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Fed guidelines back Franchot's solar-farm complaint

August 04, 2011|By ANDREW SCHOTZ | andrews@herald-mail.com
  • Maryland Comptroller Peter V.R. Franchot talks with local business owners in this Herald-Mail file photo. Franchot voted last week against a solar farm lease in Washington County, questioning why the state didn't seek a share of federal money the project could receive.
Herald-Mail file photo

Maryland Comptroller Peter V.R. Franchot voted last week against a solar farm lease in Washington County, questioning why the state didn't seek a share of federal money the project could receive.

Gov. Martin O'Malley and Treasurer Nancy K. Kopp, the other two members of the state's all-Democrat Board of Public Works, voted in favor of the 20-year lease for Maryland Solar LLC. Franchot voted no.

After the July 27 meeting, Raquel Guillory, a spokeswoman for O'Malley, wrote in an email that, under the terms of the federal energy project program, a state can't receive any of the money.

But, during an interview in Hagerstown this week, Franchot continued to press his case, arguing that the state could indirectly get a share of the federal money.

According to guidelines for that program and a U.S. Treasury Department spokeswoman, Franchot appears to be right.

At issue is a payment in lieu of tax credits — more than $20 million — Maryland Solar LLC could receive for its solar farm at a state prison complex south of Hagerstown.

Maryland Solar will pay $32,050 a year — $128 an acre — to use 250 acres near the prisons. The company plans to install about 100,000 photovoltaic cells and generate, at peak, about 20 megawatts, doubling the state's current solar output.

The project is expected to create about 125 temporary construction jobs.

In a July 22 letter to the Board of Public Works, state Sen. Christopher B. Shank, R-Washington, urged the state to negotiate a better lease.

He cited projects in which government bodies elsewhere received higher rents and a share of the profits derived from the power that is generated.

Kopp asked questions about the lease during last week's meeting, but later said she was satisfied with the answers.

For his part, O'Malley praised the project, saying it would help the state meet its goals for renewable energy and will create jobs.

Franchot said he supports the idea, but wondered whether the state could have negotiated a better deal for the use of the land, so he voted against the proposed lease.

The renewable energy incentive program that Maryland Solar is pursuing is administered by the Treasury Department, in conjunction with the U.S. Department of Energy.

Developers can receive cash payments in lieu of investment tax credits, equal to 10 to 30 percent of the project's total eligible cost.

Maryland Solar has said the Washington County project will cost about $70 million.

Kelly Speakes-Backman, director of clean energy for the Maryland Energy Administration, said the estimate has been $70 million to $75 million.

Although Franchot cited the possible federal payment as $24 million, it likely would be a maximum of $21 million to $22.5 million, based on the figures Speakes-Backman gave.

Maryland Solar is trying to move quickly; it must start construction this year to qualify.

The federal incentive program isn't available to "any Federal, state or local government, including any political subdivision, agency or instrumentality thereof," according to the guidelines.

But Franchot insisted Monday that he's "on very solid ground" in proposing that the state share in the millions of dollars of federal tax money.

"All we had to ask (the company) was, do you think you could give us two million (dollars) of that? Five million? Nobody asked. That's the reason I voted against it," he said.

Treasury spokeswoman Sandra Salstrom acknowledged that the prohibition on governments receiving incentive money only applies to direct payments.

If, after receiving an incentive, a company wants to share it with a government body, "they could certainly do so," she said.

Guillory said Tuesday that the larger point is that Franchot didn't support an arrangement that boosts Maryland.

"In the current economic climate, the comptroller votes against an item that brings jobs to Western Maryland," she said.

On the other hand, Guillory said that Shank, in calling for scrutiny of the lease, "makes a good point."

 "We should do that on every contract," she said.

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