South Dakota is weighing two tax breaks to induce developers to build coal-fired power plants in the state.

The projects are a $1.5 billion new power plant that a coalition of five utilities is considering building near Mobridge or Yankton and a $1 billion plant that a group of six other utilities has studied building on the site of the existing Big Stone power plant near Milbank. The Big Stone plant is owned by Otter Tail Power Company.

South Dakota has no income taxes.

A state utility group has proposed to the governor that the state refund a 2% excise tax that is collected on labor and equipment used in construction projects once the projects are completed; the proposal is to refund the taxes over five years. South Dakota already refunds such taxes to developers of ethanol plants. The other break would be an exemption from annual property taxes for pollution control equipment used at the projects. Pollution control equipment accounts for about 25 to 30% of the cost of a coal-fired power plant.

The state legislature could be asked to act on the proposals after it reconvenes on January 11. 

Keith Martin