January 8, 2011
Wyoming

Wyoming lawmakers face several unresolved wind questions this session

By JEREMY PELZER, Casper Star-Tribune, The Billings Gazette, billingsgazette.com 7 January 2011

CHEYENNE, Wyo. – Wind energy was one of the main topics of discussion during last year’s legislative session, as lawmakers passed a landmark wind-generation tax and temporarily banned wind developers’ eminent domain powers.

And legislators left a lot of unresolved questions for this year’s session, which starts Tuesday. How much should wind energy be taxed? Should the eminent domain ban become permanent? Should wind developers continue to receive a sales tax exemption on their equipment?

While other issues are likely to crowd wind energy out of the limelight this year, state legislators will have to decide what they want to do with what may be the state’s most promising new industry.

“That issue’s not going to go away,” said State Rep. Pat Childers, R-Cody.

One of the key wind energy issues legislators will consider this session is what, if any, eminent domain powers should be granted to wind developers.

Last session, lawmakers passed a one-year moratorium on wind developers’ ability to condemn private land for collector power lines.

State Rep. Kermit Brown, R-Laramie, has filed two proposed bills this year to limit eminent domain powers.

The first proposed bill, House Bill 25, would permanently ban wind developers other than utilities from using eminent domain powers, a proposal passed in October by a wind energy task force set up by the Legislature.

Brown’s second proposal would allow wind companies to condemn land for a power line project only if they first get at least 85 percent of landowners – or landowners who own at least 85 percent of the land – to voluntarily sell their land. The holdouts would be paid the average of what the other landowners sold their land for.

Brown said that while many landowners feel threatened that wind companies will confiscate their land, other landowners are eager to sell their land – and don’t want one or two landowners to hold up an entire project.

The Powder River Basin Resource Council, a Sheridan-based landowner advocacy group, favors a complete ban on eminent domain powers, said Shannon Anderson, a council organizer. However, Anderson said, the group is willing to talk about the other proposal as well.

On the other hand, the Wyoming Power Producers Coalition, a group of Wyoming independent wind developers, opposes a total ban, said executive director Cheryl Riley. Riley said the coalition is still polling its members about whether to support the 85 percent limit bill.

Even with differing opinions, Brown said he didn’t expect the legislative debate over eminent domain to be nearly as contentious as it was last year.

The day the moratorium passed last session, he said metaphorically, “there was blood all over the floor back there in the back room.”

In 2010, Wyoming passed the nation’s first tax on wind-generated electricity, setting the rate at $1 per megawatt hour.

But many lawmakers at the time saw that rate as a placeholder until the Joint Revenue Committee worked out a more permanent tax rate in the 2010 interim session.

Yet while several ideas about taxing wind energy have bounced around, as of Friday no proposed bills had been filed to change the wind energy generation tax.

One idea some legislators have discussed is to establish a flat tax based on a wind farm’s capacity – that is, how much electricity a wind farm could generate, no matter whether how much power is actually being created.

Riley said Wyoming Power Producers Coalition members favor a flat tax structure.

With the generation tax taking effect in 2012 and a sales tax exemption on renewable energy equipment expiring at the end of 2011, Riley said, Wyoming’s current wind tax structure is “severely uncompetitive” compared with other neighboring states.

A flat tax, on the other hand, she said, would get rid of the initial sales tax “spike” up front for developers, and it would ensure that local governments receive a steady stream of revenue as long as a wind project’s in operation.

“Wind companies know they have to pay their fair share. They want to pay their fair share. They want to make sure any local impacts are covered,” Riley said. “But if we tax these companies out of the state, they’re going to be gone for decades.”

But incoming House Speaker Ed Buchanan, R-Torrington, said that because different states each have their own confusing array of wind energy taxes, bonds and incentive programs, it’s tough to see whether Wyoming’s wind tax structure is less business-friendly than in other states.

Buchanan also said lawmakers need to make sure that any changes to the state’s wind tax wouldn’t have unforeseen consequences, such as inadvertently cutting off revenue to local governments.

“It’s like a big thing of Jell-O – you poke it here, and it comes out over here,” he said.

Brown said he didn’t think any state legislator wants to tax wind developers out of business. But at the same time, he said the Legislature supports a wind tax in some form.

“We’ll hunt around for the sweet spot in the middle, and sooner or later we’ll find it,” Brown said.

While it’s not as high-profile as bills dealing with eminent domain or taxes, a proposed Senate bill, Senate File 22, would set the groundwork for wind energy law in Wyoming.

SF22 would establish wind energy property rights alongside surface and mineral rights in the state. But it would prevent Wyoming landowners from selling their wind energy rights separate from their surface rights, as some property owners in the state have already done.

The proposed bill would also set time limits for wind energy producers to start developing land they’ve leased, or else the lease would be canceled.

State Sen. Tony Ross, R-Cheyenne, who co-chairs the Joint Judiciary Committee that sponsored the legislation, said it’s important to set the framework for wind energy rights now before inevitable conflicts arise.

“There’s a number of people and landowners that are wondering how to develop their wind energy rights,” Ross said. “The object is to be proactive rather than reactive.”

Lawmakers will consider legislation this session restricting where wind farms can be built in Wyoming.

According to House Bill 48, authored by State Rep. Richard Cannady, R-Glenrock, no commercial wind energy facility would be allowed within a mile of any church, cemetery, public school, historic landmark, American Indian religious ground, or city, county or state park.

All in all, Riley said 2011 will be a “very, very important year” for lawmakers to tackle wind energy issues.

“Wyoming’s really got to make a decision this year whether they want wind development,” she said.

But with the Legislature also set to take on a number of hot-button issues including education and health care, Brown said he expected wind energy to be a second-tier issue this session.

“I don’t think it’s a real hot ember,” Brown said. “There’s a lot hotter stuff burning down there.”