PGE Awarded Tax Incentive
by Darryl Swan
Oregon Utility Commission weighing bids for new power generation to offset lulls in renewable energy
The Oregon Business Development Commission unanimously agreed last week to approve Portland General Electric's application for a 15-year property tax exemption for a proposed new natural gas-fired power plant at Port Westward.
PGE was granted entrance into Business Oregon's Strategic Investment Program, or SIP. SIP provides for property tax exemption on new construction in rural areas that meet a minimum investment of $25 million.
In PGE's case, that translates into an $11 million to $14 million tax break spread out over 15 years for the new power plant, which has been valued between $300 and $400 million.
Total taxes on the project are estimated to run between $30 million and $45 million.
Some of PGE's tax savings will come back to Columbia County and tax districts where the new plant will be constructed.
Columbia County and tax district officials have 90 days to agree to a plan for how the tax revenue would be distributed. If no agreement is reached, the onus would fall to the Business Oregon commission to craft a distribution formula.
The power utility is considering two build scenarios for the Port Westward Unit 2 plant, which is being constructed as a capacity resource to offset lulls in renewable energy production.
The plant was identified as part of PGE's 2009 integrated resource plan.
As many as 200 jobs are likely to be created during construction between 2012 and 2014, and the plant would employ up to two full-time positions, said PGE spokeswoman Brianne Hyder.
If approved, construction could start as early as this year.
First, however, PGE needs sign-off from the Oregon Utility Commission, which is requiring a competitive bid on the energy PGE is proposing to provide.
"Just having approval of a SIP does not mean we're going to actually have that revenue or construction," said Columbia County Commissioner Tony Hyde.
The SIP agreement aids PGE's efforts to win regulatory approval from the state utility regulator by lowering its long-term financial obligation for the proposed plant. PGE first approached the county in May with the SIP proposal.
"A strong SIP agreement with Columbia County is going to make it more likely the Port Westward Unit 2 project is built in Columbia County," Hyder said.
The utility commission is expected to award the power contract this year.
David Stocker, the county's economic development director, said the SIP is more attractive from the county's perspective than the enterprise zone because, unlike the enterprise zone, it provides revenue streams immediately after the plant is constructed.
"The county commissioners were particular interested in a SIP because it would generate three distinct revenue streams," Stocker said.
The first $25 million of PGE's potential investment would be taxed at normal levels and the revenue applied to the Port Westward urban renewal plan, a county official explained.
Details on how some of the SIP payments would be allocated are still being hammered out, though $500,000 would be distributed in annual payments to tax districts that serve Port Westward.
The SIP was created out of the 1995 Legislature as an incentive to spur start ups in Oregon's traded-sector manufacturing sector. Traded sector is a legal expression for firms that sell goods and services into markets in which national or international competition exists.
Visit www.oregon4biz.com and search for 'strategic investments' to learn more about Business Oregon's Strategic Investment Program (SIP). SIP gives property tax exemptions on large new construction projects in rural areas.
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