State subsidies could impact wind energy PILOT

Herkimer, N.Y.

A recent announcement that the proposed Hardscrabble wind farm is eligible to receive government subsidies may impact the amount of money local taxing jurisdictions receive from the project, county officials said.

State officials have said they are unable to provide how much the Hardscrabble project may receive, but they did say it is one of five clean energy projects splitting $96 million. The funds are part of a total of $300 million pledged for clean energy production.

County officials want to know how these additional funds will affect a payment in lieu of taxes agreement, which sets how much a company pays to those affected by the project.

Patrick Russell, county Finance Committee chair, said “due diligence” requires looking into how the state money could affect any PILOT agreement.

County Finance Committee members last week proposed hiring a consultant to provide advice on the issue. The legislature will address the resolution at its meeting Wednesday at 7:30 p.m.

Steven Levine, of Encap Development LLC, had previously acted as consultant to the county on an original PILOT resolution in November 2008. Levine could not be reached for comment Monday.

Russell said he anticipates re-hiring the same consultant at an estimated cost of nearly $5,000. The services mainly involve providing advise on the potential fluctuations in the energy market, he added.

The 2008 resolution set a payment from energy companies to taxing jurisdictions of $8,000 per megawatt produced by wind energy projects. The county, towns of Fairfield, Norway and Little Falls and West Canada Valley school district would each share a portion of nearly $600,000 annually, based on the Hardscrabble project’s 37 turbines producing 2-megawatts each. Over a 20-year agreement, as has been proposed, the project could generate $11.8 million in PILOT revenues.

But now that state officials are promising subsidies for the company, only once energy production begins, a PILOT agreement may have to reflect the impact government funds would have on the project and energy market.

What’s Next:

If a PILOT agreement is reached in principle with the company Atlantic Wind LLC (a subsidiary of Iberdrola Renewables), the county Industrial Development Agency must hold a public hearing prior to approval.