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Thread: Welfare Case Companies - Kalamazoo Solar

  1. #1
    Banned Melonie's Avatar
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    Default Welfare Case Companies - Kalamazoo Solar

    from

    (snip)"Solar farm near Climax losing money because of property taxes

    CHARLESTON TOWNSHIP — Producing 225,592 kilowatt hours of electricity in its first year of operation, a solar farm in eastern Kalamazoo County that went online in early 2010 has exceeded expectations.

    Also exceeding expectations is the property tax, said Sam Field, a Kalamazoo attorney and one of the owners of Kalamazoo Solar.

    The $27,689 tax bill for the Charleston Township property means that the owners are losing money, even when being paid a premium price of 45 cents a kilowatt hour by Consumers Energy, he said.

    “That Michigan property tax burden works out to a cost of 12.3 cents per kilowatt hour,” Field said. “That amount is more than the retail value of the electricity.”

    For comparison, Field researched the property tax for the Palisades Nuclear Plant in Covert Township along Lake Michigan. He found that the annual real and personal property taxes for Palisades are just over $12 million or .2 cents per kilowatt hour.

    “The property tax burden on our solar project is 60 times as much as the property tax burden on the nuclear power plant when calculated on a per kilowatt hour basis,” he said.

    Kalamazoo Solar has filed an appeal with the Michigan Tax Tribunal over the property tax issue, but in the meantime, it has to continue paying the property tax, Field said. The appeals were filed a year ago but it could be another two years before the hearing takes place.

    The property tax issue has been the one surprise in the whole solar farm venture, according to Field, “It never crossed my mind that the property taxes would become a significant obstacle to our success. I thought it was all kinds of other things. We didn’t know whether our design was going to work or whether the location was a good location or so many things,” Field said.

    Field said he considers Michigan’s system to be “schizophrenic” in the sense that it places a tax burden on renewable energy while at the same time the state has a renewable portfolio standard law to encourage renewable energy. He contends that all sources of producing energy should have the same per kilowatt hour tax rate.

    “On a level playing field, I’m convinced more than ever that solar is going to prevail and carry the day,” he said.

    State Sen. Tonya Schuitmaker, R-Lawton, has visited the Charleston Township solar farm and is working to fix the problem of the property taxes, Field said.

    “She has introduced (bills) to abate property taxes on small renewable energy projects of two megawatts and less. We greatly appreciate and applaud her efforts,” he said.

    With reasonable or no property taxes, Kalamazoo Solar could make a small profit, Field said.

    “What we’ve learned is that if we solve some of these economic issues, that solar energy is just amazingly feasible in Michigan,” he said.

    The company has a 12-year contract with Consumers Energy and plans to fulfill that contract, despite the property tax issue, he said.(snip)


    Let's get this straight ... thanks to a 'cost shifting' gov't approved utility rate structure for Consumer's Energy which allows them to pay 45.0 cents per kWh to solar companies (and in turn recover this cost via charging all electricity customers higher electric rates ), Kalamazoo Solar was able to land a 12 year contract guaranteeing the sale of their solar power at 45.0 cents per kwh. At the same time the nearby Palisades nuclear power plant, which must sell the power it generates at 'free market' prices, receives probably 1/10th that amount or 4.5 cents per kwh. The article points out that the 'retail' price of Consumer's Energy electricity is less than 12 cents per kwh, meaning that Kalamazoo Solar is already receiving about 33 cents per kwh in 'cost shifting' subsidies financed by Consumers Energy electricity customers = $74,000 per year.

    Kalamazoo Solar's commercial solar 'farm' property is also subject to a $27,000 annual property tax bill. They claim that paying these property taxes consumes their entire 'profit margin' and are seeking a special permanent tax exemption ( which hard-pressed Michigan / Kalamazoo taxpayers can ill afford to sacrifice since doing so will force tax increases on others to make up for the revenue loss ). At the same time the Palisades nuclear power plant's commercial property is subject to $12 million a year in property taxes and Palisades is able to operate profitably even though their selling price for electricity generated is far lower than Kalamazoo Solar's selling price for electricity.

    The property tax burden in terms of kwh's generated is stated to be 60 times as high for Kalamazoo Solar's 'farm' of collector panels than it is for the Palisades 'blockhouse' and cooling towers. However, on a per acre basis the tax burden is approximately the same. Obviously when comparing nuclear generation to solar panels, the nuclear equipment requires a far smaller physical 'footprint' per kwh of electricity generated.

    IMHO when a particular 'politically correct' technology is already receiving subsidies amounting to nearly 3 times the actual retail price of the 'product' they are producing ... and are still not profitable ... it's time to face the reality of the situation !

    However, from the 'investor' side, the rich partnership owners of Kalamazoo Solar really don't care where Kalamazoo Solar is profitable or not. The reason ... the ~250,000 kwh of solar power they produce also 'generates' US federal energy tax credits amounting to 30% of their investment ... a tax credit which they can then utilize to avoid having to pay an equal amount of taxes due on other investment income from conventional sources. This is yet another subsidy paid for by US federal taxpayers, albeit that it is 'paid' directly to the investors rather than to Kalamazoo Solar.

    ~
    Last edited by Melonie; 05-16-2011 at 11:45 PM.

  2. #2
    God/dess Zofia's Avatar
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    Default Re: Welfare Case Companies - Kalamazoo Solar

    I suspect Kalamazoo Solar's tax bill represents the agricultural value of the land they occupy with less than productive solar panels. When the land was a farm, $27,000 was a drop in the bucket compared to the value of the corn or soybeans that grew there. Instead, Kal Solar has taken productive farm land and converted it to a solar panel field. (Truth be told, they are probably waiting for real estate to pick up again so they can subdivide the farm and cash out rich.) So, if they had left the farm in a productive state, they would be making good money right now with the price and yield on corn or soybeans. Instead, they make the land less productive and whine about it. To bad, pay your tax bill.

    Z

  3. #3
    Banned Melonie's Avatar
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    Default Re: Welfare Case Companies - Kalamazoo Solar

    ^^^ Zofia, that actually dovetails with the fact that the 'green energy tax credits' for Kalamazoo Solar's rich investors will run out after 7 years or so ! And it also dovetails with the probable result that after 7 years the efficiency of solar panels, inverter batteries etc. will start falling significantly while maintenance costs will start rising significantly. Perhaps the investors' plan from the beginning was to exit the solar generation business as soon as the 'green energy tax credits' run out ?

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