.

But Kirkpatrick said developers could make the added cost work if they build it into their business models.

“We have 55 renewable energy projects being proposed right now,” she said. “We’re looking to set the rules in the beginning.”

As for the argument that some projects would go elsewhere, she said: “If we get them, we get them. At a certain point, we need to look at what’s in the best interest of Nevada.”

Supporters of a tax on renewable energy say that if most of the revenue comes from energy consumed outside Nevada, it could engender more support in the state for the solar and geothermal energy industries. Otherwise, they say, renewable energy companies could face a backlash from residents who expect them to contribute more to the state.

Charging California energy users who have committed to paying higher energy bills could be one solution, they say.

“The question is: Can Nevada use renewable exports to generate income for the state, the same way that Alaska uses oil exports and Wyoming uses coal exports?” said Charles Benjamin, Nevada director of Western Resource Advocates. “Can it be done so it doesn’t violate the Interstate Commerce clause of the Constitution? Can it be done so it’s not to the detriment of industry? This is something to look into.”

Benjamin said he could not comment further on the legislation because he had not had time to thoroughly review it.

The bill, which was formally introduced as an Assembly Commerce and Labor Committee bill, would extend the sales and property tax abatements for renewable energy projects for 10 years. The abatements are set to expire in June.

It would also make the Nevada Energy Commission the lead agency overseeing transmission lines.

It wasn’t immediately known how much revenue the fee would raise. Kirkpatrick said the rate would be part of ongoing discussions.

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