Coal Tattoo

Wind vs. Coal I


A pretty smart guy I know in the coal industry took me to task a while back for a story I did about the report showing that the Coal River Wind Project would provide more jobs and tax revenues than the mountaintop removal operations proposed by Massey Energy.

I wanted to pass along his criticisms of the study (well, he was also criticizing my story for not pointing these things out), as well as a response from the author of the study, Evan Hansen of Downstream Strategies.

For everyone’s understanding, this is the story:

A wind-power production facility along the ridges of Coal River Mountain would provide more jobs and tax revenue than a mountaintop removal operation planned by Massey Energy, according to a new economic impact report released Tuesday.

Strip-mining the area will do more harm than good for local communities, if environmental damage and health effects are taken into account, according to the report prepared for the group Coal River Mountain Watch.

Mining the area could produce nearly 200 direct jobs and several hundred more spinoff positions. But those jobs would disappear when the coal is mined out in about 17 years, according to the report prepared by Downstream Strategies, a Morgantown-based environmental consulting firm.

Construction of a windmill operation would generate more than 275 temporary construction jobs, but then create 40 direct and more than 30 indirect jobs that could essentially last indefinitely, according to the report.

And, the report I reference is posted here.

And here’s what my coal industry friend had to say (about my story, and then about the report):

You’re staying true to form in accepting and reporting without question anything generated by coal’s opponents, even when those reports are full of ridiculous assumptions and outright misrepresentations.  For example, the report compares the severance taxes returned to Raleigh County by the surface mine to the property taxes paid by a wind farm.  What about the personal property taxes paid on the mining equipment?  What about the loss of unmined mineral taxes on the seams that would be “sterilized” should a wind turbine be located above those reserves?  That alone would come close to negating the property taxes paid by a wind farm.

I understand Massey is one of the Gazette’s favorite targets and also that Massey often sets itself up for attacks. However, the Gazette at some point has to consider integrity and fairness in its reporting.  It is failing miserably by not even looking at the details of the Downstream Strategies “report.”

And here is Evan’s response:

First off, I’m glad that someone in the coal industry has read our report! I think it’s healthy to have this kind of dialog.

As your contact pointed out, we performed calculations of severance taxes returned to Raleigh County versus property taxes paid by a wind farm. There are certainly other kinds of taxes that would be paid.

Your contact brings up the personal property taxes paid on mining equipment. We did not include these in our analysis. Neither Coal Facts (the industry
publication) nor a University of Kentucky study that examines the economic impacts of the coal industry specifically mention property taxes on mining equipment in their calculations of industry impacts. Keep in mind that mining equipment is often old. We believe that these taxes are relatively small compared with the property taxes that would be paid on the wind turbines. If your contact has hard numbers to refute this, I’d be interested in hearing them.

Also, he brings up the mineral taxes on the seams that would not be mined should turbines be located above the coal. This value is likely to be very small. One major reason is that coal seams less than 30 inches thick are considered unmineable and property taxes are not assessed on these seams. Most of the highest coal seams on Coal River Mountain are less than 30 inches thick and are therefore considered unmineable for property tax purposes. Therefore, it doesn’t matter whether or not these seams are mined.

I told the industry guy he could have the last word, and here’s what he said about Evan’s response:

Hansen evidently doesn’t read the Gazette or else he just missed the article about the state tax department raising taxes by changing the surface mine ratio criteria based on recent coal prices.  The Gazette did a couple of articles around March 8-9 on the tax increases and the impact on small land owners.

I took a look, and found this story:

 Hundreds of West Virginia property owners with no intention of mining the coal underneath their feet can breathe temporary sighs of relief.

The state has rolled back 2009 tax assessments on some coal reserves to last year’s levels after unsuspecting landowners suffered sticker shock in January, said state Tax Department consultant Jeffrey Kern.

The recent reclassification from unmineable to mineable would have added nearly 3.7 million acres to the 4.9 million acres of mineable land last year.

More coal reserves in West Virginia were deemed mineable after the price of coal jumped from about $20 a ton in the early 1990s to about $50 a ton today, Kern said.

And, the State Journal had this take on that same subject:

In January, some West Virginians got an unpleasant surprise in their mailboxes.

The tax assessment of their coal reserves had gone up by more than 10 percent, according to letters from their county assessors. Some assessments actually went up by a lot more.

There were a lot of letters.

“We had pushing 800 mineral tracts that increased in our county,” said Preston County Assessor Terri Funk.

The appraised value of reserve coal in Preston County rose from $23 million in 2008 to $109 million in 2009.

In one example Funk pulled at random from her desk, the owner’s 225 acres of coal was appraised at $340 last year, with a tax bill of $5.10. This year, the owner was told it was worth $101,150 — likely resulting in a tax bill this summer of more than $1,500.

Preston is one of six or seven counties hit hard by high coal property tax valuations from the West Virginia State Tax Department this year.

Many hundreds of small coal owners in Preston, Harrison, Lincoln, Monongalia and other counties called their county offices and the state to complain.