Tax handouts propel wind power off Virginia’s coast

By   /   September 5, 2013  /   4 Comments

OCEAN BREEZE: Virginia moved a step closer Wednesday to hosting the East Coast's first large-scale offshore wind farm.

OCEAN BREEZE: Virginia moved a step closer Wednesday to hosting the East Coast’s first large-scale offshore wind farm.

By Kenric Ward | Watchdog.org Virginia Bureau

ALEXANDRIA — Energy giant Dominion Power got a doubly good deal when it paid $1.6 million for the right to develop a 112,800-acre tract into a wind farm off the Virginia coast.

“It’s a good deal for Dominion, but only because of the taxpayer-funded handouts that come with generating offshore wind power,” said Nick Loris, an energy specialist at the Heritage Foundation.

“Virginians are going to end up paying for this twice, through higher electricity rates and to help foot the bill for the project.”

The wind venture, which still must clear several bureaucratic and engineering hurdles, could start generating power in 10 years, Dominion estimated.

The utility said the anticipated 2,000-megawatt project could electrify 700,000 homes.

Environmentalists hailed the lease awarded by the U.S. Department of the Interior — with conditions.

“It’s the best deal we could get when you are dealing with a monopoly. No one else could do anything with the lease had they won because they’d have no one to sell to but Dominion, and Dominion would not have been likely to buy the power,” said Glen Besa, director of the Sierra Club’s Virginia chapter.

Dominion was one of only two bidders on the Atlantic tract, 25 miles east of Virginia Beach.

“If this project were truly competitive with other sources of electricity, it wouldn’t need the subsidies,” Loris told Watchdog.

Instead of dishing out “green energy” subsidies, which include a 30-percent investment tax credit and additional bonuses from the state, Loris said government policymakers should focus on oil and gas resources in the Atlantic.

“Offshore lease sales for oil and gas activity would help drive down prices and create jobs for the area,” he said, noting that the Obama administration initially supported offshore drilling in the Atlantic, and then canceled the lease sales.

“Whether it’s offshore wind or oil and gas, they should all be given an opportunity so long as a commercial interest exists and the project can be built without the help from the taxpayer to fund it,” Loris said.

Republican gubernatorial candidate Ken Cuccinelli, and even a few environmentalists, have criticized Virginia’s targeted incentives to renewable-energy projects. These so-called “adders” allow utilities to offset the higher costs associated with such ventures.

As attorney general representing the public in rate cases, Cuccinelli said the adder program raises consumer bills while padding the profits of monopolistic utilities.

Gov. Bob McDonnell, however, has pushed in the opposite direction — engineering an annual $500 tax credit for every “green job” created with a salary of $50,000 or more.

Contact Kenric Ward at kenric@watchdogvirginia.org or at (571) 319-9824. @Kenricward

 

 

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  • madmilt

    Again the taxpayer has been bitten by an adder.

  • Just a reader

    Interesting that the author didnt ask Dominion for a comment. Seems a bit one-sided and like he rushed to get a story out about an “energy giant”. Its easy to call them a monopoly, but its the government that allows that. They tried deregulation but with soaring costs from a lack of competition, it just didnt work out here. So I wouldnt blame a corporation for taking a profit when they are merely following VA statute, even with the incentive adder.

  • Larey

    Who’s the single largest donater to Virginia state politicians?

  • lovernature33

    I am confused. Isn’t there 2 sides to every story? Renewable-energy projects are still a pricey way to go over a more cost effective choice like for example natural gas. Someone has to pay for alternatives either way. If people are afraid of higher taxes stick with the cheaper solution of natural gas.

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