Industry says Wyoming wind taxes tops in Rockies

CHEYENNE, Wyo. -- Wyoming taxes on the wind energy industry would be the highest among Rocky Mountains states if all of Wyoming's pending taxes take effect, according to a new analysis by an industry group.

The Wyoming Power Producers Coalition is releasing its study in advance of wind tax discussions scheduled for next week by the Wyoming Legislature's Joint Revenue Interim Committee.

"Wyoming has a big policy discussion that needs to take place," said David Picard, a lobbyist for the coalition. "What amount of wind energy development do they want? Because clearly our analysis shows that Wyoming is much less competitive with our surrounding states."

The wind industry lost tax battles in the past two Wyoming legislative sessions. In 2009, lawmakers allowed a sales tax exemption for renewable energy projects to expire at the end of 2011. This year, lawmakers passed a $1 per megawatt hour wind energy generation tax that takes effect in 2012.

The industry calculations accounted for Wyoming's pending sales and generation taxes.

Post a CommentThe report says a 66-turbine wind farm producing 99 megawatts and costing $247.5 million to build would pay about $37.6 million in taxes in Wyoming over 20 years. The same wind farm would pay $8.4 million in taxes in Colorado, the state with the lowest tax burden for wind, according to the study.

The upfront sales tax burden is the most troublesome for wind developers, Picard said. The model project would pay about $11.8 million at a sales tax rate of 6 percent. Picard said developers must account for sales tax as part of their project financing, rather than pay it with operating revenues over time.

"It's that significant, steep initial investment that can make and break some of these projects," he said. The comparison did not include state corporate income tax, which Wyoming doesn't impose, because of the difficulty of accounting for different corporation's expenses and tax postures, coalition officials said.

Gov. Dave Freudenthal supported the sunset of the sales tax exemption and the imposition of a wind energy generation tax. The efficiency and strength of Wyoming's wind resource would make up for most tax consequences, said Ryan Lance, Freudenthal's deputy chief of staff.

The construction of electric transmission lines to export Wyoming wind power and the cost of delivering it to markets in California are much bigger obstructions to the industry in Wyoming, Lance said.

"There's still a significant gap - even with the tax being wholly dismissed from the equation - in terms of what we can sell it for into California and what they're willing to buy it for," Lance said.

During this year's legislative session, the Power Producers Coalition used the transmission argument when urging lawmakers to reject a wind generation tax and take more time to study the state's overall tax structure for wind. The transmission bottleneck and ongoing environmental regulatory issues related to sage grouse mean Wyoming has plenty of time to sort out its tax structure, developers argued.

Rep. Rodney "Pete" Anderson, chairman of the House Revenue Committee, said he found the industry study to be revealing, particularly the impact of sales taxes. The Pine Bluffs Republican said he views the Legislature's action earlier this year to be just the starting point for hashing out Wyoming's wind tax policy.

"We're going to take testimony from all interested parties," Anderson said. "We want to get that testimony and then we'll go from there. You know when you get that many legislators together it's hard to tell where it will go."

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