Harry Reid, John Ensign work to reclaim rurals’ geothermal revenue

By Stephanie Tavares

Tuesday, March 9, 2010 | 2 a.m.

Nevada’s congressional delegation is scrambling to try to reverse a 5-month-old change in federal appropriations that is costing some of the state’s rural counties hundreds of thousands of dollars each month.

At issue is the way the federal government divvies up royalty and lease payments from geothermal power companies that are using federal land.

The 2005 Energy Policy Act allocated a quarter of that revenue to counties where geothermal plants are located, half to those counties’ states and a quarter to the federal government.

Since the law was first implemented in 2007, Nevada counties have taken in nearly $17.8 million from royalties and leases, and the state has gotten nearly $35.6 million.

With expectations that Nevada will see a boom in geothermal plants, many rural counties in Northern Nevada were counting on getting even more of this money this year to bolster their budgets.

But the appropriations bill for the Interior Department approved in September changed the formula and gave the federal government what used to be the counties’ share.

Nevada’s congressional delegation voted in favor of the bill. Whether they all knew about the change it contained is unclear.

The Senate version of the bill included language giving home counties their share of geothermal energy income. But the House version removed the provision and that version of the bill won out in conference committee.

In November, a month after the change went into effect with the start of the new federal fiscal year, the National Association of Counties Western Interstate Region sent letters to Senate Majority Leader Harry Reid, Sen. John Ensign and Rep. Dean Heller, R-Nev., whose congressional district includes some of the affected Nevada counties, complaining the counties had been robbed.

Now a bipartisan effort is under way to try restore the counties’ share of the money. The amendment to restore the counties’ share of the geothermal money was introduced by Reid and Ensign. The co-writers of the legislation on the Senate side are Democrats Dianne Feinstein and Barbara Boxer of California and Republicans Orrin Hatch of Utah and Mike Crapo of Idaho.

Heller and Democrat Mike Thompson co-wrote similar legislation in the House.

With a boom in geothermal energy expected over the next decade, the counties stand to lose hundreds of millions of dollars from leases and royalties.

Nevada could add as much as 3,743 megawatts of geothermal energy in the next decade. Up to 1,207 megawatts of that projected energy development is in the final stages of planning or construction. The state leads the nation in geothermal exploration and development and is getting the lion’s share of federal funding for demonstration projects, with more than $73.6 million in Energy Department funding.

California, the current geothermal energy production leader, got about $47.3 million from the Energy Department.

Most geothermal energy development in Nevada is on public land administered by the Bureau of Land Management, which sets the royalty rate and auctions off parcels for lease.

Because geothermal involves extracting a resource from the ground (in this case, heat or hot water) it is considered a mineral resource. That means geothermal companies must pay royalties on the revenue they generate from the resource. BLM collects 1.75 percent of gross income for the first 10 years of a project and 3.5 percent after that.

The issue doesn’t directly affect Clark County because the county doesn’t have geothermal plants. Similar legislation regarding wind and solar plants would significantly affect Southern Nevada, but that legislation has gone nowhere and isn’t expected to advance unless Congress takes up the carbon cap debate, which isn’t likely to happen soon.