CHEYENNE — Anyone thinking the push for increasing taxes on wind energy in Wyoming is over should think again.
For the past several years, proposals have come forward in the Wyoming Legislature to increase taxes on wind energy production in the state. The state taxes wind production at a rate of $1 per megawatt hour of electricity it produces. And while it could be argued wind turbines manufacture energy, wind turbines aren't granted a sales tax exemption as are other manufacturing facilities in the state.
Wyoming generally has a low-tax environment, but its tax on wind energy is one of the highest.
Wyoming's the only state to impose a tax specific to wind separate from other taxes (Minnesota has a $1.20 per megawatt hour tax, but it's in lieu of property tax, so the state isn't assessing the tax on the improved property value).
As Wyoming looks at new approaches to reach the long-sought goal of diversifying its economy, the wind energy sector shows the greatest potential toward that effort, with estimated planned investments at more than $10 billion in coming years. That's according to Rob Godby, a University of Wyoming associate professor of economics and director of the Center for Energy Economics and Public Policy.
"This is an industry that could potentially bring significant benefits and investment in the state at a time when I don't know a single other sector considering a $1 billion investment in the state," he said.
But Sen. Cale Case, R-Lander, sees things differently, and his passion for the issue is tireless.
The long-time Wyoming lawmaker is very disturbed by the potential impact on Wyoming's viewsheds. Within years, proposed developments could affect a significant portion of Wyoming's landscape, covering its vistas with windmills visible during the day and red blinking lights at night on land that will be difficult to reclaim should they become inoperable.
"I believe in renewable resources, I believe in global warming, and I want to do something about it. But I'm not prepared to sacrifice Wyoming," Case said. "We're important, too."
The Wyoming Legislature's Joint Revenue Interim Committee defeated Case's proposal to increase the wind tax by 400 percent - from $1 per megawatt hour to $5 - earlier in the interim. But as the committee meets this week in Cheyenne to look at advancing some draft bills to generate revenue during the 2018 budget session, Case plans to reintroduce the measure.
Even if that draft bill is not sponsored by the Revenue Committee, Case said he has sponsors prepared to introduce it in the House of Representatives during the session. All revenue-generating bills must be introduced in the House. And the issue won't be dead for Case if it fails there.
There's been some debate as to whether a tax can be enacted by a citizens' initiative under the Wyoming Constitution. But Case is convinced such a measure is legally sound. With the necessary petition signatures - 15 percent of the voting population collected in an 18-month period - he said a wind tax could appear on a ballot.
Case said he believes Wyoming voters would side with him on increasing taxes on wind, given the opportunity. However, he doesn't think it would come to that if it appeared such an initiative was gaining steam.
"Usually what happens when a citizens' initiative has some teeth to it, the Legislature has traditionally acted," Case said. "That's what happened with in-stream flows, the sales tax on food and other initiatives."
If you tax them, will they come?
Wyoming is home to one of the best on-shore wind resource locations in the U.S., but according to developers and economists, that doesn't necessarily mean development is just going to throw itself at the state.
Between Rocky Mountain Power, Power Company of Wyoming and Viridis Eolia Corp., private companies are preparing to invest billions in the Cowboy State to establish wind farms and transmission lines.
But Godby said creating an unfriendly environment for wind development could put Wyoming's potential at risk.
"The bottom line is there is a really huge amount of development and potential economic activity in the state, and potential tax revenue, that we could end up squandering if we price ourselves out of the market," he said.
It's a competitive market, Godby said. Looking at locations such as New Mexico and Colorado, he said there are enough potential wind resources that companies otherwise considering Wyoming could go across borders to avoid the headaches of dealing with unfriendly policies.
Wind development came to a halt in Wyoming between 2010 and 2016, while Colorado doubled its wind resources in the same timeframe. While it's true Wyoming also implemented its wind tax in that time, Godby said it largely had to do with the state's lacking access to transmission lines. But plans are in the works now to invest billions in building transmission lines, anticipating wind energy development in the state.
The TransWest Express Transmission Project, a project of TransWest Express LLC, looks to build power lines stretching from a terminal in Carbon County, just south of and in-between Rawlins and Sinclair, to another terminal south of Las Vegas. It would transmit power from the developing Chokecherry and Sierra Madre Wind Energy Project in Carbon County, where the first phase of construction began last year to install 500 of 1,000 planned turbines. Rocky Mountain Power's Energy Vision 2020 plan includes $3.5 billion investments in wind and transmission projects in Wyoming.
However, a spokesperson for Power Company of Wyoming and its sister company, TransWest Express, said increasing taxes on wind production could put the development of wind farms and transmission lines at risk.
"Overall, project economics must consider and reflect federal and state tax policies, as well as the state of the market with respect to capital costs and prices for renewable power," said Kara Choquette, Power Company of Wyoming and TransWest Express director of communications.
As tax reform moves its way through Congress, green energy lobbyists are concerned about the U.S. House proposal that would partially or completely roll back tax breaks that encourage wind development. Combined with the potential for a higher tax in Wyoming, David Eskelsen, Rocky Mountain Power spokesman, said the company's investments could be reevaluated, as well.
"Any changes to state or federal tax policy would prompt the company to evaluate its current proposal for wind projects in Wyoming to determine if it still makes economic sense for our customers," he said.
Worth what cost?
Case said he isn't buying the argument wind energy potential will just blow away with an increased tax on production. Wind developers in Wyoming still enjoy a better tax climate than other states with property and income taxes, he said.
"They can produce more energy with the same investment," he said. "It's a mathematical exercise."
And with so much development apparently on the horizon, Case said its important now for Wyoming to put a tax structure in place so the state reaps an appropriate level of benefits before an even more powerful wind lobby establishes itself in opposition to tax increases.
Ultimately, Case said, if it slows development, that's OK with him.
The federal subsidies for wind development make it an artificially driven industry that is sacrificing Wyoming's open spaces, Case said. Wind developments are "unlike anything in (Wyoming's) history," resulting in changes to the landscape in a way many don't even realize, he said.
An increase in wind tax is opposed by many, including Senate President Eli Bebout, R-Riverton, the Wyoming Taxpayers Association and the Carbon County Economic Development Corporation, based on interviews with the Wyoming Tribune Eagle last week.
However, Case said he's gaining ground with more people recently than in past attempts at legislative action. Whatever happens during Tuesday's committee meeting or during the 2018 session, Case said he's not letting it go.
"I'm not giving up on this - not to the very end," he said. "I feel that when people realize the impact on Wyoming from this and how we get very little in tax revenue and give up so much, they will sign the initiative."