A south-west council is missing out on potentially more than $100,000 in rates from a wind farm that is complete but unable to connect to the outdated electricity grid.
The Mortlake South Wind Farm was due to pay rates to Moyne Shire Council from July but the project has been unable to start producing power and the developer has flagged delays could last until early next year.
For a full year, the wind farm was due to pay about $260,600 in rates but the council can't collect any money until the electricity starts to flow.
Moyne Shire corporate services director Kevin Leddin said there was a different rating agreement for wind farms than for other shire ratepayers that stopped the council from charging until generation began.
"These rateable entities are quite different from the normal rateable properties which are valued on a capital improved basis to calculate their rates," Mr Leddin said.
He said the Electricity Industry Act 2000 gave companies an option to enter into a rating agreement in lieu of the normal rating methodology of the council.
Councillor Jim Doukas said he believed the system was not equitable.
"If I had a farm with no stock on it, I'd still have to pay the full amount of rates," Cr Doukas said. "It's not fair."
But he stressed the system was out of the council's hands because it had been set by the state government.
He suggested wind farm companies should pay a minimum base rate during construction and then have rates go up when electricity generation started.
Cr Doukas said he also held concerns that a wind farm could stop paying rates if it was in a de-commissioning phase.
Australian Energy Infrastructure Commissioner Andrew Dyer said his office had ensured landholders were compensated during project construction but had not investigated councils being compensated.
"There is a formula applied in Victoria that goes back a long time since it was developed," Mr Dyer said.
"I think it would be a good time to revisit what the current arrangements are between councils and proponents and see if there's another way.
"You can't change historic arrangements but maybe it's a good time to take a look."
The council earned $1.6 million in rates from wind farms in the 2020-21 financial year.
Moyne Shire was also unable to charge the Dundonell Wind Farm rates when it faced trouble connecting to the electricity grid last year.
A spokesman for Acciona, the developer of the Mortlake South Wind Farm, said construction had led to a "significant boost to the local economy" including $180,000 shared with neighbouring residents.
It included gift cards for anyone within four kilometres of a turbine to be spent at businesses in Mortlake, Terang and Noorat.
The spokesman did not respond to questions about whether the wind farm would be open to paying council rates earlier.
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