The proposed BrightSource Energy solar power plant at the Hidden Hills Ranch in southeast Inyo County came one step closer to breaking ground with the release of the California Energy Commission (CEC) Final Staff Assessment (FSA) on Dec. 21, 2012.
Although ‘final’ implies finality, the FSA marks not an ultimate decision on the future of the project, but an assessment of impacts to the environment, public health and safety, and compliance with applicable laws, ordinances, regulations, and standards (LORS). The FSA will now serve as testimony at a series of hearings held by two commissioners reviewing the project in the spring. Only after these hearings are completed, and the commissioners present their findings to the CEC for a final decision, will BrightSource and Inyo County know the fate of the solar plant.
As predicted after a heated Board of Supervisors meeting on Dec. 11 between Supervisors and BrightSource representatives, the FSA continued to favor CEC, rather than Inyo County, estimates of revenues and cost impacts to the County. The CEC had previously estimated revenues to the County of as much as $37.2 million over the 28-year lifespan of the Hidden Hills project. This figure, coupled with a much lower estimate of cost impacts to the County, would yield a net gain of about $33.2 million. According to the FSA report, the “sales tax revenue alone generated for the County during the construction period would be far greater than the potential County expenditures estimated by the Inyo County staff and by Energy Commission staff.”
Part of the total revenue to the County, according to the FSA, would be a projected annual $3.9 million from property tax. However, California Revenue Taxation Code, section 73, allows property tax exclusions for certain types of solar energy systems, and might apply to the BrightSource project. “Section 73 is a big issue,” said Inyo County Administrator Kevin Carunchio. “It means that unlike any piece of property that you or I live in, it’s possible that portions of the project attributable to renewable energy won’t be assessable.” Given the nature of the project, particularly the 170,000 mirrors that may be property tax exempt, Carunchio estimated a potential loss in property tax of about 80% percent compared to any similar, non-solar project, should Hidden Hills qualify for Section 73 exclusions.
“That number becomes huge in my mind because the school districts are dependent on these taxes,” Carunchio said. “So the schools suffer at a time when we’re already talking about cuts to school budgets.” Carunchio explained that the property tax exemption was originally created to encourage domestic use of solar power. Since then, it has become a loophole for corporations, providing exemption for industrial wind and solar. “Why are we increasing our sales tax and exempting major corporations from paying property tax?” Carunchio wondered.
The discrepancy between CEC and County estimates of property tax revenue might be acceptable to the County, as Supervisors argued at the Dec. 11 Board meeting, were the CEC willing to offer a guarantee that it would make up the difference should property tax revenues fall short of its estimate. “That guarantee would resolve a lot of our concern,” said Carunchio.
As it is, according to numbers generated by the County, Inyo would receive not $33.2 million total revenue over the project’s lifetime, but closer to $100,000. This dramatic discrepancy reflects a difference in projected expenditures by the County while BrightSource builds its two, 250-megawatt solar power plants on the 3,200 acre Hidden Hills Ranch. The CEC has estimated $4.05 million overall in County expenditures, while Inyo estimated $31.1 million; $11.4 during construction and $1.7 during each year of operation. As noted by Supervisors, these higher figures hinged on a difference in analysis of necessary law enforcement and road rehabilitation during and after construction.
Regarding the issue of law enforcement, the CEC assessment turned to the example of San Bernardino and the nearby Ivanpah solar plant to evaluate potential needs at Hidden Hills. The FSA noted that, in the case of the Ivanpah power plant, “construction resulted in five calls to San Bernardino County … since construction commenced in Oct. 2010, and its construction activities and workforce are similar to that of [Hidden Hills].” However, both Inyo County Sheriff William Lutze and Carunchio disagreed with this comparison. Lutz noted at a March 13, 2012 Board of Supervisors meeting that response times and services were dramatically different between Inyo County and San Bernardino. He also observed an increase in vandalism and theft in the area in recent years, using the example of bullet holes in signs, and theft of metal items to be sold as scrap, and pointed out that the Hidden Hills site would be at once isolated and accessible. In other words, a perfect target for such theft and vandalism.
“I think Inyo County is very different,” Carunchio added. “San Bernardino is a large, rural county, but it certainly has a local government infrastructure to handle such a project. The economic benefits are also completely skewed between San Bernardino and Inyo, because of the proximity of Pahrump and Las Vegas to the Hidden Hills site. A lot of benefits will go to Nevada.”
Carunchio called attention to the fact that the CEC consultant who prepared the report on Inyo County that informed the FSA never set foot in the County except to vacation several years ago. “How can you prepare an analysis if you don’t have boots on the ground?” he asked.
The FSA analysis of the Hidden Hills project will dictate the hearings to come this spring. “State law says that even though the CEC has sole permitting authority over the project, they need to make sure that the project complies with state and county laws, ordinances, regulations, and standards,” Carunchio explained. “I remain positive. I’m glad the FSA is out and we can analyze it and submit comments.”