Like the walking dead in a zombie thriller, the idea of raising Wyoming’s wind generation tax refuses to go away. No matter how many times legislators kill it, the proposal is revived just long enough to see it shot down again.
Any measure that would dissuade development of our renewable energy resources is a bad idea in my book. But that doesn’t forgive the wind industry’s bluster and bluffs — tactics borrowed from the fossil fuels industry playbook — about pulling out over having to pay its fair share.
The Legislature approved a $1 per megawatt hour tax on wind generation in 2010, when wind mega-farms were mostly still on the drawing board in the state. Some factions have wanted to raise the tax while others would like to see it repealed, but it has stayed the same rate since it was implemented.
Wyoming and Minnesota are the only two states that tax wind generation. The tax is a thorn in the side of renewable energy supporters here who don’t want the fledgling industry taxed out of existence before it has a chance to flourish in Wyoming.
Last October the Joint Revenue Interim Committee overwhelmingly defeated a proposed hike to $3 per megawatt hour. Once the session started in January, the House Revenue Committee voted 7-2 against a bill that would have increased the tax rate five-fold.
The issue wasn’t even on Revenue’s interim committee agenda when it met last Thursday in Thermopolis, but it popped up again just as the panel prepared to adjourn. Sen. Cale Case (R, SD-25, Lander) protested that while lawmakers were proclaiming “everything is on the table” when it came to reviewing revenue-generating measures, the committee wasn’t giving a wind tax increase its due.
“Some of us have held our noses and voted to put draft [bills] on the table we probably won’t vote for,” Case said. “Why should this industry be treated any differently than the others?”
Case had a point. The committee also decided to draft bills for a property tax increase; tax hikes for beer, wine and spirits; and to apply state sales taxes to various professional services. All of these ideas will be formally voted on by the Joint Revenue Interim Committee by November.
After a short discussion in which several legislators said the panel needed to “put the issue to bed” and thus give the wind industry some certainty about its future taxes, a voice vote overwhelmingly killed the proposal to draft a wind tax bill. For now. Case, though, promised it will be back in some form.
A brief 2-hour chat
Revenue Co-Chairman Rep. Mike Madden (R, HD-40, Buffalo) unsuccessfully sponsored a wind tax increase bill earlier this year, so one might think he’d be in favor of drafting another to keep the idea alive. But he’s also a stickler for keeping to the panel’s agenda and not deviating from the schedule. Madden reluctantly asked if there was anyone who wanted to briefly speak about the issue. The committee spent the next two hours listening to debate from industry lobbyists, city and county officials and even a few people who voiced their opinions as “private citizens” — a rarely seen species at professional-dominated committee meetings these days.
One of the latter was Jeb Steward, a former state House member who represented Encampment from 2007-’13. He told the committee he favors a reasonable and responsible hike in the wind generation tax to increase state revenue and offset “the permanent and massive industrialization of Wyoming’s open spaces that I love.”
He reminded some of his former colleagues that when they set the wind tax at $1 per megawatt hour, it was a number “that was just thrown out there, not tied to any sound data.” Steward added he doesn’t believe a higher tax
“will drive the industry away from the best wind in the West.”
But according to several industry officials, that’s precisely what will happen. One of the most dramatic in making that point was Juan Carpio, CEO of the Viridis Eolia Master Plan, a planned 1,870-megawatt multi-phase wind project located near Medicine Bow.
The recurring tax discussion, Carpio said, “really scares the jitters out of anyone willing to invest billions and billions of dollars” in Wyoming wind energy projects.
The CEO said his company operates on a “razor thin” profit margin of about 6 percent. If investors can’t rely on Wyoming not to change its tax rules, Carpio said, they won’t hesitate to go somewhere else because there’s a lot of competition in the wind energy industry.
His company wouldn’t hesitate to walk away from a $10 million or $20 million planning investment, Carpio explained, because “it’s better than losing a billion dollars. That’s the reality we get to face every day — it’s economics 101.”
But Case is a natural resources economist, and he isn’t buying any of Carpio’s claims. “They pay a lot of taxes, but they don’t pay a lot of taxes compared to their economic value,” he said.
John Brown, a speaker who said he was representing himself, expressed a similar sentiment but in more colorful terms. “The most important thing is for Wyoming to be fairly compensated for its wind resources,” he said. “We can’t just almost give it away like some floozy.”
Roxane Perruso is vice president of the Power Company of Wyoming, which is developing the Chokecherry and Sierra Madre Wind Energy Project in Carbon County, the largest in the nation. It is slated to have 1,000 turbines with a capacity to produce 3,000 megawatts of electricity when complete.
Perruso said a study of taxes owed for a model wind project in Wyoming and Minnesota, which both tax wind generation, showed that a company would have a total tax bill over the next 20 years of $841 million in Wyoming and only $389 million in Minnesota.
Unlike Carpio of Viridis, Perruso said PCW has no intention of building its project anywhere but Wyoming. Still, she said her company vigorously opposes any wind generation tax increase. “We need [tax] stability while we’re under construction and trying to market our product,” she said.
Local governments opposed
The most compelling testimony may have come from city and county officials who practically begged the committee not to consider a tax increase.
Karen Heath of the Medicine Bow Council said her town, Hanna and Elk Mountain have always been dependent on fossil fuels, and residents are suffering because the coal is gone. “All we have left is the wind,” she said, adding she is fearful a higher wind tax would drive future businesses out of Wyoming.
“Nobody wants to come to a town that has no services to offer. Who wants to come to a town that doesn’t even have a grocery store?” she asked.
I strongly support wind power, and I was incensed when the Legislature established the $1 per megawatt hour wind generation tax. I saw it as a foolish attempt by the state to try to thwart the use of renewable energy and, once again, do everything in its power to prop up a dying coal industry.
But as Wyoming searches for revenue in the wake of its $400 million annual budget shortfall for education, I agree with Case in one respect. If the Republican leadership of the Legislature insists that all taxes are on the table, that should include a thorough discussion of the impacts of a wind generation tax increase. Two hours of unscheduled testimony at the end of a grueling session in Thermopolis that looked at the good, bad and ugly of several diverse tax proposals isn’t an adequate amount of time to fully evaluate how we want to tax the industry going forward.
I don’t support a tax increase, but I’m tired of hearing any industry — whether it’s fossil or renewable fuels — threaten to go somewhere else if it feels it is being jilted in some way by the state. Wyoming has the resources, and I don’t believe for a second that the wind industry is just going to take its turbines and play somewhere else if it isn’t guaranteed no tax hikes in perpetuity.
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If Wyoming takes the logical, responsible action and allows renewables to steadily grow its share of the energy market without interference, there may come a time when the state will need to call on the wind industry to contribute a larger share of its wealth.
If that’s the message the state plans to eventually send to wind farm developers, it’s best that they hear it now.
