Province launches tax rebate program for delinquent wells
Back row from left, Camrose County Coun. Gregory Gillespie, Coun. Brian Willoughby, Coun. Doug Lyseng, Coun. Cindy Trautman, County Administrator Paul King, and Coun. Jack Lyle, front row Wetaskiwin-Camrose MLA Bruce Hinkley, Reeve, Don Gregorwich, and Energy Minister Margaret McCuaig-Boyd met in Edmonton last week to discuss PERC. Supplied
The Alberta government has announced a tax relief program for municipalities dealing with delinquent oil wells.
This past week, Energy Minister Margaret McCuaig-Boyd, along with Alberta Municipal Affairs Minister Shaye Anderson, introduced the Provincial Education Requisition Credit, or PERC. The program will refund taxpayer money paid out by municipalities to cover education taxes and is to be capped at $10 million a year. It will be retroactive to 2015 and run through 2019.
In Camrose County there are currently 129 delinquent oil and gas accounts. There are currently $664,778.15 in outstanding linear and non-residential taxes, of that total about $65,000 is education tax, though the county is currently checking into how much of a refund they will be eligible for.
For Camrose County Reeve Don Gregorwich, this is about much more than just getting taxpayer money back.
“It shows the oil and gas operators that are deliberately delinquent that the government both locally and provincially are noticing them and are taking steps to try and stop this practice,” he said. “In the end, if either government doesn’t do something, it’s our local tax payers that have to pick up the difference when an oil or gas company becomes delinquent and that’s neither fair nor right.”
This is a province-wide problem.
According to the Energy Minister’s office as of spring/summer, the Orphan Well Association had an inventory of 2,084 orphaned wells to go through closure activities. Orphaned is defined as a well or facility confirmed not to have anyone responsible or able to deal with its closure and reclamation. Essentially, there’s no company left to hold responsible because current laws mean bankrupt companies must pay creditors before taking care of their environmental and tax liabilities.
McCuaig-Boyd says this is a problem that has been growing for years and exploded with the drop in oil prices and the slowdown of the economy.
“Part of the reason this problem has occurred is our previous government did not do a good job of paying attention to this, when everything was booming they didn’t put it as a priority,” she said. “In their failure to show leadership on this matter when the downturn hit, the growing amount of wells became a way bigger problem than before.”
The issue with orphaned and delinquent wells goes beyond taxes, it has also left a large debt when it comes to cleaning up the abandoned well sites.
The provincial government has also secured a $30 million grant from the federal government that they have leveraged into a $235 million loan to the oil and gas industry to help kick start the clean-up process. The loan is to be paid back by industry over the next 10 years. McCuaig-Boyd says companies pay into a fund every year to help deal with orphaned wells which have been left behind by companies that have disappeared. In short, oil companies in good standing are on the hook for the mess left behind by other companied.
However, the government is adamant the taxpayers should not be responsible for these issues.
“We are not going to put a Band-aid on it, we are going to continue to address this problem long term,” said McCuaig-Boyd. “The government has a polluter pays policy. It shouldn’t be on the backs of Albertans, the industry needs to clean up their messes.”
Camrose County has been pushing this issue for the last three years with the government.
The energy minister’s office reached out to the County following a motion on the subject put forward by the representatives at the Alberta Association of Municipal Districts and Counties most recent meeting. Usually a municipality has to request a meeting with the minister, but this was completely different. The entire council attended the meeting and everyone had a chance to speak on the subject.
“It was a really constructive meeting,” said Gregorwich. “Our conversation with her was amiable and on good terms. It was quite obvious she understood what we were concerned about, so we were quite pleased with the reception we got.
Funding for PERC will be coming out of the Alberta School Foundation Fund managed by the education department.
Wetaskiwin-Camrose MLA Bruce Hinkley said it is unknown what areas the money will be taken out of when it comes to education funding, however, he points out the province’s infrastructure program, which included building 200 new schools, is winding down and that will be a likely area where funds are moved from.
“It will have an impact, but I think it will be in the capital area and not in jobs,” said Hinkley. “We have made a commitment that we will go into debt to ensure that no frontline social service positions are cut. We’re just not going to do that.”