Wyoming rejects tax on wind energy that will likely be sold in California

Source: By William Yardley, Los Angeles Times • Posted: Thursday, September 29, 2016

The answer is apparently not blowing in the wind. At least not in Wyoming. At least not for the state’s Republican-led Legislature, which has spent months looking for ways to close a multimillion-dollar gap in the state budget.

Roiled by declining revenue from the trifecta of fossil fuels – oil, coal and natural gas – state lawmakers this spring turned their attention to a relatively untapped source of energy in Wyoming that is clean, abundant and suddenly in demand: the big winds that blow down from the Rocky Mountains.

The plan, advanced by an interim joint revenue committee, was to raise the state wind energy production tax – the only such tax in the nation – to help pay for important school construction projects. Yet instead of finding new revenue, lawmakers in the conservative state found controversy and, finally, rejection.

Last week, after listening to five hours of testimony from wind companies, business groups and local communities opposed to the tax increase, the revenue committee voted overwhelmingly to kill the idea.

By doing so, they pleased wind advocates but made it harder for Wyoming to balance its budget.

“I don’t know what we’re going to do now,” said Michael Madden, the House co-chairman of the committee who had supported the plan.

In a voice vote, the committee, which spends the summer and fall deciding what measures it will sponsor when the full Legislature meets during regular session in January, voted overwhelmingly against moving forward a bill that would have raised the production tax to $3 per megawatt hour of electricity produced. The current tax is $1 per megawatt hour.

Madden said the increase would have raised almost $40 million in revenue after completion of a new project that will have as many as 1,000 wind turbines and generate as much as 3,000 megawatts. That project, called Chokecherry and Sierra Madre, would be the largest wind farm in the nation.

Forty million dollars would hardly close the budget gap, which has now grown to at least $200 million, but Madden and others say multiple new revenue sources, and spending cuts, are going to be needed.

Opponents, however, have said that expanding the wind industry is more important than short-term tax revenue.

Not a single supporter of the tax increase testified during more than five hours of discussion at a field hearing, held Thursday in Buffalo, Wyo., Madden’s hometown.

The Power Company of Wyoming, which is developing Chokecherry and Sierra Madre and began road construction for the project this month, was joined at the hearing by business groups, contractors and local leaders from Carbon County and the town of Rawlins, where the new project would be built.

The groups repeated what they had said in individual meetings with lawmakers and Gov. Matt Mead over the summer: raising the tax could make wind companies reconsider whether to do business in Wyoming, even though experts say it has some of the strongest and steadiest winds in the nation.

They argued that they already plan to pay hundreds of millions of dollars in property and sales taxes, and that uncertainty over the production tax would make it hard for them to negotiate price agreements with utilities.

The major target market for the Power Company of Wyoming is California. That irks some supporters of the tax increase who say giant turbines will forever alter the rural identity of wide-open Wyoming.

“It looks like there’s nothing in it for the state of Wyoming and everything in it for the consumers of California,” Madden said, referring to the Chokecherry and Sierra Madre project.

The state’s tax crunch has prompted whispers of a solution far more radical than taxing the wind. Some economists and others say Wyoming, no matter how business-friendly it aspires to be, will eventually have to consider instituting an income tax. The idea even came up briefly at the hearing last Thursday. Madden, himself an economist, did not express support.

“That,” he said in an interview, “would cause an armed conflict around here, I think.”