Letters from the West

Otter signs Idaho solar production tax sought by developers

The Boise Solar Project is under construction on Cloverdale Road on 550 acres and will product 40 megawatts of solar power. Its production will be taxed at 3.5 percent under a new law.
The Boise Solar Project is under construction on Cloverdale Road on 550 acres and will product 40 megawatts of solar power. Its production will be taxed at 3.5 percent under a new law.

A bill that will help solar developers quietly passed the Idaho Legislature and was signed last week by Idaho Gov. Butch Otter.

The law replaces property taxes on solar projects with a 3.5 percent production tax on solar-produced power. It allows developers to spread their taxes out over the life of the project, and counties to get steadily increasing tax revenues as the price for the power rises.

Wind and geothermal projects have the same arrangement with counties, but their production tax is set at 3 percent. Another difference: Under the new law, tax revenues generated by the new solar projects go solely to property tax relief.

That prevents counties, schools and others from using the taxes to meet growing needs as counties like Bonneville, Bingham and Power already have through wind projects.

Both of these changes came from the need for political compromises after the solar tax was killed in 2015.

Idaho Power and other utilities sought the higher tax as a way to set the bar higher for developers who under federal law are guaranteed contracts from public utilities for their power if they meet certain requirements. The Idaho Public Utilities Commission had already taken the pressure off the utilities by changing the rules for the guaranteed contracts, at Idaho Power’s request, shortening the contract period to two years from 20.

Five to seven solar projects are moving forward in Idaho, including a project under construction on Cloverdale Road in Kuna and a project near Mountain Home.

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