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 call, utilities 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 county, mec dean crist, auditors office, and more posts, though these have the bulk of the information found..
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