Wind tax seen as a budget fix — and a foe of industry

Source: Benjamin Storrow, E&E News reporter • Posted: Tuesday, January 29, 2019

Few states rely on tax revenues from the energy industry quite like Wyoming. More than half of the Cowboy State’s revenue comes from coal, oil and natural gas.

But Wyoming faces a problem: Coal is in decline, and oil and gas revenues are prone to wild fluctuations. A decade ago, mineral revenues accounted for nearly 70 percent of the state’s tax take.

Policymakers in Cheyenne have long puzzled over how to solve the conundrum. Wyoming lacks an income tax; the idea remains an anathema in such a conservative state. So increasingly a group of Republican lawmakers have focused their attention on another source: wind generation.

Wyoming already has a $1-per-megawatt-hour tax on wind, making it one of the few states in America to tax electricity generated by the breeze. This year, no fewer than three bills have been proposed in the state Legislature to increase the tax to $5 per MWh.

Those measures aren’t exactly new. Lawmakers have defeated similar proposals in recent years.

But what is new is a recently announced ballot measure that would take the case for a wind tax to voters. A group led by Republican state Sen. Cale Case is collecting signatures to place a $5-per-MWh wind generation tax on the ballot in 2020. That would make Wyoming voters the first to consider taxing electricity produced from wind turbines.

Advocates say a tax is necessary to compensate for the loss in mineral revenues and for the environmental damage of building large-scale wind farms that export electricity to other states. They argue the state’s low property taxes and lack of a corporate income tax mean Wyoming wind developers will remain competitive with their counterparts from other states.

“We are a mineral-dependent state. We are a carbon-dependent state,” Case said. “Carbon’s going away. We have to figure out to provide schools, roads and jobs to our next generation.”

But renewable developers see the measure as little more than a thinly disguised attempt to kill the industry. The proposal represents a 500 percent increase in taxes on wind generation, they note.

In their view, the plan is particularly pernicious because the state doesn’t tax any other form of electricity generation. Wyoming mineral revenues come from mining and oil and gas production. They fear the tax could leave them at a disadvantage relative to renewable developers in other states, which are trying to incentivize wind and solar production.

They have framed the tax as a threat to proposed developments, like the 3,000-MW Chokecherry and Sierra Madre wind project, which would generate power for the California market, and the associated jobs and tax revenues.

“If we can’t offer a competitively priced product, the project can’t go forward,” said Kara Choquette, a spokeswoman for the Power Co. of Wyoming, the project’s developer. “We think it can under the current environment, but that would be a significant cost to us.”

Wyoming boasts some of the stiffest winds in the United States. Only five states have more onshore wind potential, according to federal estimates. Development in the Cowboy State nevertheless has proceeded in fits and starts. No new wind farms came online in Wyoming between 2010 and 2016.

There have been signs of change in recent years. In addition to Chokecherry and Sierra Madre, Portland, Ore.-based power company PacifiCorp has plans to install 1,100 MW of new wind capacity and repower an additional 900 MW of existing capacity with new turbines in the state (Climatewire, April 6, 2017).

The company is skeptical of the ballot measure.

“Wyoming, and many of our customers, are already experiencing the financial pressures of a changing energy economy,” David Eskelsen, a PacifiCorp spokesman, said in a statement. “We are still very early in the process and will watch this effort closely fully aware this proposal would likely increase the cost of electricity for our customers.”

Wind has long divided opinions in Wyoming, America’s top coal-mining state. Some see it as a threat to the state’s traditional fossil fuel industry. Others have lauded it as a potential tool to diversify the economy. Former Gov. Matt Mead (R) was a supporter of the proposed Chokecherry and Sierra Madre wind project.

How the new governor approaches the issue remains to be seen. A spokeswoman for Gov. Mark Gordon, a Republican elected in November, did not respond to a request for comment.