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Scott G Winterton, Deseret News
The solar array on the roof of The Leonardo in Salt Lake City is pictured on Tuesday, Nov. 14, 2017.

SALT LAKE CITY — A state legislative audit released Tuesday says a lack of accountability has created a rift of gray area between energy-related tax credits that have been claimed versus ones actually earned.

And the revenue impacts of energy incentive programs — some $74 million over the last five years — are likely to grow while quantifying impacts of the efforts remain hazy at best, according to auditors.

Overall, state-funded and state-regulated energy incentive disbursements totaled $566 million between 2011-15, with the lion's share being paid out from public utility company programs. They include programs like Rocky Mountain Power's wattsmart and Dominion Energy's Thermwise.

Aaron Thorup, Utah Office of the Legislative Auditor General
Utah Office of the Legislative Auditor General

Audit supervisor Deanna Herring told the Legislature's Audit Subcommittee Tuesday that even though programs like these are managed by the utility companies, the state, via the Public Services Commission, retains approval authority over incentive efforts.

The report noted that "tax credits, exemptions and deductions that incentivize energy programs have a significant financial impact on Utah’s tax revenue" and were poised to grow as some incentive programs were being under utilized.

Auditors went on to detail that, over the five-year period covered by the report, the state's General Fund missed out on over $44 million while education funding took an almost $30-million hit due to energy-related tax breaks. Also, the majority of money was paid out in incentives related to fossil fuel development, though there were more individual payouts for programs related to renewable sources.

Herring noted, however, that some incentive programs are buffered to ensure that education funding is minimally impacted by shifting the fiscal burden to the state's General Fund coffers.

The audit cited several programs where a lack of verification may be leading to credits being issued erroneously. Those included one example where the Division of Air Quality in 2015 issued clean fuel vehicle approval to 247 individuals, but 645 people claimed the credit on their 2015 tax returns. While the audit acknowledges that some of the claims may have been carried forward from the year before, verifying the claims would require auditing every return, since DAQ and the State Tax Commission are not sharing records.

Senate Majority Leader Ralph Okerlund, R-Monroe, said the audit underscored that the cost of the energy incentives was fairly easy to identify, but the benefits remained somewhat more illusive.

"What would be really helpful for us is figuring out how we can get to the qualitative parts of all of these incentives we have out there," Okerlund said.

Auditors reported that among the 13 agencies they reviewed that are responsible for management of one or more energy incentive programs, there was little reporting on the effectiveness of the efforts or data reflecting impacts.

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"Although agencies may be internally tracking some program metrics, few of the energy incentives we reviewed have state reporting requirements that could monitor energy-related effectiveness," auditors wrote. "The lack of reporting requirements prohibits the state from monitoring the effectiveness of these energy incentives and if they are accomplishing any type of energy goal."

Auditors suggested state lawmakers could help optimize the wide range of programs and public entities that administer them by centralizing the organization of energy incentive efforts as well as instituting reporting requirements that help clarify and define the energy benefits related to the taxpayer-funded programs.