First year of Wyoming wind tax blows in $2.6 million
Casper Star-Tribune|Adam Voge|March 14, 2013
The $1-per-megawatt-hour tax, signed into law in 2010, raised about $1.6 million for six counties in the central and southeast part of the state in its first year of implementation. Converse County received about $600,000 of that total. An additional $1 million went into state coffers.
The $1-per-megawatt-hour tax, signed into law in 2010, raised about $1.6 million for six counties in the central and southeast part of the state in its first year of implementation. Converse County received about $600,000 of that total. An additional $1 million went into state coffers.
Wyoming's one-of-a-kind wind power production tax generated only a drop in the bucket's worth of revenue for the state and counties in 2012.
The $1-per-megawatt-hour tax, signed into law in 2010, raised about $1.6 million for six counties in the central and southeast part of the state in its first year of implementation. Converse County received about $600,000 of that total.
An additional $1 million went into state coffers.
State officials admitted that the tax revenue collected last year was paltry when compared to revenue derived from minerals and other taxes. But they expect the wind revenue stream to grow with the industry.
"To be honest with you, it's not very much money, really," Ed Schmidt, director of the state …
... more [truncated due to possible copyright]Wyoming's one-of-a-kind wind power production tax generated only a drop in the bucket's worth of revenue for the state and counties in 2012.
The $1-per-megawatt-hour tax, signed into law in 2010, raised about $1.6 million for six counties in the central and southeast part of the state in its first year of implementation. Converse County received about $600,000 of that total.
An additional $1 million went into state coffers.
State officials admitted that the tax revenue collected last year was paltry when compared to revenue derived from minerals and other taxes. But they expect the wind revenue stream to grow with the industry.
"To be honest with you, it's not very much money, really," Ed Schmidt, director of the state Department of Revenue, said. "But it's going to get a little larger."
Among the reasons for the limited tax revenue was the wind energy's struggle to take hold in Wyoming in recent years. That's in large part because there is limited transmission lines available to deliver the power to out-of-state customers eager for renewable energy.
Three transmission projects -- TransWest Express, Zephyr and Gateway West -- could all begin operations in the next few years, creating more demand for the resource and more incentive to build wind projects in Wyoming.
"We've got a limited amount of wind in production right now," Loyd Drain, executive director of the Wyoming Infrastructure Authority, said. "To the extent some of these transmission projects are built, certainly that will increase."
Additionally, facilities that have produced wind energy for less than three years are exempt from the tax. Two of the state's largest active projects -- Duke Energy's Top of the World wind farm and PacifiCorp's Dunlap I -- were exempt in 2012 because they came online in 2010. Both generate more than 110 megawatt-hours, a feat only one active, taxed wind farm is capable of.
The addition of new wind farms, including the 1,000-turbine Chokecherry and Sierra Madre wind project near Rawlins, would drive up revenue generated by the tax.
But some in the state say in order for the wind industry to thrive, the state tax structure needs to change.
Dave Picard, a lobbyist for the Wyoming Power Producers Coalition, said his organization has opposed the generation tax since its inception. The WPPC represents several independent wind producers in the state.
"This tax is unfair to the income of independent power producers," Picard said. "It treats them differently than a utility."
Picard said because independent wind farms must operate under long-term contracts, they aren't able to adjust sales rates to reflect changes in tax codes.
"Independent power producers who've paid this tax ... that's coming directly from their shareholders or owners of projects themselves," he said.
Meanwhile, utilities like Rocky Mountain Power, a division of PacifiCorp, are able to pass the increased costs on to their customers. The company paid about half the $2.6 million collected statewide in 2012. Company spokesman Jeff Hymas said that PacifiCorp considers the tax a cost of doing business and spreads that cost across the six states it serves.
Hymas said via email that more company projects will become eligible for taxes in coming years. By 2014, PacifiCorp expects to pay $2 million in wind production taxes.
Members of the industry remain willing to negotiate wind tax structure. In 2011, a state House bill which eventually failed would have provided a stair-step tax hike by taxing a company at a low rate early in the life of a project, but then ramping up the rate over time.
Picard said a measure like the failed bill would attract more independent wind power producers to the state.
"It would definitely have been an incentive to look at Wyoming," he said. "These companies have the entire globe to invest their money in. They're going to invest where they get a higher return on their investment."
Reach energy reporter Adam Voge at 307-266-0561, or at adam.voge@trib.com. Read his blog at https://trib.com/news/opinion/blogs/boom or follow him on Twitter @vogeCST.
Tags
Pacificorp, Wyoming, Environment Of The United States, Dave Picard, Duke Energy, Department Of Revenue, Ed Schmidt, Renewable Energy, Wind Farm, Zephyr West, Gateway West, Wyoming Infrastructure Authority, Loyd Drain, Electricity Generation, Wyoming Power Producers Coalition, Adam Voge
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