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Legislator says wind tax increase will be needed as industry grows in state

Jun 14, 2017 - By Katie Roenigk, Staff Writer

Wyoming lawmakers failed to pass a bill this year that would have increased taxes on wind production, but Sen. Cale Case, R-Lander, doesn't think the idea is dead.

"I believe it's needed more than ever," he said in April.

He cites an increased wind tax as a viable method for diversifying state revenues, the majority of which currently come from mineral severance taxes.

"This is the classic Wyoming thing," Case said earlier this year. "All of our support is paid by the mineral industry. ... They provide the bulk of the property taxes in the state, all of the severance taxes and a considerable amount of sales tax."

Even if the revenue stream from other industries was to double, triple or quadruple, Case said the income still would be "tiny" in proportion to the amount that is generated by the minerals industries. So, instead of looking to other business sectors to diversify Wyoming's economy, Case wants to prioritize diversification within the energy industry itself, particularly when it comes to wind development.

No incentive needed

Case was in favor of increasing the tax on wind energy from one-tenth of a cent per kilowatt hour to one-half of a cent this year. He estimated the move would have increased wind tax revenue from about $3 million a year to $15 million per year.Considering the rate of development, which has gone up due to advancements in wind energy transmission capabilities in the state, Case said that total could reach $30 million per year or more.

Wind developers may argue that an increased tax would discourage them from producing in Wyoming, but Case says the state offers plenty of incentives to production in the form of some of the best wind resources in the country, with plenty of land suitable for wind development.Plus, he pointed out, wind companies qualify for a 2.3 cent per kilowatt hour tax credit from the federal government. During a September meeting of the Joint Revenue Committee, he said one wind developer testified that the energy was only worth 2 cents per kilowatt hour at that time, revealing that his company profits from the subsidy alone.

Other consumers will pay as much as 21 cents per kilowatt hour for the wind energy, Case wrote in a December letter to The Ranger, citing information from the Bureau of Labor Statistics.

The potential profits were enough to prompt the developer of the Rawlins-Saratoga wind project to build his own transmission line from Wyoming to Nevada, Case said.

"It's amazing the expense they're going to in order to accomplish that," Case wrote. "The new transmission line, plus the 1,000 wind turbines, roads and other facilities makes this possibly the single largest private infrastructure project in Wyoming since construction of the Union Pacific Railroad."

During the September meeting, the developer did not reveal how much his company would profit from the project, but Case estimated earnings would exceed $10.2 billion over the next 20 years while paying less than 8 percent in Wyoming taxes.

"Raising the existing wind production tax to one-half cent per kilowatt hour will increase Wyoming's 20-year tax receipts to only 14 percent of total project revenue," he said.

There are other transmission lines being planned in the state, too - one to the south and another to the west.

"Transmission capacity is the key, and it is clear Wyoming is transmission constrained - but only for now," Case wrote.

During the same JRC meeting he said he heard from Rocky Mountain Power representatives who talked about their progress in building the Gateway West transmission project.

"That will eliminate the transmission bottleneck - which is why wind developers are pushing hard now," Case wrote. "When the transmission constraint is resolved, prices will rebound and the boom will be on."

Landscape loss

The Chokecherry and Sierra Madre project in south-central Wyoming will have 1,000 turbines across 340 square miles of where the wind speed averages more than 15 mph and frequently gusts above 50 mph, according to the Associated Press.

In his letter, Case lamented the loss of open spaces in the state as a result of the turbine installation, describing his drive home from Cheyenne to Lander recently.

"I crested the commanding rise in Carbon County looking west towards Walcott Junction, just a few miles after beginning the descent from the Elk Mountain plateau," Case wrote.

"From this wonderful spot you can see more than 25 miles towards Sinclair and Rawlins and gaze south up the Saratoga valley and north towards the Shirley Basin.

Over the years making this drive home from legislative sessions, I have witnessed many beautiful sunsets on the western horizon across this 50-plus mile vista. On this particular evening, I considered what the view will be like south of Sinclair, almost to Saratoga, with 1,000 blinking red lights, each marking the location of a giant turbine in the largest wind farm in the world."

During the meeting in September, he said he learned about another project planned for the Shirley basin that would be three times as big as the one between Saratoga and Rawlins.

"It is hard to imagine 3,000 additional wind turbines in the Shirley Basin," Case wrote.

He believes Wyoming should be compensated for giving up the "starkness" of its landscape.
 

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