By failing to increase the tax on wind generation in Wyoming, even a small bit, the Joint Revenue Committee has given it an exalted status among the various energy producers in the state.
The committee voted 8-4 last week against raising the tax from $1 per megawatt hour to $2 or $3 after pleas from various officials, mainly from Carbon County, who feared that North America’s largest wind farm that’s been in the works for 10 years there would disappear.
The committee said it wanted to be more business-friendly and feared that changing course now with an additional tax could have grave consequences on proposed projects
The Chokecherry-Sierra Madras project is projected to bring in potential revenues of $1.9 billion to $2.2 billion over the next 20 years, according to a presentation by Robert Godby, an economist and director of the Center for Energy Economics and Public Policy at the University of Wyoming.
Opponents say that Wyoming already is at a disadvantage because it is the only state to tax wind.
The arguments sound very much like those made 40 years ago as Wyoming was emerging as a leader in the energy industry when coal mines started to be built in the Powder River Basin.
Companies protested the severance tax rate as an impediment to development. Wyoming still ended up approving a hefty severance tax. The argument was similar then to what it should be now: Yes, you bring jobs to the state, but you also have an impact, and the state has an interest in mitigating that impact. That’s what taxes are for.
Then, as now, some of our leaders recognized that Wyoming shouldn’t be afraid to take the offensive. If indeed Wyoming has the best wind, as one legislator said last week, it will be developed, just as its coal, oil, gas and uranium reserves have been developed.
The wind tax was suggested six years ago by then-Gov. Dave Freudenthal against the wishes of the wind industry. Freudenthal said at the time that passing a wind tax would send the message that while Wyoming welcomes the wind industry, it will only do so on terms that are good for its quality of life and economic development – and only if the industry pays its own way.
It’s also worth noting another similarity between coal and wind. It is a product captured here, but sent out of state for the benefit of others, including the stockholders in the corporations running them.
“I appreciate the fact that people can say it has great environmental benefits, but those are people who don’t live next to them, or whose wildlife habitat isn’t being disrupted, or the bird population isn’t being affected, or whose view isn’t being altered,” Freudenthal said.
By the Legislative Service Office’s own study, the wind tax generated about $14.5 million in total in 2015 ($8.7 million for the six counties where projects are located) and $5.8 million for the state. Compared to that $1 per megawatt hour wind pays, coal companies pay $3.97 to $7.33 per ton of coal (depending on low or high quality BTUs), about $1.77 to $2.69 per megawatt hour. Natural gas pays $3.49 to $4.89 per metric cubic foot produced.
Combined, coal and gas pay 81 to 89 percent of the total general fund in Wyoming. Wind projects pay about 40 percent of the general fund.
The committee’s action was startling if only because of the seriousness of the state’s budget problems. With the drop in fossil fuel production and value, every program is hurting. School funding was cut, and certainly no new schools will be built – even in Carbon County – because there is no new coal lease money to be spent. Even the budgets to promote a more diverse economy have suffered.
Put another way, taxes from those coal leases built new schools in Carbon County. Will taxes from industries in Carbon County build a new Campbell County High School in the future?
That’s what Freudenthal was referring to when he said that all economic activities in this state should be on equal footing.
In the end, the committee decided against even raising the tax by 25 cents. And it ended up with no answers to the niggling question of how the state will pay its future bills, particularly in school funding.