Long-planned project is scheduled to break ground this year, if it remains economically viable
Just when it seemed the a sure thing — after more than a decade of study, planning and clearing regulatory hurdles — a proposed mega windfarm in south central Wyoming is once again in doubt. The company behind the project, Power Company of Wyoming, is reconsidering its plans to break ground later this year in light of discussions about raising the tax on wind power generation during the Legislature’s Joint Revenue Committee meetings in Douglas last week.
The $5 billion Chokecherry Sierra Madre windfarm being developed in Carbon County south of Rawlins was recently the subject of news stories reporting that the 1,000-turbine, 3,000 megawatt installation was close to beginning construction after its most recent round of environmental scrutiny.
But in an email exchange with the Wyoming Business Report today, a company spokesperson said PCW is now uncertain as to when, or even if, the project will ever become a reality. The fate of related electrical transmission project the company had planned is now also uncertain, as well.
“The Revenue Committee’s decision to explore further taxation of wind energy has created significant uncertainty and added a huge new risk regarding our plans to construct and operate two new renewable energy businesses in Wyoming,” PCW’s Kara Choquette said. “As we have always said, whether our projects can be built, or built to their full potential, depends on a number of factors including overall economics, which must consider and reflect federal and state tax policies and the state of the renewable energy market.
“Imposing additional Wyoming taxes increases the risk of successful wind energy and transmission development in Wyoming.”
The Revenue Committee decided at its Douglas meetings to go forward with drafting two bills for consideration during the next legislative session in February 2017: one to raise the production tax on wind beyond the current one dollar per megawatt hour; the other to obligate wind companies to hand over to the state some portion of the federal wind energy production tax credits they currently receive. Exact amounts would also be decided before the bills are filed.
Under the present tax structure, PCW expects to pay an estimated $377.5 million in property taxes during construction and the first 20 years of operation and another $232 million in sales and use taxes to Carbon County and the state of Wyoming. In addition, the state and county would pull in an estimated $171million in electricity generation tax during that span.
As proposed, the windfarm would take eight years to fully complete and when operational would provide power for up to one million customers in California and other southwestern states. An estimated 945 full-time workers would be employed in the two phases of construction and 114 permanent workers upon completion.
At the end of April, PCW formally notified the state Industrial Siting Division that it was requesting to amend its original permit, which had an original commencement date set for the fourth quarter of 2014, and was now seeking to commence construction by December 31 of this year.
“We were not able to project a precise start date because a few more things needed to fall into place, such as receiving the final Phase I infrastructure authorizations from the BLM, but we believed those things would happen in time so that we could begin construction by the end of the year,” Choquette said.
In a letter sent to the committee before last week’s meeting, PCW president and CEO — as well as Anschutz senior vice president for energy and land resources — William Miller called on the legislature to be fair to wind companies, who he said are already paying their fair share. He also warned that altering the tax structure for wind could make projects like Chokecherry Sierra Madre and others proposed for the state economically unfeasible.
He said that in looking to offset tax revenues lost during the recent crash in the coal and oil and gas industries, the state Legislative Service Office “considered only the wind generation tax” and didn’t take into account other contributions the wind industry makes to state coffers.
“The LSO failed to consider two other significant Wyoming taxes paid by wind — the sales and use tax and the ad valorem tax,” Miller said. In addition, the LSO failed to consider the federal royalties paid by wind.
“Therefore, the LSO’s summary comparison of: (1) all taxes paid; (2) Wyoming-based taxes paid; and (3) state level revenues is highly misleading.”
He added that not only does “equity” require the committee to reject another increase in the wind generation tax, but that could also “stall” the Chokecherry Sierra Madre project and “quash any renewed interest by other developers in Wyoming’s wind resource.”
Some legislators were unmoved by the pleas made by Miller and other wind proponents to the committee.
“If it kills a project, it kills a project,” Sen. Ogden Driskill, R-Devils Tower, said. “If wind doesn’t provide some form of significant benefit to the state of Wyoming, I don’t care if it’s here.”
Choquette said that the idea that wind was getting a tax break, as compared to what the minerals industries pay, is also unfounded.
“We are glad to continue sharing facts about how Wyoming’s taxation of wind farms has significantly increased since 2008,” Choquette said. “Wind farms now pay property taxes, sales/use taxes, and wind electricity generation taxes in Wyoming, whereas in 2008 it was property taxes alone. The CCSM Project’s current approximately $800 million in Wyoming tax payments, for example, has more than doubled in amount since 2008. On a per-megawatt-hour of electricity produced basis, the Wyoming taxes that new wind projects pay already exceed that of coal and natural gas.”
She did hold out hope that this new challenge to the project would be resolved favorably, and that the windfarm would finally see the light of day, because in the long run it would be a boon for everyone involved.
“I would add that we are grateful for all of the strong local support we have received in Carbon County for our proposed projects and the significant economic benefits they would provide to Wyoming, if built,” Choquette said.