Wyoming is apparently set to jack up taxes and fees on wind energy producers starting next year now that a legislative committee this week shot down an industry-friendly measure supported by Gov. Matt Mead.
An adviser to Mead warned Friday that the state could lose wind energy projects if the sales tax exemption on wind energy equipment expires in January as scheduled. But most state lawmakers apparently believe that the state's wind resource is so good that future construction of wind projects hinges more on the availability of transmission lines than the details of the state's tax code.
The Legislature's Joint Revenue Interim Committee on Thursday voted down a bill that would have continued the sales and use tax exemption on equipment used on wind energy projects in exchange for imposing lower, one-time impact fees on them.
Policy advisers to Mead as well as lobbyists for the wind energy industry had testified in favor of the bill. Its defeat by the committee leaves no apparent barriers to the state's starting to impose sales and use taxes on wind projects next year. In addition, the state next year is set to start imposing a $1-per-megawatt tax on wind energy production.
Shawn Reese, Mead's policy director, said Friday that imposing sales and use taxes on wind energy projects would likely result in some never getting built.
"If the sales taxes remain, I think the likelihood of projects being able to be financed decreases," Reese said. "That upfront spike in sales tax is likely going to some projects not be able to get off the ground."
The sales and use tax rate varies by county but generally exceeds 5 percent. The bill the Revenue Committee rejected would have substituted a 2 percent impact fee on wind projects to support county governments.
Larry Wolfe, a Cheyenne lawyer and registered lobbyist for Duke Energy, said Friday a typical 1.5-megawatt wind turbine costs up to $3 million. He said a typical wind farm has about 66 turbines.
Wolfe presented the committee with a letter from Duke Energy and Edison Mission Energy stating that it's imperative to change Wyoming's existing tax structure to ensure that wind energy development in the state remains competitive in the West and that developers don't get sandbagged with up-front taxes before projects generate any revenue.
Bob Stiens, spokesman for Santa Ana, Calif.-based Edison Mission, said Friday his company has two wind farms in Uinta County, Wyo., and has developed projects in several other states.
Stiens said his company is concerned about Wyoming imposing the new wind energy generation tax. He said the company spent $250 million on developing wind power in the state and signed 25-year contracts to deliver power out of state that didn't anticipate the extra tax burden.
"It's going to hurt the economic viability of projects, and probably a bigger concern is that I think it sends the wrong message when they impose this $1 tax," Stiens said. He emphasized his company already pays more than $1 million a year in Uinta County property taxes.
Renny MacKay, spokesman for Mead, said Friday that the governor will continue to work with county governments to try to come up with a tax structure that works for them but also isn't a disincentive for wind companies to develop projects in the state.
State Sen. Cale Case, R-Lander, serves on the revenue committee.
"Wind is just going to be a huge impact for the state of Wyoming and the governor's office and a lot of these proponents are acting like it's a very marginal resource and it depends on our tax policy," Case said after the committee vote Thursday. "And the truth is it doesn't depend on our tax policy. It depends on the construction of transmission, whether the transmission gets in or not.
"And when that happens, and the transmission goes, and it's looking more and more likely that it will go, we're going to have so much wind, just an unbelievable amount of wind, it's going to change the fundamental timber of Wyoming," Case said.