TransAlta could see some tax breaks to convert its coal-fired power plant to cleaner options if lawmakers approve state House or Senate bills that aim to keep jobs at the Centralia-based facility.
The bills seek to exempt the plant from sales and use taxes in the form of remittance for materials, machinery, equipment and labor for construction or renovation to convert the coal-fired power plant into a natural gas-fired or biomass energy plant.
The proposed tax break comes after the state made an agreement in 2011 with TransAlta, the state’s only coal-fired plant, to reduce emissions. TransAlt, a Canada-based company, agreed to power down its two coal-fired units in 2020 and 2025.
The bills intend to provide an opportunity for TransAlta to convert to a cleaner option rather than shut down completely.
The House bill is primarily sponsored by Rep. Brian Blake, D-Aberdeen. State Reps. Ed Orcutt, R-Kalama, and Dick Muri, R-Steilacoom, have also signed on to the bill.
On Wednesday, Blake’s bill moved out of the Technology & Economic Development Committee with an amendment limiting the exemptions to state sales and use tax, excluding local tax. It will go to the Finance Committee next.
A similar Senate Bill sponsored by Sen. John Braun, R-Centralia, has been reintroduced after not making it through the 2015 session.
“I’m hopeful that we can keep either my bill or the Senate bill moving,” Blake said.
Braun’s bill was pulled out of the Rules Committee yesterday to the floor, and he hopes to move it to the House next week, he told The Chronicle.
According to a fiscal note for the House bill, construction will cost about $150 million and the exemption would decrease state revenues by an estimated $9.8 million. However, an April 2015 fiscal note for the Senate bill estimates the construction will cost about $800 million, so the state will lose an estimated $52 million in revenue with the exemption.
Both bills wouldn’t allow for exemptions to be claimed until the conversion has been completed, and not earlier than April 1, 2019.
The legislation, if passed, would expire on July 1, 2025.
In 2008, lawmakers enacted the Greenhouse Gas Emissions Performance Standard, and in 2011 the state set up a schedule for TransAlta to meet the emission reductions by the end of 2025.
The Legislature approved a $55 million payout from the company for local economic mitigation, and in exchange TransAlta was allowed to sign long-term power sales contracts with utilities.
