Rev & Tax Committee holds geothermal tax bill for clarifications 

The House Revenue and Taxation Committee on Feb. 18 voted to hold, until Feb. 21, a bill that would require counties to tax geothermal power projects the same way they tax wind projects – based on production revenue.

House Bill 529 also aims to clarify the definition of machinery and equipment used by renewable energy production facilities, and to clarify what equipment is exempt from sales tax.

Rep. Leon Smith, R-Twin Falls, and Rep. Ken Roberts, R-Donnelly, said the bill’s definitions of “operating property” should be clarified.

Idaho State Tax Commission officials, in response to a question by Rep. Nicole LeFavour, D-Boise, said they didn’t expect the legislation to impact the definition of personal property.

The bill would not impact the Idaho General Fund, according to the bill text. But Tax Commission Policy Supervisor Dan John said it would have a fiscal impact if it exempts from sales tax some items that now are not exempt.

Centra Consulting Inc. and U.S. Geothermal proposed the bill.

U.S. Geothermal’s Raft River LLC production facility south of Burley now pays property taxes on the improved property, Stephen West of Centra Consulting said in an interview. House Bill 529 would exempt such facilities from property tax, and instead impose a 3 percent production tax on revenue from energy production. The energy production tax revenue would go to counties.

“It improves the economic model for existing facility expansion or new facilities, and provides the means to recover some of the enormous capital costs associated with these types of projects,” he said. The operator would pay the county from realized revenue rather than from property taxes up front, he said.

“With this legislation, we’re able to recover some of those capital costs sooner without adversely impacting the revenue stream going to the county,” West said. This would leave the facilities in better position to hire people and expand – a boon to income and sales tax collections, he said.

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