Gov. Bob Riley's $1.2 billion tax and reform package could cause one company to cancel plans to expand in Alabama.

Tenaska, which operates two generating plants in Autauga County, said the 170 percent increase in state commercial property taxes under Riley's plan equates to an increase of $750,000 to $1 million for the company.

Because of that, it may cancel plans to build two plants in Talladega County, west of Childersburg.

"No. 1, it changes the economics of being in Alabama negatively," said Bill Braudt, general manager of project development for Tenaska, which is based in Omaha, Neb. "Secondly, it lets us know we cannot count on the government to maintain a steady course. Therefore, locking in long-term contracts is a really bad idea. Because Tenaska is not going to take that kind of risk, we'll probably choose to build in other places."

Tenaska invested more than $500 million in its two plants near Billingsley since 2000, said company spokeswoman Jana Martin. The plants, which employ about 40 people, use natural gas to generate electricity. The projects have generated more than $13.8 million in state, local and county taxes, according to the company.

The power is sold at fixed prices under 20-year contracts, Braudt said.

Braudt said the company considered reasonable tax increases as part of its price negotiations.

"Our objection is that no prudent business plans on their taxes going up 170 percent," Braudt said.

Braudt also noted that Tenaska received no tax abatements and no tax credits to locate in Alabama. The state has paid hundreds of millions for automobile plants to locate here during the last decade.

Riley said he was surprised by Tensaska's reaction. He said there may be a way to help the company with future legislation, but that it was not possible to do that during the special session that ended Saturday.

"There may be an opportunity to create something that doesn't affect them as dramatically as they seem to think this does," Riley said. "We couldn't this session."

Tenaska has purchased about 700 acres on the Coosa River in Talladega County and has equipment on site, Braudt said. He did not know when a decision would be made on whether to proceed with the project. He said it will depend on whether Tenaska can still offer a competitive price at the new tax rate.

"This is not a real good market to be raising your price," Braudt said.

The new plants would be in the legislative district of Rep. Ron Johnson, D-Sylacauga, who voted against Riley's property tax proposal.

"The ad valorem part of it just tears them out of the frame," Johnson said. "It doesn't make it feasible for them to do it."

The tax increases will not take effect unless approved by voters in September.

Tenaska, founded in 1982, operates 12 generating plants, including the two near Billingsley. Those are Tenaska's only plants in Alabama.

Tenaska paid $1.1 million in local property taxes in Autauga County last year. The company also paid about $8.9 million in sales taxes during construction of the plants.

"They have been pretty much a lifesaver for us, both the county and the Board of Education over the last two or three years, with the shortfall in education funding that everybody's had," said Clyde Chambliss, chairman of the Autauga County Commission. "We've been able to weather the storm because of Tenaska and the revenues they've generated. I don't think this is an intended consequence of the governor's package, but certainly it's a real consequence. My hope is the governor's staff and the governor's office would work with them to try to find a way it wouldn't affect them so severely."

State property taxes on one plant are estimated at $250,000 to $300,000 this year, but would jump to $675,000 and up to $800,000 under the Riley plan, Martin said.

Local property taxes would go up 10 percent on commercial property.