Baker: State obligated on ethanol

While funding for ethanol incentives fell short in this legislative session, Sen. Tom Baker said this morning the state is contractually obligated to pay the incentives to plants which meet production requirements.

Speaking by telephone with members of the McCook Chamber of Commerce Legislative Committee, the senator devoted most of the hour-long session to answering questions about ethanol. The issue is of major concern in this area because of the Trenton Agri Products LLC plant, which is now in production, and the SW Energy LLC project west of McCook and an ethanol project which is in the early stages in Cambridge.

Despite the Legislature's obligation to pay incentives, Sen. Baker said he had difficulty getting an ethanol funding bill though this year. The problem was opposition from urban senators, who opposed adding a small portion of the funding to gasoline taxes. Instead, the final funding measure included corn checkoff money and $1.5 million from the leaking storage tank penalty fund.

As explained by Baker, the ethanol incentives could amount to $22.5 million per plant if all production goals are met. These incentives may be paid over an eight-year period, he said.

To qualify, the ethanol plants must produce 8,333 gallons of ethanol by June 30, 2004, and meet larger production requirements in the years to come. To qualify for the maximum incentive payment of $22.5 million, the plants would have to produce more than 18 million gallons of ethanol annually.

Both the senator and those on the McCook end of the conversation agreed that the key to ethanol's success is the price. If ethanol blend's are cheaper -- as they are in Omaha and Lincoln -- useage will increase. That's already showing on the national level, with alcohol-gasoline blends outselling regular.