Public Revenue from Wind Farms May 2008 Susan Skalka.

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Presentation transcript:

Public Revenue from Wind Farms May 2008 Susan Skalka

Current Public Revenues Ppty Taxes:  Determined by municipality, no standard calculation $153,995 to Searsburg in 2001, PPM offered $240,000 for proposed expansion Sheffield will pay $520,000 annually to mitigation fund, ppty taxes H.520, Sec. 5402c: Fee based on production  $ in fiscal year 2009  $ in fiscal year 2010  $0.003 in fiscal year 2011 and thereafter

Potential Public Revenue Capture economic rent on profits created not by producers, but by nature and the market Different fiscal structures could be used  Economic analysis by energy economist would be needed to determine which would work best  Would need to not discourage production of wind energy  Instead of taxing production (which is a cost), take portion of economic rent (not a cost) Revenue could go into a fund  Fund management would need to be discussed

Proposed Guidelines Progressive Profit Tax Percent of royalties taken increases as profits increase Fiscal Structure should take into account age of facility: New and older facilities have smaller percentage, those in their prime have highest percent

Estimates for Discussion Study*: VT could produce 10% of electric energy from 6 wind-farms,with about MW wind turbines = 225MW total Vermont Net generation: 7,084,344MWH/year (EIA) x 10% = 708,434.4MWH/yr =708,434,400 KWH/yr Check: 225,000 kW x 24hrs/day x 365 days=1,971,000,000 KWH/yr x.35 (capacity factor) = 689,850,000kwh/yr X * 5.6 cents per kWh est. cost * = $38,631,600 Assume 6.6 cents per kwh* selling price** x 689,850,000kwh/yr = $45,530,100 - $38,631,600 = $6,898, Assume 10.6 cents per kwh* selling price** x 689,850,000kwh/yr = $73,124,100 - $38,631,600 = $34,492,500 Assume 30.6 cents per kwh* selling price** x 689,850,000kwh/yr = $211,094,100 - $38,631,600 = $172,462,500

Conclusion Vermont should complete an analysis and be prepared to share profits/ economic rent with wind industry as profits from wind-produced power grow due to factors other than work put in by wind company.