Threat to raise taxes on wind energy could blow huge Wyoming project

Wyoming moved to tax wind, and now wants to raise the government cut. (AP)

Wyoming lawmakers could end up inheriting the wind if they raise the state's unprecedented tax on breezes. 

That’s what the Wyoming Legislature determined four years ago when it became the first state to impose a tax on revenue from wind energy, in a decision that has reaped the state about $15 million. Now the state is considering raising the tax in a maneuver critics say could put the industry in jeopardy.

Some blame the blowback from Wyoming’s move for the fact no wind farms have been built there since 2012, according to the Los Angeles Times. Cash-strapped state officials are already eyeing a massive wind farm proposal which would supply power to 1 million homes in California and the Southwest, and preparing to raise the tax.

“Just about every legislator we’ve met with asks us, ‘You tell us how much we can tax you before we put you out of business,’” Bill Miller, chief executive of the Power Co. of Wyoming, which is planning the wind farm, told the Times. “I just shake my head and say, ‘Zero.’”

Miller said the state could be “taxing this project out of existence.”

It is not clear how high a wind-generation tax could go in Wyoming. The current rate is $1 per megawatt-hour produced, an amount that can power about 650 homes. The Legislature is considering two proposals to raise the tax, but neither explicitly states the amount by which it would rise. One would force the wind companies to pass federal subsidies on to ratepayers.

Wyoming, a conservative state that is also the biggest U.S. producer of coal, is trying to stem a yawning budget gap, created at least in part, by declining revenue from fossil fuels. Many blame the declining coal industry’s fortunes on the Obama administration, and Miller and others believe lawmakers are taking their anger at federal policies out on clean energy.

Supporters of the tax increase believe the company should pay for the opportunity to build the Chokecherry and Sierra Madre project, and for potentially marring the horizon of a state known for wide, open spaces.

“The benefits of wind are disproportionately on the West Coast, and the costs of wind are disproportionately in Wyoming — and I mean the social costs,” state Sen. Cale Case, a Republican and an economist, told the LA Times. “This tiny reflection of the impacts back here, I think it’s just kind of a fair trade.”

California, the primary potential customer for the Chokecherry and Sierra Madre project, intends to get half its electricity from renewable sources by 2030. Wyoming officials believe a tax on wind generated within their borders can be rightly passed on to Gold State ratepayers. California itself does not tax wind generation, but only gets about 6 percent of its juice from wind turbines, according to the Times.

Miller and other wind-power supporters have begun a lobbying effort to stop a tax increase. Ray Peterson, a contractor hoping to get work on the project, told the Legislature’s revenue committee in a letter that taxing energy – no matter what kind – makes no sense.

“We expected the Obama Administration to wage war on coal and oil as they promised,” he wrote. “What is most alarming, and completely unexpected, is realizing Wyoming state officials are willing to threaten killing the creation of new business, much needed jobs, a generous amount of tax revenue and diversification of our state’s energy dependent economy to wage war on renewable energy sources.”

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