Bill would repeal tax break for wind energy

CHEYENNE - Despite opposition from some officials in Laramie County and elsewhere in the state, Wyoming lawmakers narrowly advanced a bill Wednesday that would make wind energy producers pay more in taxes in the first three years of new projects.

The legislation, which won approval on a 7-6 vote from the Joint Corporations, Elections and Political Subdivisions Interim Committee, would remove a tax exemption on electricity generation that applies to new wind energy projects in their first three years of existence. Under current law, wind energy producers are taxed $1 per megawatt hour of wind energy produced upon expiration of the exemption.

With Wyoming facing a budget deficit of roughly $225 million for the current 2021-22 biennium – a gap made smaller this summer by an initial 10% cut to the state's budget – lawmakers saw the exemption repeal as a way to potentially generate some additional revenue for the state. Sen. Charles Scott, R-Casper, said the Legislature would need a wide variety of revenue-raising options to consider during the body's session in a few months.

"For that reason, I think it would be wise for us to send this bill forward so it's on the menu of all the things we might do, and then we can compare all those things," Scott said. "I think we've got to make major reductions in some of our expenditures before we can justify any tax, so at this point, I would urge us to vote for this bill, but recognize this is just the first step."

Yet many people who testified to the committee maintained the proposal ultimately would not add much to the state's coffers. Given wind projects also bring in sales tax and property tax revenues, Wyoming Business Alliance President Cindy DeLancey warned of the proposal possibly scaring away new investments altogether.

"This might look like a step forward as far as revenue enhancement, but it really is taking potentially two steps backward," DeLancey told the committee. "And what I mean by that is if the exemption were to go away, sure, there would be the imposition of a new tax on an emerging industry that would generate some production tax revenue. But we also could stand to lose the other two revenue streams at the same time."

In recent years, new wind projects in Laramie County and elsewhere have translated into substantial revenue gains for local governments. Laramie County Commission Chairman Gunnar Malm told the committee that a NextEra Energy wind project on the Belvoir Ranch has generated roughly $2 million in local sales tax revenue.

"I also am opposed to this because I see it as looking at the short term, instead of a long-term plan for Wyoming and what it has to offer in terms of economic diversification," Malm said. "I think that in the long term, continued support of wind and renewable energy will allow you to continue to be an energy exporter to the United States, but it will also help us prevent continuing to be a talent exporter. When we get these other industries coming in, it keeps our graduates and our citizens here in Wyoming – that's $16,000 per pupil."

The proposal also drew pushback from Greater Cheyenne Chamber of Commerce CEO Dale Steenbergen, who worried about sending mixed messages to energy companies planning wind projects in Wyoming over the next few years.

"We find companies that are interested in us, they see a resource in Wyoming with wind, and now we're turning around and saying we're going to remove the cost-effectiveness for you to be able to do business in our communities," Steenbergen said.

Though more testified in opposition to the repeal, a couple members of the public also spoke in favor of the proposal. Albany County resident Paul Montoya argued the state should focus on the potential of solar and small-scale nuclear energy industries, arguing large wind facilities can have a negative effect on the state's sprawling vistas and, in turn, its tourism industry.

"The original goal of the tax exemption, I'm sure, was to give incentive for a very young wind energy development industry in Wyoming, and I feel like it's served its purpose already," Montoya said. "This industry is already ... heavily federally subsidized, and Wyoming's tax exemption really is no longer needed."

Lawmakers did adopt an amendment to the proposal that would grandfather in the tax exemption for any wind projects that begin prior to the bill's possible passage. The grandfathering action was viewed as necessary by lawmakers such as Sen. Tara Nethercott, R-Cheyenne, who was opposed to the bill and said it was "pulling the rug out of industry."

"I'm not advocating that this exemption should never be removed and that we shouldn't analyze the way that we tax wind, but I just think this tool at this time is wrong," Nethercott said, noting the importance of state lawmakers sending a clear message that Wyoming is a stable, reliable place to do business.

With narrow approval, the committee-sponsored bill will now be up for consideration during the Wyoming Legislature's general session next year.