Wind Tax Debate Not Over in Wyoming

Article courtesy of Stateline.org

Wyoming's first-in-the-nation tax on wind energy production was an easy call for outgoing Governor Dave Freudenthal, a Democrat who believes that the energy firms tapping into the state's abundant natural resources -- including wind -- should pay their fair share. After all, Wyoming is the eighth-windiest state in the nation, according to the American Wind Energy Association.

As he recounted in an interview with Stateline earlier this year, Freudenthal sees Wyoming's new tax, which doesn't go into effect until 2012, as "the first opportunity in my lifetime to diversify our tax base." Companies that erect huge and sometimes disruptive wind turbines, Freudenthal believes, should pay for the right to do so. Lawmakers agreed, approving a tax of $1 per megawatt hour of wind energy production, initially estimated to generate $4 million a year to be divided between the counties and the state.

Not surprisingly, wind energy producers view the tax differently, seeing it as a drag on business and vowing to look elsewhere to spend their money. A report from the Billings (Montana) Gazette this week suggests that their threats appear to be serious.

As the paper noted, construction recently finished on two of the biggest wind farms in Wyoming. But the two firms that built the farms, Duke Energy and Rocky Mountain Power, "say they have no further plans to plant wind turbines in Wyoming." Meanwhile, an industry association, the Wyoming Power Producers Coalition, says an uncertain tax and regulatory environment in Wyoming will lead more companies to consider other states.

“I do think there’s going to be a little slowdown, and I think some of it has to do with these policies. And part of that is taxation,” a spokeswoman told the Gazette.

Even before the initial generation tax goes into effect, Wyoming lawmakers are considering increasing it substantially to $5 or $7 per megawatt hour instead of the current $1, according to the Gazette. Besides that, a state sales tax exemption for wind energy equipment is scheduled to expire next year. The industry is upset that it doesn't know what it's going to get.

“Companies have said (to Wyoming policymakers), ‘We are sitting on hundreds of millions of dollars that we want to invest in Wyoming, and because of uncertainty we will end up investing in other states,’” a lobbyist for the Wyoming Power Producers Coalition told the Gazette. “Unlike coal, they are not forced to come to Wyoming.”