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The Problem With Oregon’s Business Energy Tax Credit

Gina-Marie Cheeseman
| Tuesday February 23rd, 2010 | 2 Comments

Oregon’s Business Energy Tax Credit (BETC) allows businesses without ties to green energy buy credits at a discount and reduce their state income tax bills. There is a problem with the BETC. As Treehugger.com put it, Walmart “raked in $11 million by taking advantage of it—without ever touching a solar panel or a wind turbine.” State records show Walmart paid $22.6 million in cash in 2009 for the right to claim $33.6 million worth of energy tax credits. The money Walmart paid went to seven projects, including two wind farms and a solar power manufacturing plant. Walmart profited $11 million from it.

The Weyerhaeuser Paper Mill received $3.3 million in Oregon energy credits in 2008 for revamping a biomass plant that burned wood waste for heat and steam, and capturing the heat to dry paper. The company then sold energy tax credits to Walmart for $2.3 million in cash. Walmart is able to deduct the full $3.3 million from its Oregon income tax over five years. Last year, International Paper bought the mill and shut down production. Walmart is benefiting from energy tax credits even though the mill is no longer in operation.

A Texas trucking company called Mesilla Valley Transportation received 752 separate tax credits worth $4.5 million. An investigation by The Oregonian discovered that Mesilla’s long-haul rigs run less than one percent on Oregon roads.

The Oregonian cited other examples of companies who benefited from the BETC:

  • A Clatskanie ethanol plant got $12 million in tax subsidies plus a $20 million state energy loan, then promptly went bankrupt and stopped operating. The plant, Cascade Grains, claims it’s still owed $10 million in tax credits, and it may sue to try to get them.
  • A wind energy project received four separate $10 million tax credits even though it will generate less electricity than projects getting one-tenth the $40 million subsidy.
  • A Boardman tire recycling plant got $3.4 million even though, after more than two years, it has yet to recycle tires. Investors are suing founders of Reklaim Technologies, now known as McKinstry-Reklaim, alleging they were misled about the project’s solvency.
  • Thirty-five companies that had applied for smaller tax breaks under the old rules were granted the higher subsidies — essentially giving them windfalls that cost taxpayers $2.1 million.

“I’m concerned that projects were funded that may not have benefited Oregonians,” said Mark Long, who took over as Energy Department director last June. “If it’s determined that there was not a benefit to Oregonians, then the department will take action. Absolutely.”

“It’s so convoluted,” said Eric Fruits, an adjunct economics professor at Portland State University who has studied Oregon’s energy incentives. “You’ve got all these dollars swirling around. Everyone is trying to grab them as fast as they can.”

“The problem is, we’re taking taxpayer money that is supposed to be accomplishing energy efficiency or power generation and instead we’re putting it into the financial market,” said Jody Wiser, who leads a watchdog group that wants changes to the energy subsidies. Wise thinks it would be better to give clean energy or energy conversation companies grants.


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Categorized: Policy & Government|

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