State of North Dakota's Commitment

The State of North Dakota has made a significant commitment totaling over $36 million to the Lignite Vision 21 Program, which consists of feasibility studies, matching grant funds and an attractive package of tax incentives.

Matching Grant Funds of Up to $10 million

In August 2000, the North Dakota Industrial Commission recommended a commitment of up to $10 million in matching demonstration program funds be made available for the Lignite Vision 21 Program. The matching funds are from the 10-cent-per-ton check-off from the coal severance tax, which is designated for research and development purposes as part of the state’s Lignite Research, Development and Marketing Program.

The Industrial Commission, made up of the state’s Governor, Attorney General and Agriculture Commissioner, is responsible for approving distributions of these funds. The Commission has entered into a public / private partnership with the Lignite Energy Council in developing the Lignite Vision 21 Program, recognizing it as the state’s largest economic development project.

Tax Incentives of Over $26 Million

The North Dakota Legislature has enacted very attractive tax incentives to encourage construction of new coal-based generation facilities. These tax incentives carry an estimated value of $26 million for a 500-megawatt size plant.

The State of North Dakota’s tax incentives include:

• Corporate Income Tax Credit: A 1% “new business wage and salary” credit for the first three years and ½% for years four and five. (1969, NDCC 57-38-30.1)
• Sales and Use Tax Exemptions: An exemption from the state’s 5% sales and use tax for all production equipment and tangible personal property used in construction. (1991, NDCC 57-40.2-04.2)
• Coal Conversion Tax Exemption: An exemption from the coal conversion tax. This tax, which is in lieu of property tax, includes two elements:
  1. An installed capacity tax of 0.65 of a mill times 60% of the installed capacity times the number of hours in the tax period. Present law provides a New Coal Plant Exemption from the State General Fund portion (85%) of this 0.65 mill tax for the first five years. The county may also grant an exemption from their share (15%) of the 0.65 mill installed capacity tax for up to five years (2001, NDCC 57-60-02)
  2. A production tax (¼ mill per kWh of electricity generated). Present law provides a 100% exemption on the ¼ mill production tax for the first five years of operation (1991, NDCC 57-60-02).

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