Zombie Taxes: Wind power, other forms of green energy once again the focus of Wyoming tax proposals

Article published by: FW Broschart, Planet Jackson Hole.

Another perennial tax proposal in Wyoming, taxation of wind power and other forms of green energy has reared its head again for the 2018 legislative session in Cheyenne, which began Monday.

Like Eurydice, the daughter of Apollo who drove the Sun Chariot across the sky in Ancient Greek Myth, the legislature’s proposed tax on wind — and now maybe solar energy — keeps coming back from the dead.

This year’s rendering of the bill, House Bill 118, was proposed by State Representative Thomas Crank, a Republican representing district 18 and the town of Kemmerer in Lincoln County. The tax, as proposed, would hit green energy produced in the Cowboy State with a $2 per megawatt hour tax, doubling the current tax from $1 per megawatt hour.

Statewide, there are numerous green energy projects in the works in Wyoming, especially wind farms looking to capitalize on one of Wyoming’s more plentiful weather phenomenon. In Carbon County, the Chokecherry/Sierra Madre windfarm which is under construction South of Rawlins is billed by developers as one of the largest wind farm in the U.S., with a planned generation capacity of 3,000 megawatt hours and 1,000 windmills.

Next to the Chokecherry/Sierra Madre Wind farm, another large project is underway to develop an interstate transmission line to move energy produced in Wyoming to a terminal near Las Vegas, where it will be distributed to California and other power-hungry southwestern states with a hearty appetite for renewable energy.

Not far away from the Chokecherry/Sierra Madre site, another large wind farm near the towns of Hanna — the site of a now-defunct coal mine that used to employ hundreds of workers — and Medicine Bow is planned by Viridis Eolia, an international conglomerate. That project would bring online another 1,800 megawatt hours of renewable energy.

Many companies are bullish on the future of renewable energy being produced in Wyoming, and the investments in the state are huge. According to some estimates, the state of Wyoming and counties could stand to reap nearly $1 billion in form of the existing $1 per megawatt hour wind energy tax, property tax and sales and use tax over the expected 20-year service life of the Chokecherry/Sierra Madre project alone.

But increased taxes could make companies more reluctant to start new renewable energy projects in the state. According to Power Company of Wyoming, a proposal to raise wind energy generation taxes last year to $5 per megawatt hour would have resulted in an additional $1 billion.

Despite the fact that the legislature has voted against raising the wind tax several times in the past, the proposal seems to be reborn every year during the legislative session. Wyoming, with its famous and well-loved lack of a personal income tax, it’s nearly non-existent property taxes and relatively low sales taxes relied heavily on mineral royalties to fund state government.

As those mineral royalties have evaporated due to rapidly shrinking demand for coal and cyclical factors in the oil and gas businesses, the state has had to look elsewhere for tax revenues. With the idea of a personal income tax being highly unpalatable, legislators have looked time and again to the state’s nascent renewable energy sector as a source of funds.

Despite doubling the existing wind energy tax — and creating a similar tax on energy derived from solar — the bill does introduce a bit of a carrot for some: any renewable energy equipment manufactured and installed in the state, such as wind turbines or solar panels, could be written off, helping to negate the additional tax.

However, at this point there is no large-scale manufacturing of wind turbines or solar electricity panels in the state, meaning potential project developers are still likely looking at a possible increase in their tax burdens should the proposed tax increases pass.

ENDOW — The Economically Needed Diversity Options for Wyoming — Governor Matt Mead’s Executive Council tasked with developing a roadmap for diversifying economic and business activity in the state to help overcome Wyoming’s dependence on the highly cyclical gas and oil business, has not yet proposed significant development of in-state green energy manufacturing.

In ENDOW’s first report, released December 31, wind energy is mentioned twice but not as one of the group’s key recommendations for economic diversification. Solar energy development or manufacture of solar power equipment is not mentioned at all in the document.

Several other proposals that will come up for vote during the 2018 legislative session also deal with renewable energy. One such proposal would act to prevent consumers’ power rates from going up when or if Wyoming utilities begin purchasing power from utility-scale renewable power generators. The bill would prevent utilities from being forced to purchase renewable energy if they can produce the power more cheaply on their own with existing technologies.

The 2018 legislative session began Monday in Cheyenne and will begin debating and voting on proposed legislation. PJH


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