BUFFALO – Lawmakers spurned a bill to increase taxes on wind energy Thursday, after hearing five hours of testimony from the industry’s developers, utilities, local government officials and ranchers opposed to the proposal.
In fact, no members of the public spoke in favor of wind tax increases, even though lobbyists who represent fossil fuel companies sat through the entire discussion, which ultimately lasted nearly six hours.
The idea to increase wind energy taxes – currently at $1 per megawatt hour, with Wyoming being the only state that taxes generation – originated as school construction money continues to dwindle. The school construction account is primarily funded with coal lease bonuses. But there have not been new coal leases in years.
Rep. Mike Madden, a chairman of the Joint Revenue Committee, suggested increasing the tax to $3 per megawatt hour. The rejection of his proposal represents a major victory by the wind industry, which mobilized dozens of local government leaders and others in the fight against the proposal.
Armed with handouts including splashy graphics and big dollar figures – construction of some projects runs into the billions of dollars – the wind energy industry successfully argued that a new tax will kill projects now under development and put Wyoming at a competitive disadvantage for wind projects at a time when it needs economic diversification.
“Wind and fossil fuels are very different technologies with very different economics,” said Paul Martin, CEO of Intermountain Wind.
However, Madden disagreed that an increase would kill projects if it was around $3. Although Wyoming is unique in its generation tax, he said lawmakers from two other states have talked to him about implementing such taxes in their states. And Wyoming has a different tax scheme than other states.
“We have the cheapest, lowest price of industrial property taxes you can find, almost, in the whole country,” he said. “In fact, the commercial property (tax) is the lowest.”
In the world of renewable energy, wind farms are built one of two ways: Either utilities such as Rocky Mountain Power construct them and add them to their fleet of renewable and nonrenewable-generated electricity, or companies in the business of developing the farms build them and sell the power to utilities, typically inking 20-year contracts.
The contracts tend to have a fixed price, meaning there is no flexibility if the Wyoming Legislature decides to hike the tax halfway through a contract.
Representatives of Power Company of Wyoming, which began building this month a 1,000-turbine project that will likely be the country’s largest, and Viridis Eolia of Venezuela, which is developing a smaller farm north of Medicine Bow, both spoke at the meeting. They described taking on the risk of building the farms and asked lawmakers not to change the taxation scheme.
Cameron Stonestreet of Calgary-based TransAlta, which has a wind farm in Uinta County, said there are opportunities to expand in the Cowboy State. But the current tax environment in Wyoming put the company on pause.
“We just feel a tax increase would really blunt our enthusiasm for the state,” he said.
Rep. Bunky Loucks, R-Casper, wanted the committee to advance the tax proposal so that it would have a debate on the House floor. He disagreed with a wind production tax credit that the federal government gives some companies, arguing it chooses winners – the wind industry – over losers – the coal industry.
“I don’t know how I’ll vote for it on the floor,” he said.
But most lawmakers agreed with Rep. Mark Kinner, R-Sheridan, that wind energy – through employment, construction of the massive projects and taxes the industry pays – offers tremendous opportunities for many communities in Wyoming, especially in Carbon County, where the largest project is planned.
“We’ve heard a lot about Wyoming is a small town with long streets,” he said. “And really I think we’re all in this together, working together for the state.”