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Panel considers personal property tax exemption for Owatonna peaking plant to keep municipal rates competitive
Summary
Senate File 2615 would exempt personal property tied to a proposed 49‑megawatt natural gas peaking plant in Owatonna from local property taxation, subject to siting and timing requirements; supporters say the move would keep municipal power agency rates competitive.
Senate File 2615, presented in the Senate Taxes Committee, would exempt personal property associated with certain electric generation facilities from property taxation or payment in lieu of taxation. The exemption is narrowly defined in the bill draft to apply to generation equipment for facilities between 40 and 50 megawatts that use natural gas as a primary fuel, are owned and operated by a municipal power agency and meet siting and approval requirements.
Senator Jasinski said the exemption request is intended to place the Southern Minnesota Municipal Power Agency's proposed new 49‑megawatt "Steel Energy Station" in Owatonna on equal footing with similar generation projects in Minnesota and to help keep electric rates for SMMPA members competitive. The bill requires the facility to be within 1,000 feet of an existing natural gas pipeline, located outside metropolitan areas as defined in statute, satisfy a resource deficiency in an integrated resource plan and receive approval by the city and county governing bodies where it is located. Construction must commence after Jan. 1, 2026 and before Jan. 1, 2028 to qualify under the draft language.
Dave Geschwind, CEO of the Southern Minnesota Municipal Power Agency, told the committee SMMPA is building the plant to replace capacity as larger coal units (Sherco 3) retire in 2030 and to meet reliability obligations when renewables are not available. He noted that the personal property exemption traditionally applies only to generating equipment; other real property and non‑generating equipment remain on the local tax rolls. Geschwind also said Owatonna and Steele County passed local resolutions supporting the exemption.
The committee's fiscal staff presented a revenue estimate indicating there would be no general fund impact; because property taxes are local, the estimate projects a modest shift in property tax refunds of roughly $50,000 in fiscal year 2030 in the planning period discussed. Committee members discussed how static and dynamic scoring assumptions influence such estimates. The bill was laid over for further consideration; no final statewide fiscal or policy decision was made at the hearing.
