By Mark Waite
SolarReserve Chief Executive Officer Kevin Smith defended his company’s use of tax rebates as essential to landing a competitive contract to supply power to NV Energy.
He was responding to complaints by Nye County Commissioner Butch Borasky at a Dec. 4 meeting about the company’s request to the State Energy Office for a 55 percent property tax abatement over 20 years. The abatements were provided under Assembly Bill 522, passed in the 2009 session of the Nevada Legislature.
“The reason why there’s a project up in Tonopah is because we won a competitive bid with NV Energy,” Smith said. “We do everything we can to make sure we’re competitive. We included the renewable energy tax abatements as did all the competitors. Everybody’s bidding to win.”
“When we bid our power price to NV Energy we included the tax abatement issues in our pricing,” he said.
The property tax abatements aren’t a savings for SolarReserve, he said, but wll be a savings for NV Energy. The utility signed a 25-year power purchase agreement to receive electricity from the SolarReserve Crescent Dunes project 13 miles northwest of Tonopah. Other companies, like Solar Millennium, weren’t succeessful at landing a power purchase agreement with NV Energy, which filled up its renewable energy portfolio.
Smith said the cost of electricity NV Energy will pay from the Crescent Dunes plant will still be about 13.5 cents per kilowatt hour, by comparison Valley Electric Association residential customers pay 10.98 cents per kilowatt hour. But he said SolarReserve had to bid a fixed price for their electricity over 25 years.
SolarReserve still estimates the company will pay $73 million in combined taxes — sales and property taxes among others — over a 20-year period. Smith said 55 percent of those taxes will be paid to local government, 45 percent to the state.
“We bid that project tight to make sure we could sign a contract with NV Energy and build the project. Without this project I’m not sure what the revenue generation would be off that land, but I’m sure it would be pretty minimal,” Smith said.
SolarReserve was able to use the 55 percent property tax abatement on 281 acres of land they own, but they will end up paying more because the use was reappraised from agricultural to commercial. However the company will benefit from the value of improvements on a 20,923-acre parcel leased from the U.S. Bureau of Land Management. But the BLM also charges SolarReserve and other renewable energy companies a fee for leasing public land.
The value of improvements on the BLM land was reduced from $887,837 to $399,527. Right now the property contains the 450-foot solar tower.
The traffic out to the site 13 miles out Pole Line Road from Highway 6/95 just west of Tonopah, led to the deaths of 11 cows. Smith said SolarReserve is trying to work through those issues.
“There’s a whole lot more traffic. They have been working some double shifts as well. We’re trying to work with the town and with the contractor to make sure that we can eliminate some of those issues,” he said.
County Commissioner Dan Schinhofen Tuesday questioned a requirement in the development agreement requiring SolarReserve to hire 90 percent of its work force from Nevada, another point raised by Borasky. Smith said the company is willing to pay a penalty for failing to achieve that goal. During a September interview, Smith said 73 percent of the construction workers were Nevada residents.
The penalties for failing to reach that 90 percent threshold will be assessed at the end of the project, Smith said. The payments will go into training and educational programs, he said, but added, “it’s really up to the county to decide what they want to do with that.”
The development agreement had suggested a worker training program with the Nevada system of higher education to train future workers for construction on renewable energy projects.
Finally, Smith addressed remarks by State Assemblyman Ira Hansen, R-Sparks, who now represents that area in the state Legislature, who was critical of subsidies for renewable energy projects. Smith said his company will pay about $300 million in interest back on a $737 million federal loan guarantee.