Sunday, December 9, 2018

MidAmerican wind property tax


I do have a lot of correspondence on this issue.  I thought I would share some of it.
Here, in 2013 , a couple board members at the Iowa Wind Energy Association seem skeptical that MEC was installing wind turbines for the cost I listed in this post at bleedingheartland. 
And, if you check my 2014 post, where IWEA discusses installed wind turbine costs, they are higher than MEC was reporting to assessors in 2013 and before. So, MEC is somehow installing turbines at a lower cost than industry numbers reported by the American wind energy association in that time frame ?  
In his comment at the end of the  bleedingheartland post,  IWEA board member Mike Carberry even called it a "financial malfeasance" while wondering if the Des Moines Register would be interested .  So far, the Register is not.
Link to the bleedingheartland post. 




Here's an email discussion with Senator Joe Bolkcom a few months back. I'll post some excerpts. I've known Joe for several years. He seems like a good guy who represents his constituents well. I reached out to him because quotes he made in the media concerning Iowa's budget issues.
 Senate Dems were first made aware of this issue when Daryl Beall scheduled a meeting with the DOR property tax department and sent a senate staff person in 2014. Mike Granstal's office was informed also,  but I would be happy to meet with them to go over more recent information that I've found. Plus, if people haven't dealt with an issue before, they'll need to learn about it. That's why all those lobbyists hang out at the capital after all :) .    Also , yes, my writing skills are not great, and I don't think I always explain this issue well to folks dealing with it for the 1st time.







Really ? Contact the Register? My thinking is any elected official concerned  about the budget might want to be involved when someone sends information about discrepancies with $$$ amounts this size, but I did contact Lee Rood as he suggested.  Also, I did send some of this information to another  DMreg writer a while back, Donelle Eller if memory serves.

  


Didn't hear anything more from these folks. I did remind Senator Bolkcom about this when I received a Dem email later on fretting over the condition of the states budget, so I've probably annoyed him. Still, I'll gladly meet with senate staff and go over the issue. They will likely be able to obtain documents I've had a hard time getting so far.  I'd simply like to hear someone explain why the discrepancies I've identified are occurring .


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Saturday, December 8, 2018

MidAmerican wind property tax update


updated on 12-9

A timeline of my wind property tax research might be useful to blog visitors.

My research into the MEC wind property tax issue began a few years ago, when I saw a per turbine valuation listed in a local newspaper. I thought the valuations looked too low, as I had some experience with wind project development. When I asked to see MEC's filings in Pocahontas county, I was told they weren't available to the public. Yes, I was denied access to public records. After a lawyer drafted a letter to the Pocahontas county assessor office, The assessor  provided the paperwork I had requested. I had the same experience in Calhoun county. A copy of the letter I sent  to Pocahontas county previously secured MEC filings in Calhoun as well. I'm not the only taxpayer denied access to these files, but persistence pays off I guess. Did MEC request these records remain confidential?

It soon became apparent that local government had little interest in verifying that the utilities filings were accurate. Daryl Beall was the elected senator for my district at the time. He was kind enough to  schedule a meeting with the state property tax department at the Department of of revenue when I informed him about this. He was unable to attend, so he sent a senate staffer (Jace Micheals) with me. The state property tax director had little interest in this issue, and I was directed to the local property tax review board to resolve it. I did file a petition in Calhoun county , which was quickly denied, even though  the Calhoun county assessor actually supplied information that supported my suspicion that MidAmericans wind property taxes were too low. It seemed the outcome was predetermined here.

So, from the beginning I got little cooperation from state or local government. I was able to eventually piece together enough information to become convinced that there was a problem here. Much of that information has been uploaded to the blog. including more details on items above. I have more to sort through, and I'm sure there will be more info to come. I worry that this issue is much larger than the discrepancies I've found so far, which is why I called for a thorough audit of MidAmerican's wind property and replacement tax filings in the previous post. The issue looks huge. It's been going on for years. It will take state and local officials lots of time and effort, and no doubt will anger one of the county's largest utilities, which, as this post mentions, can exert a lot of influence in the state.  No doubt these are some of the reasons it has been so hard to get public officials interested. Newspapers are probably risking potential advertising income here as well.

So I want to list the public employees and elected officials that have received this information so far. The list will likely be added to as I go back through several years of correspondence on this issue.

The assessors from Calhoun and Pocahontas counties. A Webster county assessor told me the state DOR had warned her against contesting wind property valuations. The following Webster county assessor who replaced her said his hands were tied,  and to contact the state DOR and department of management.Supervisors from Webster county and Calhoun county were informed and did not act on the issue.

I fared no better at the state level. DOR sent  me back to the local  property tax review boards, stating this was a local government issue, so, state and local government are contradicting each other.  I finally sent DOR much of the information here on the blog, and received no response. I then contacted the department of management , who in turn contacted DOR. This resulted in an angry unscheduled phone call from DOR property tax department, documented here on the blog. Department of management ceased responding to to me soon after.


Another groups inquiry to the state AG office about MEC's turbine repower project was referred to the DOR, not a good sign considering the experience I had there.



On the Democrat side, former state senator Daryl Beall was very helpful. The information was also sent to Micheal Gronstal's office (Eric Bakker), Senators Joe Bolkcom , and Rob Hogg. who were not interested to date. The state treasurer referred my information to the state auditor ( Republican-who has stated they are looking into this). The state AG office (elected Democrat) referred the turbine repower part to the DOR. Since these discrepancies have been going on for years, the heads of the departments above would have Democrat appointees during part of the time periods I have identified.
They didn't find these problems, or didn't act on them if they did.
an email example sent to Senate Dems, Never did hear back from Eric:



The heads of the state departments above are now staffed by Republican appointees who  currently have shown little interest and one even displayed what I would consider strong push back on this issue. The exception being the state auditors office (elected Republican) who said they would review it.

  I'm not surprised when someone ignores this, maybe thinking it looks like a lot of work. But I've experienced a lot of bipartisan resistance, along with some genuine push back while trying to sort this out. Add in some off the record comments folks have mentioned, and I'm confident in the need for a large audit.

My current state senator and representative are Republican and I recently met with Senator Kraayenbrink about this. I'm hopeful for their help.

Area newspapers - the Pocahontas Record Democrat and the Storm Lake Times have shown little interest. Lee Rood from the Des Moines register did not respond to information sent to her.


One elected official asked if MidAmerican would ask for a rate increase if it was found the the utility owes more taxes. I suppose it's possible, MEC is a rate regulated utility who gets a guaranteed rate of return . However, if I was a regulator, I'd ask why the utility wasn't reporting taxes accurately in the first place. I'd vote to make the MEC board of directors to cover any back taxes. Fully disclosed tax liability would be crucial for regulators to properly do their job. The last IUB regulator who was critical of MEC was replaced though.  

An elected official even revealed during a conversation that he was "told not to look into this" (wish I had a written record of that!) . If he disputes that, he is welcome to roll up his sleeves and assist. And yes, I've endured the jokes about getting audited, or that I'll get beat up from people. Considering that I had one of my letters opened by MidAmerican a few years back  .....well ....   I always hope for the best with people, though I've got to say this issue has been disappointing at times.

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And also , anyone listed here is welcome to provide a statement if they disagree with what I've written. Or, they could simply prove me wrong and help sort this out. I'm just a farmer, but I did discover this issue, as opposed to several people above who have the responsibility to make sure things like this don't occur. Anyone of them are welcome to contact me. It would be nice if someone would explain why all these financial discrepancies are happening. This spare time research and reporting project continues....

   


 
   John Stewart








               

Thursday, December 6, 2018

MidAmerican wind property tax update



Updated -12-8 , comments added 


Almost a year ago, I received a call. Someone had forwarded the MEC wind property tax information I've been making available online to the State Treasurers office. That office in turn had forwarded the information to the state auditors office. The gentleman on the phone mentioned he was from the state auditors office, and had seen the information I've been uploading. He asked some questions , stated the auditors office would be proceeding with a full review that would take a while, and said his office would be in touch at some point. I told him that I would be happy to provide information, relevant correspondence, etc. and thanked him.

As I mentioned above, that's been almost a year ago. I've thought it odd that I've heard nothing since, though I recently noticed the auditors office completed a review started in May of Iowa's medicaid system. It examined several months, January 2017 to November 2018, with 5 staff members performing the review. The article linked here was critical of the audit. The blogger is active in Democrat politics, and the current auditor is Republican, so I won't comment on the politics here, except to note that Iowa has room for improvement on healthcare, lots of room . But,  hey , I'm an energy blogger, so I'll keep those opinions to myself for now, except to recommend that visitors who are also interested in healthcare might check out the link to Matt Stoller on the side bar of this blog.  I was interested in the  time period audited, and time ,staff needed to complete the Medicaid audit because some of the wind property tax discrepancies I've been listing on the blog have been going on more than a decade. Much longer than the review time frame for the medicaid audit.So maybe it isn't odd after all that I haven't heard back from the auditors office.Reviews like this undoubtedly add to their normal annual workload.


I'm hoping the state auditor is still active on this, and will trace down why all the discrepancies and procedures  I've listed on the property tax issue have occurred. I still have additional information I haven't uploaded yet. I'm researching and reporting what I've found in my spare time after all.  So, here's my wish list for a full and thorough audit into MidAmerican's wind property tax :

1 Audit all of MidAmerican's 20 plus wind projects. Compare the utilities federal FERC wind cost filings and the Iowa utilities board filings , and compare to valuations MEC submitted to county auditors, Every MEC wind project I've looked at so far. has discrepancies between MEC's county filings and the MEC's federal FERC filings, so the auditor should look at all MEC wind projects.The Iowa Utilities board MEC  filings relevant to this are likely confidential. The IUB wasn't helpful at all to my inquiry about this. The auditors office would have no trouble getting them. Indeed, the gentleman who called me mentioned he had visited the IUB and would be continuing a review of MEC's wind property taxes. There's probably useful information relevant to this issue at the SEC as well, which I haven't had much time to check into, except to notice some information that MEC filed there that I couldn't find yet at the IUB (transparency issue ?). Some of these wind  projects have been in operation for a decade, so that's a lot of wind projects and a lot of years to review.

2 Audit MidAmerican's replacement tax filings at the state department of revenue. Every MidAmerican wind project has listed certain wind project grid connection equipment in the replacement tax program. That information is from an email sent to me by MidAmerican employee Dean Crist. He may possibly be retired. Thanks for your help Dean! That email is posted here on the blog, along with a Webster county MEC filing that supports the email. I've found another wind project that listed similar equipment as wind property. When I review the Iowa code, I don't think MidAmerican should be able to do this. Definitely not fair if DOR is allowing them to and other wind projects in the state can't.

I also noticed MEC removing this equipment from wind property , but I can find no record MEC added it to the replacement tax.  Again... 20 plus wind projects, some them more than a decade old, so lots of work here. When I sent DOR information about this, they didn't reply. Then I received an angry call from DOR when I contacted the department of management(the budget folks), and DOM contacted DOR about. During the angry DOR call, they stated that this was not happening. I followed up with an email that I thought clearly showed the wind asset switcheroo was happening. I received reply that stuck to their original position. So... they didn't find this error on their own, or they did know, and were unconcerned ?  And, since I found an instance of MidAmerican wind equipment missing from the replacement tax, I suspect that MEC is self reporting their replacement tax to DOR with insufficient oversight. My question about this to DOR has gone unanswered so far.      

Since I've found this issue, the auditor should examine MEC's other assets in the replacement tax program for similar problems. Since The annual KWH's of generation are listed at FERC for MEC wind projects, I'm guessing the rest of MidAmerican's assets are there also. State DOR said replacement tax calculation formula was confidential (transparency issue ?) The auditor should compare those generation and transmission assets annual KWH's,  calculate the excise tax due on those assets and compare them to the MEC filings for these assets at the department of revenue.I'm guessing there will be discrepancies, and if so, then MEC's natural gas assets should be audited also. The replacement tax program has been in place about 20 years... so, wow! That's a lot to track down.  Replacement tax was adopted when the utilities pushed for deregulation in Iowa, noted in another post on this blog.

3 The state auditor should take a position on MidAmerican's current wind turbine repower operation.The state DOR has stated that it considers this operation to be repairs, not improvements.So no additional property taxes will be due .  Since MEC is installing bigger gear boxes, larger generators, and longer turbine blades, These sound like improvements, and should be taxed accordingly. The state auditor should sort this out as well. I've also found instances where MEC has lowered the valuations on their wind projects with no supporting documents in county assessor filings. Again... 20 plus wind projects, some in operation over a decade.

I've sent this information to lots of agencies and elected officials, so it was encouraging that one of them called me and said they would be looking into it. As you can see, I'm hoping for a pretty thorough audit, so Iowans can be sure one of the states largest taxpayers is paying its fair share, and treated the same as everyone else. Who knows, maybe the auditor might find some back taxes due to aid the state budget. The discrepancy that I found on just 1 wind project is worth about $120,000 annually,      

  Also, Iowa will soon have a new State Auditor, Rob Sand, who has stated his intent to exercise use of the auditors office prosecuting and enforcement authority more than the Auditors office has in past years.
There's plenty of other energy issues to write about, but I think I'll stay with the wind property tax issue a while longer. Hope readers aren't getting bored.

Here are some past posts about this issue for easy reference. 

emails sent to department of revenue , wind turbine repower,   wind turbine repower 2,  wind turbine repower 3,   mec wind xi, gov removes IUB member after MEC meeting, DOR phone callutilities board not helpful, non mec owned wind project superior assessor filing,   mec press release compared to county assessor filings, mec replacement tax,   questions sent to DOR and department of management, mec highland wind project mec press release 2, mec lundgren wind project,  mec wind press release vs county filings, Iowa wind energy association cost estimates,  Calhoun county  MEC wind property tax review, DOR wind cost reporting memo to assessors, mec wind Pocahontas county, mec wind Calhoun countymec dean crist,   auditors office, and more posts, though these have the bulk of the information found..


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