Rowan commissioners OK incentive deal for Southern Power

Published 12:00 am Tuesday, December 1, 2009

By Jessie Burchette
jburchette@salisburypost.com
Rowan County Commissioners have approved a record-setting incentive deal for a possible $400 million power-generating facility.
The county’s part is certain, but Southern Power Company’s part is far from certain. It will depend on whether the wholesale power company gets the low bid on a long-term contract to supply retail power companies, such as Duke Energy or Progress Energy.
Southern Power is considering expanding its generating facility off N.C. 801. The plan would add 630 megawatts of generation capacity to the existing 925 megawatt facility. Although it would not add additional employees, the construction phase could create 300 or more jobs for up to two years.
Southern Power is a subsidiary of Atlanta-based Southern Company.
Under the deal approved by commissioners on a 4-to-1 vote, Southern Power will have a seven-year window to win a bid, get a signed contract and start construction.
If that happens, the county will rebate 68 percent of the taxes paid for 10 years after the facility goes into operation.
Over the life of the grant, the county would collect $22 million and rebate $15 million to the company. The Woodleaf Fire Department would collect $1.5 million during the 10-year period, according to projection.
Using a 15-year model to show the potential benefits, the county and Woodleaf Volunteer Fire Department would would collect $30 million, keeping an estimated $14.6 million and rebate $15 million to Southern Power.
The figures are based on the current 59.5 cent per $100 tax rate.
Robert Van Geons, executive director of the Salisbury-Rowan Economic Development Commission, said Southern Power already has its air quality permit for the expansion.
He said the county’s current incentive policy calls for an incentive of 85 percent for five years, but stressed that Rowan is competing with many other counties, including Cleveland County, which set the bar at 68 percent for 10 years. That landed a Southern Power facility in Cleveland.
Several company officials were on hand, including Buddy Jessup, who discussed the company’s “lean and mean” strategy.
Responding to a question from Commissioner Chad Mitchell, Jessup said it’s possible that Rowan could end up with the power plant expansion without incentives. He quickly added that the incentives “dramatically increase the chances.”
He explained that the taxes are factored in with construction and equipment costs when the company bids on a supply contract. Incentives allow the company to bid less and improve chances of winning.
The company bids on 20 to 30 projects (contracts) a year.
The board was unanimous in supporting the company’s interest in Rowan.
Commissioner Tina Hall raised several questions about the project and going beyond the guidelines for incentives. She indicated she could support the 85 percent rebate for five years, about $8.5 million.
Mitchell made the motion to approve the 10-year deal with Vice Chairman Jon Barber, adding a stipulation that no illegal aliens can be hired or the company would forfeit payments.
Hall cast the lone vote against.

Comments

Comments closed.