Ormat urges plant-by-plant royalty reform, cites McGinnis Hills example
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Summary
Ormat Technologies told the subcommittee that HR 5638 would restore facility-specific royalty treatment intended under prior law, lower barriers to expansion on existing leases, and spur investment; the company cited McGinnis Hills as an example of where current practice created unintended royalty increases.
PAUL THOMPSON, vice president of business development at Ormat Technologies, told the subcommittee that two bills his company supports would help geothermal development: the Geothermal Energy Opportunity Act (HR 301) and the Geothermal Royalty Reform Act (HR 5638). Thompson said HR 5638 would restore a facility-by-facility royalty framework that he described as the original intent of the Energy Policy Act of 2005.
Thompson described Ormat’s McGinnis Hills facilities in Nevada, noting the company built successive units over the years and then experienced royalty treatment that, in practice, increased obligations across the resource area when the first plant reached a 10-year anniversary. "This bill simply says the royalties paid to the federal government are on a plant by plant basis to streamline this process moving forward," Thompson said.
Thompson argued the facility-specific approach would spur investment, incentivize expansion on existing leases, reduce land disturbance through clustered facilities, and ultimately increase royalty revenues by promoting industry growth. He also recounted that Ormat processed multiple NEPA approvals and administrative permits and that administrative permitting delays — rather than environmental review — sometimes blocked project starts.
Thompson closed by saying Ormat supports the nine-bill package and thanked the committee for its consideration; committee members reserved written questions and the record was held open for follow-up.